In March 2020, I was on a call with 15 other nonprofit leaders. As the world was coming to grips with the reality of the pandemic, my peers and I were advised to expect a 40 percent revenue reduction to our organizations in the upcoming 12-24 months. It took years for many organizations to recover from the Great Recession in 2008; many folded altogether or merged with other organizations. Not knowing how exactly the pandemic would affect the economy or our donors, we prepared to cut expenses as our best hope of survival.
In a sector where it’s encouraged to spend over 80 percent of a nonprofit’s budget on direct program services, how do you prepare for such a significant revenue reduction without affecting those same services? As a leader of an anti-trafficking organization providing workforce development to the most vulnerable women and girls in India, Cambodia, and the U.S., it was not an option for me to cut programming. Our clients were severely affected by the pandemic and the lockdowns, which brought many of them to the brink of destitution. As the needs of our clients exploded overnight, everyone across the organization felt the pressure to do more with less.
My experience was not unique. The pandemic highlighted how unprotected nonprofits are from exogenous shocks. Last June, CEP released a report by Hannah Martin, Kate Gehling, and Ellie Buteau entitled “Persevering Through Crisis: The State of Nonprofits.” The organizations surveyed for the article reported a negative impact on programming, revenue, demand, and costs in 2020. More than three-fourths of nonprofit leaders reported increased demand for their services while also undergoing negative financial impacts.
Funders were flexible overall, but nonprofits led by women and nonprofits serving communities including Asian, Pacific Islander, Middle Eastern, and Native American communities experienced less flexibility, responsiveness, and communication than other nonprofits. A high percentage of respondents did not feel that donors had a sense of what they needed. As a female AAPI leader, in spite of many supportive donors, I do feel like sometimes I am trying to walk the fine line between appealing toward a donor’s funding interest versus what I feel the organization actually needs to thrive and reach the next level.
Read the full article about nonprofits surviving crises by Diana Mao at The Center for Effective Philanthropy.