Nonprofits That Serve Low- and Moderate-Income People Show Fewer Signs of Covid Disruption

Thirty-four percent of nonprofits that serve low- and moderate-income people say they continue to suffer “significant disruption” amid the pandemic, according to a study from the Federal Reserve conducted in August.

That figure is far down from the 71 percent who reported significant disruption during the peak of their pandemic-era distress, according to the data. However, 94 percent of nonprofits said they continue to suffer some level of disruption.

The survey results were based on 2,561 responses that were collected with the assistance of the National Council of Nonprofits, the National Urban League, the Local Initiatives Support Coalition, and other organizations that support or work with charities.

Many of the nonprofits in the study worked in the areas of housing, education, child welfare and family well-being, and health. Nearly 40 percent had operating expenses under $1 million, and another 40 percent had operating expenses of $1 million to $10 million.

Nishesh Chalise, director of community-based policy and analysis within the Institute for Economic Equity at the St. Louis Federal Reserve branch, said the study was not drawn from a representative sample so the results are not statistically significant. However, Chalise said he believe the results are valuable indicators because of the large number of respondents.

“It’s a pretty good picture of what’s going on in the nonprofit world,” Chalise said.

“Many of these organizations operate with a model in which more services provided doesn’t always result in more revenue,” the study states. “This creates a challenging situation, especially during economic crises, where demand for such services increases while total revenue may remain stagnant or decrease.”

Chalise said the study was part of a broader look at the impact of the pandemic on organizations that serve low- and moderate-income people that included nonprofits as well as other kinds of organizations.

Pandemic Impact on Revenue

In terms of finances, 47 percent reported increased or no change in revenue from individual donations amid the pandemic, the same share that reported decreases. Forty-six percent reported steady or increased corporate donations; 48 percent reported declines.

Foundation funding was a strong point for nonprofits, with 63 reporting no change or increased grant making and 32 percent reporting decreases. Government funding was another bright spot, with 77 percent reporting steady or increased revenue and 19 percent reporting decreases.

Fee-for-service revenue was steady or grew for 54 percent of organizations, while 40 percent reported declines.

Meanwhile, 71 percent reported steady or increased demand for services, with 54 percent reporting “significantly increased” demand. Eighteen percent reported a drop in demand for services.