Pandemic impacts, reshapes area nonprofits

The Nonprofit Institute at the University of San Diego, part of the School of Leadership and Education Sciences, recently released its annual State of Nonprofits and Philanthropy Report. The study synthesized findings from surveys given to local nonprofit leaders (including COVID-19 impact surveys), public opinion polling and other sources of nonprofit data, such as the Internal Revenue Service and the California Economic Development Department.

“The story that emerges is both hopeful and concerning,” said Dr. Laura Deitrick, associate director of The Nonprofit Institute and leader of the report's six-member research team. “Some nonprofits have adapted quickly by finding new ways to collaborate, leveraging capacity and more effectively advocating together for those they serve. Yet, other nonprofits struggle to bridge digital divides and regain their financial footing.”

San Diego's nonprofit sector is home to a wide variety of organizations, and most are relatively small, with 85 percent of nonprofits reporting budgets less than $1 million.

While the effects of COVID-19 have touched all nonprofit organizations, negative impacts have been more profound in small nonprofits and in certain subsectors, such as education, arts and culture. Despite charitable organizations' overall strong growth over the last decade, the report highlights emerging threats to local nonprofits.

Key findings

COVID-19 has adversely impacted most nonprofits in San Diego County, with nearly all organizations reporting decreased revenues and donations, resulting in widespread layoffs and furloughs of staff.

Demand for nonprofit services is shifting as community needs change. In areas where demand is growing, reported inability to meet all the increased demand signifies community needs may be going unmet.

Smaller nonprofits (budgets under $1 million) reported more difficulty managing remote work environments and raising money in digital formats, than larger nonprofits (budgets over $1 million).

More human service and health related nonprofits report stronger financial positions while more arts and culture organizations describe their financial position as weak.

Public trust in nonprofits remains high, however public confidence in the ability of nonprofits, government and corporations to respond to COVID-19 is waning as the pandemic continues.

The report's authors conclude that a strong nonprofit sector benefits San Diegans both socially and economically. Local, state and federal government agencies call upon San Diego nonprofits to provide critical social services, education and workforce development programs to benefit our region.

Previous research by The Nonprofit Institute found that California nonprofits rely on government funding for an estimated 30 percent of their total revenue. Corporations rely on nonprofits to sustain a quality of life in the region that is conducive to doing business. And local nonprofits, especially arts and culture institutions and environmental nonprofits, are foundational to tourism, San Diego's second-largest trade economy.

“In addition to social benefits, nonprofits are an integral, but often overlooked, component of

San Diego's economy, creating economic impact through business functions and employment,” Deitrick said.

Strong nonprofits attract new dollars into the region through grants and contracts for research and services.

In turn, nonprofit sector jobs are created, initiating a multiplier effect when wages are spent in the local economy. In this respect, most San Diego nonprofits are much the same as small businesses but have the added benefit of a social purpose, often referred to as a double bottom line.

The report suggests that the weakening of nonprofits is cause for concern on two fronts. First, strong nonprofits are needed as part of the response to COVID-19, which has disproportionately impacted some of San Diego's most vulnerable populations.

Additionally, 211 San Diego continues to document growing need for food, shelter and other emergency services typically provided by local nonprofits.

Second, the findings of a newly released report from the San Diego Association of Governments predict a loss of $12.4 billion in gross regional product and attributes COVID-19 to 176,000 lost jobs in San Diego County, two-thirds of which were in the tourism, education and health care sectors.

The concentration of nonprofit activity in these areas with a focus on workforce and business development, demonstrate a direct link between economic recovery in San Diego's key industries and the recovery and strength of nonprofits.

A full copy of the report can be found at

digital.sandiego.edu/npistateofnp/17/.