Study: Small nonprofits hit harder by COVID
Small arts organizations were among those hit the hardest by shrinking donations last year, according to a study by the Urban Institute.
Small charities nationwide have faced significant losses in charitable giving as donors cut back during the COVID health and economic crisis: Four in 10 have suffered a decline in donations, according to a study released Thursday. That’s compared to the 29 percent of large charities that saw
contributions dip.
Nonprofits were also hurt badly by the decline in ticket sales for things like artistic performances youth sporting events, and reductions in other fees for services, according to the new report from the Urban Institute. Organizations with annual budgets of less than $100,000 saw a median decline of 33 percent in their fee for service revenue, compared with 20 percent for organizations with budgets of $1 million to $10 million.
Overall, arts organizations, were hit particularly hard, with 54 percent reporting revenue losses in 2020.
The sweeping examination of nonprofits also looked at diversity among organizational leadership, as well as how geography affected donations.
While several previous studies have found that overall giving to nonprofits held up strongly amid the pandemic, the report from the Urban Institute presents a more troubling picture for small charities — those with budgets of $500,000 or less — that provide direct services to vulnerable people and groups that do community building and advocacy.
Laura Pierce, executive director of the statewide organization Washington Nonprofits, said the data was consistent with what she’s seen in her state. Small nonprofits often lack the fulltime fundraising staff and expertise needed to shift gears when conditions change, Pierce said. They face other barriers to growth as well, such as being located in neighborhoods with a large share of low-income people.
Pierce said she hopes donors will do more to help small nonprofits handle a deluge in demand prompted by crises like COVID.
“Small organizations are often particularly effective because they’re very connected to the communities they serve,” she said. “They are really in touch with what’s most needed by the community.”
Donna Murray-Brown, CEO of the Michigan Nonprofit Association, said early data suggests 2021 will end up being a brighter year for nonprofits of all sizes in her state. “It’s a better year because nonprofits better understand what it means to work in a pandemic,” she said. For example, many nonprofits that were skeptical of the ability to raise money through virtual events have learned that it can be done, and they’re getting better at it, she said.
A survey of nonprofits in Michigan that concluded at the end of September found that most have at least six months of operating cash on hand, she said, and about 95 percent said they expect to be able to continue operating through the end of the year.
Unlike other research, the Urban Institute study excluded hospitals, colleges, and private schools, which are often the recipients of very large gifts from wealthy individuals that can skew the data on overall giving trends. The Urban Institute study also excluded religious institutions and organizations that fund charities rather than offering services or doing advocacy.
Elizabeth Boris, one of authors of the report, said the study will be repeated annually to present a detailed picture of the health of serviceproviding charities.
Much of the study compares data from 2015 through 2019 with results from 2020 to highlight the impact of the COVID pandemic on nonprofits. The study found that 58 percent of organizations saw donations increase from 2015 through 2019, and 32 percent saw them stay the same. Only 11 percent saw donations decline. In 2020, only 46 percent of nonprofits saw their gifts increase.
From 2015 through 2019, organizations led by people of color were less likely to see donations increase and more likely to see them decline than organizations led by non-Hispanic white people. However, that gap narrowed in 2020.