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Nonprofits at “Breaking Point”

Many charitable organizations face an uncertain future as the COVID-19 pandemic leads to losses in income and fewer volunteers.

Governments and foundations need to release funds from emergency reserves to support nonprofits or face an uphill struggle to recover from the economic strains caused by the coronavirus, a new report concludes.

The study was produced by the Nonprofit Association of Oregon, Portland State University’s Nonprofit Institute, Mercy Corps Northwest and Oregon Voluntary Organizations Active in Disasters. The organizations partnered on a survey that went out to 1,600 Oregon charitable nonprofits in June.

A preliminary report that summarizes responses shared by 490 nonprofit leaders illustrates the large strain faced by these charitable organizations.

Key findings:

•    54% of nonprofits reported losses in earned income, with 35% losing more than 50% in earned income.
•    56% have concerns that they will not be able to maintain levels of service.
•    46% say they are worried about covering operating expenses through the end of the year.

Arts and education nonprofits face the biggest challenges to surviving in the long term.

Forty-eight out of 56 nonprofits in this cohort report concerns over their future survival and ability to sustain their funding, fundraising and programs.

Most of these nonprofits have small operating budgets: 40% have budgets of between $1,000 and $5,000, and 22% have budgets between $1 million and $5 million.

The survey reveals how many organizations are suffering from a lack of volunteer help because of closures and social-distancing requirements.

Seventy-three percent of nonprofits that rely on volunteers have seen a decrease in volunteer hours. And 38% of nonprofits reported a decrease in hours worked by paid employees.

The struggle of nonprofits comes as many perform essential services in dealing with COVID-19. Thirty-eight percent have seen an increase in demand for services as a result of the COVID-19 crisis.

Seventy-seven percent added new services to assist directly with the coronavirus response. Almost half have added new clients, services or programs since the start of the pandemic.     

A bright spot in the findings is that only 12% report losing more than 50% in donations from foundations or corporations. Twenty-eight percent have seen an increase in donations since the pandemic started.

But the report’s authors warn many of the state’s “cherished institutions” — such as domestic-violence shelters, children’s museums, food banks and homeless shelters — are at their “breaking point.”

“Without immediate attention and firm commitments of resources to this critical sector, our efforts to recover and move forward as a state will be severely impeded,” the authors conclude.  

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Kim Moore

Kim Moore is the editor for Oregon Business magazine.

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