NONPROFIT RECOVERY IN THE POST PANDEMIC RECESSION
NONPROFIT RECOVERY IN THE POST PANDEMIC RECESSION
Future implications for our sector
Andrea McManus, ViTreo Group Inc
April 21 2020
Barring a miracle, the repercussions of COVID-19 will be felt far and wide. As nonprofit organizations are dependent on the generosity of others (donors and funders) to fulfil their mission to help their clients, how will they fair? What can they do to survive and to be sustainable into the future when this is behind us.
A crystal ball is not needed to determine what the near future holds for the charitable sector. As those donors and funders are themselves reeling from the losses experienced in their businesses, their investment portfolios and their residential and commercial real estate holdings, it is likely the charitable sector will pay a high price now and in the foreseeable future.
Along with the increased service demands typically felt during a downturn, organizations are struggling with having to work remotely or managing to work within challenging circumstances because of physical distancing parameters. Staff are struggling with their own personal situations — possibly family members ill with COVID, having to homeschool children, a spouse or partner who has become unemployed, and so on.
ViTreo’s Research: Recession, Recovery and Non-Profits. Download here.
Earlier this month, ViTreo Group Partner, Vincent Duckworth, CFRE along with ViTreo’s Research Associate Ken Kempcke, MA, undertook research into the effects of different recessions on Canadian nonprofits and the road to recovery over time. We wanted to identify what we could learn from past crises and then perhaps plan for after this pandemic passes.
ViTreo’s Research: Recession, Recovery and the Non-Profit Sector first looked at the impact of the 2008 recession.
Impact of the 2008 Recession on the Non-Profit Sector
“The [October 2009] report showed that the surveyed organizations were experiencing an increased demand for services while their funding levels were falling.
A July 2010 follow-up survey by the SPNO showed that service demands continued to rise with 68% of respondents seeing a greater demand in April 2010 than prior to September 2008. Almost 80% of respondents attributed this increase in demand as primarily or in part due to economic conditions. At the same time, organizations were facing budget deficits and funding cuts. Twenty-six percent posted a deficit in 2009 compared to 21% in 2008. At the time of the 2010 survey, 37% of organizations experienced a reduction in total revenue, 34% stayed the same, while 29% reported an increase. Cuts from United Way, foundations and self-generated revenue were most common although 20% reported reductions from federal government sources and 16% from provincial government sources.
Close to 50% of organizations reporting increased service demands stated they were not able to meet the increased need despite taking action including supporting more people with the same staff, increasing volunteer hours, expanding program staff time and hours, fundraising more and increasing overtime.…
Almost half of respondents agree that the economic downturn will have a lasting impact on their organization. None of this serves the needs of struggling communities and may even add to the burden.”
After each recession, there’s a recovery period. Similar to businesses recovering from an economic downturn where some recover better than others, some nonprofit organizations will recoup lost ground more easily.
Non-Profits in Post-Recession
“While giving dipped during the depths of the recession, it rebounded relatively quickly — or at least on par with recoveries from previous downturns — but it also came back differently, with larger donors taking up more space. In an investigation of the 2008 recession, Non-Profit Quarterly made the following observations:
‘Some nonprofit organizational types never fully recovered, while others ended up in better shape after the recovery (and even immediately post-recession). For most categories of non-profits, dips in overall revenue were felt most acutely in 2009; but the depths of the dips and the trajectories of recovery, defined here as occurring between 2010 and 2015, varied widely.
Overall, larger non-profits ended up gaining ground while smaller non-profits lost ground during and after the recession….
Over the entire period, the asset totals for human services organizations, the largest single organizational type, remained remarkably stable. Human services organizations had the lowest closure rates, the smallest percentage of ‘big losers,’ and the smallest percentage of ‘big winners’ among all organizational types, excluding eds and meds. In contrast, arts organizations were less likely to close, more likely to be ‘big losers’ in terms of assets during the recession, and less likely to be ‘big winners’ during the recovery.’”
Our Report goes on to discuss different government policies and Economic Action Plans instituted by governments during recessions and their impact. The full Report can be read here.
It is too soon to predict what additional economic measures will be undertaken during this crisis to stimulate the economy, or what impact they will have. But here are some likely scenarios that we might see and organizations may want to consider:
Things will not be like they were before. There will eventually be a ‘normal’ but it will be a ‘new normal’. There is opportunity within this uncertainty to shape your organization and your fundraising to fit into the new normal as it develops. Begin to adapt now and above all, be prepared to pivot!
It is very likely that there will be an influx of infrastructure spending which is a tried and true method to kickstart the economy. Can you take advantage of this? Perhaps you were preparing for a capital campaign? Don’t fall prey to downbeat thinking about the state of affairs. Look for the silver linings.
We know that smaller, less well funded, more specific niche organizations struggle to survive major crises. Now may be the time to look for partnerships and collaborations… and yes.. possible mergers. Remember that your mission is about the people you serve and not about your organization. Is there a better way to make sure that your mission survives, if not your organization?
Remember that your traditional donors have the long view of your mission. They give to you, repeatedly, because of your mission. Their market investment portfolios may be down but there has never been more of a need to invest in their social portfolios. Don’t forsake them. Respect their belief in your mission.
Philanthropy has been around for centuries. It is alive, strong and powerful. Believe in your donors. Talk to them constantly now – with empathy and transparency.
And finally, now is not the time to be uninspiring or bland. Tough times call for boldness. On ViTreo’s most recent podcast, this august panel of global experts – Tom Ahern, Kay Sprinkel Grace, Ken Mayhew and Angela Chapman – discussed that this is the time to stand up and stand out. We must be, and live, boldness – there are many who depend on the work that we and what our organizations do.
Our goal, above all else, must be to continue to fulfil our organizational mission and continue to serve. What are some of the actions your nonprofit organization is taking to ensure it can do this? We would love to hear from you about the steps you have been taking to achieve this.
Next week’s blog, authored by Gina Wheatcroft, ViTreo Group’s Senior Consultant & Regional Director, Edmonton and Northern Alberta, will discuss the impact of the coronavirus on alumni relations. Previously, Gina spent six years with The University of Queensland (UQ), where she was responsible for leading and building alumni and community relations. Prior to that, she spent 16 years in alumni relations at the University of Alberta.
Stay tuned, stay healthy and let us know what steps your organization is taking to ensure it can continue to fulfil its mission.
These are extraordinary times and what we are doing is not easy. At ViTreo, we are here to help and we will continue to offer support and advice. You can book a 30 minute complimentary chat with a member of our team to discuss your unique situation and program goals. To schedule this complimentary chat, please email info@vitreogroup.ca or call us at 403-210-3157. We would be happy to discuss solutions for your near term needs or how we can help in the long term.
We are hosting a series of Fundraising Ask Anything Events where you can connect and ask questions of your peers and the ViTreo team. Learn more and register here.
ABOUT THE AUTHOR
Andrea McManus, Chair, Board of Directors, Partner
ViTreo Group Inc
Andrea McManus is a Partner with ViTreo with over 30 years’ experience in fund development, marketing, sponsorship and nonprofit management. A highly strategic thinker and change maker, Andrea has worked with organizations that span the nonprofit sector with particular focus on building long-term and sustainable capacity.