Effects of COVID-19: The Pandemic’s Impact on Mission-Based Organizations

July 26, 2021  |  By Brian Gleason  |  3 Minute Read

The COVID-19 pandemic affected virtually every area of the world—and mission-based organizations, like non-profits, were perhaps hit hardest. As organizations adapted to unprecedented challenges, the pandemic’s shutdown and economic fallout made it difficult for non-profits to predict impending needs and plan for the future.

Moreover, many non-profit organizations were required to continue their work even as shutdowns and social distancing made it difficult. Let’s take a look at some of the most significant effects the COVID-19 pandemic had on non-profits.

1. Reduced Fundraising & Donor Interactions

Non-profit organizations rely on fundraising to maintain day-to-day operations and advance their specific mission. But as COVID-19 canceled fundraisers and events, donation-based revenue began to dry up. Corporate support was also curtailed due to pandemic-related cutbacks.

According to a non-profit Leadership Center survey, leaders said that their top challenge¹ throughout the pandemic was fundraising. To meet this challenge, many non-profits moved in-person events in 2020 and early 2021 to remote fundraisers.

Despite the pandemic, donations ultimately rose over the past year. According to Blackbaud Institute, there was an overall increase of 3.4% in donations² between March 2020 and March 2021. Charitable giving also experienced a 25.3% increase in online fundraising.

2. Significant Budget Cuts

One of COVID-19’s biggest impacts for non-profits was budget cuts. According to Philanthropy News Digest, 75% of organizations³ had to make cuts to their budgets in order to maintain operations through the pandemic, while 30% of employees⁴ surveyed by Eagle Hill Consulting said that their organization made program reductions.

These cuts were sorely needed as funding temporarily decreased, and many non-profits looked to reduce expenses as the pandemic dragged on throughout 2020 and into 2021.

3. Furloughed or Laid Off Staff

Many small businesses and mission-based organizations were affected by the pandemic. Yelp reports that roughly 160,000 businesses⁵ closed between April and September of 2020—nearly 800 per day. Fortunately, new businesses did open throughout COVID-19, although at a lower rate than during a typical year. From March 2020 to March 2021, 487,577 total new business openings⁶ were reported in the U.S.—down only 14% year-over-year.

According to a Grenzebach Glier and Associates survey, 33% of non-profits⁷ reported that they had to furlough staff during the pandemic. And according to an Eagle Hill Consulting survey, the percentage of non-profit employees⁸ who experienced one of these employment changes were:

• 30% of employees experienced hiring freezes
• 25% of employees experienced furloughs
• 24% of employees experienced salary reductions
• 20% of employees experienced layoffs

Now that COVID-19 cases are dropping and pre-pandemic life returns, employment levels are rising. Non-profits have recovered roughly half of the jobs⁹ lost since the start of the pandemic, the Non-Profit Times reports. While recovery has been gradual, vaccines have accelerated the return to previous business practices.

4. The U.S. Government’s COVID-19 Pandemic Relief Acts

The U.S. government began passing relief acts as soon as the pandemic took hold in the U.S. The Coronavirus Aid, Relief and Economic Security (CARES) Act was passed in March 2020, and non-profits were able to take advantage of Small Business Administration (SBA) loans and loan forgiveness, Emergency Economic Injury Disaster Loans (EIDL) Grants, and Employee Retention Credits. Non-profit organizations immediately began applying to secure monetary aid when these became available in March 2020. Congress also passed additional relief legislation, like the American Rescue Plan Act in March 2021.

More than 90% of non-profits¹⁰ that the Center for Effective Philanthropy surveyed in February 2021 said their organizations applied for a loan through the Payment Protection Program (PPP), and 99% of those who applied received funding.

What Does the Future Look Like for Non-Profits?

Today as mask mandates lessen, businesses continue to open, and individuals are more willing to travel, mission-based organizations must take stock of the changes that took place since the COVID crisis began and plan for the future. In doing so, non-profits should consider two main areas:

1. Mission Creep

As a result of the COVID-19 pandemic, some social services-focused non-profits have experienced mission creep—the expansion of a project or mission beyond its original scope or goal. Organizations that have had to pivot their services to deal with those impacted by COVID-19 now need to determine what their focus will be going forward.

There is a significant risk of the donor base becoming confused by a changed mission, so the organization must communicate any changes clearly and effectively.

2. Programming Competition for Arts-Related Non-Profits

As events are rescheduled and in-person programming returns, arts-related non-profits will likely experience competition as others attempt to get donors in the door.

Consumers will now have many choices for in-person entertainment events, so non-profits need to make certain they differentiate their offering. They must be able to combine their known, reliable entertainment with a new and interesting concept.

Mission-Based Organizations After COVID-19

Due to increased donations and federal aid, non-profits ended 2020 in better shape than initially forecasted. Throughout 2021, non-profits should focus on mind share, and ensure they have a similar focus and goal for both the consumers/donors and the organization. Consumers and donors have money to contribute now, but non-profits must act quickly and show them why their organization is important and needs their funding.

As the recovery from the COVID-19 pandemic continues in 2021, mission-based organizations should be aware of their vast challenges and utilize resources that can help them navigate setbacks, improve infrastructure, and mitigate budget issues. Phoenix Management is proud to provide the experience and insight mission-based organizations need in times of change and uncertainty. Contact us to learn more about how we can help your organization’s recovery process.

¹ https://nlctb.org/news/survey-results-covid-19-impact-on-nonprofits/
² https://institute.blackbaud.com/the-blackbaud-institute-index/
³ https://philanthropynewsdigest.org/news/nonprofits-seeing-less-long-term-covid-19-impact-on-fundraising
⁴ https://www.eaglehillconsulting.com/insights/2021-nonprofit-employee-change-management/
⁵ https://www.yelpeconomicaverage.com/business-closures-update-sep-2020.html
⁶ https://www.yelpeconomicaverage.com/covid-19-anniversary.html
⁷ https://philanthropynewsdigest.org/news/nonprofits-seeing-less-long-term-covid-19-impact-on-fundraising
⁸ https://www.valuepenguin.com/news/nonprofit-employees-report-budget-cuts
⁹ https://www.thenonprofittimes.com/hr/nonprofit-jobs-up-but-slowed/
¹⁰ https://cep.org/wp-content/uploads/2021/06/CEP_Persevering-through-Crisis_2021.pdf