The Economic Importance of Nonprofits
The importance nonprofits have in our societies is unquestionable. It’s easy to see the direct impact they have through the work they carry out. A report from the National Council of Nonprofits reveals some of the economic significance that nonprofits have in the American economy:
- Nonprofits employ 12.3 million people in America, with payrolls exceeding those of most other US industries resulting in salaries, benefits, and taxes injected into the wider economy
- Nonprofits create work opportunities for millions of individuals on top of the millions they directly employ by providing care for dependents; or similarly, providing training and placement services for the unemployed and underemployed
- Impact of their consumption of other goods and services in the wider economy
Fight for Survival in Times of Economic Hardship
Despite their economic importance, many nonprofits already have to juggle poor funding. This is only seen to worsen in times of economic hardship. Downturns can result in changes in government support, a decrease in donations and investment income, and higher demands for the services and solutions they provide as the numbers of those reliant on their support increases.
In early April 2020, Charity Navigator and Reuters News surveyed nearly 300 nonprofit representatives. 83% of these respondents reported that they were suffering financially. And of those suffering financial hardship, the average of them expected a decline in revenue of 38% between April and June 2020.
Equally, Nicva (the representative body for charities in Northern Ireland) asked 1,000 charities how the pandemic impacted them. Nearly a third of organizations said they expected income to fall by between 51% and 75% in the next six months. 4.3% said they feared their organization might not survive.
ThirdSector also conveyed a bleak outlook, as they reported 8 out of 10 charities believe the coronavirus pandemic will negatively impact their ability to deliver on planned objectives in the next 12 months: Two in five organizations reported that their financial position had deteriorated in September.
The HR War Room
On top of the economic hardship that Nonprofits are faced with as a result of the economic implications of this pandemic, Human Resources leaders in the sector have had to cope with the strains witnessed in other Human Resource departments, such as:
- Communication, education, and adherence to COVID-19 Health and Safety guidelines.
- Dissemination of information about changing remote work policies and reacting to changing government guidance on this.
- Updating employee contact information.
- Physical management of employees and volunteers vs. Remote management of employees and volunteers
- Handling sick leave and sick pay
- Regulatory matters – data privacy and information concerns, such as privacy of employee health information
- Psychological impact on staff and volunteers
- Business continuation challenges – shift to online for example
Additional Strains for Nonprofits
Not only have nonprofit HR departments been working with these issues over the last 6-months, as well as the reductions in funding and donations, they are also in a unique position to have to face the following too:
- Inability to run normal fundraising activities as these are oftentimes large gatherings and events such as coffee mornings or sporting challenges—additionally, the closure of charity shops on our high street due to lockdowns on non-essential retail.
- Many needing to ramp up their normal services given the increase in demand for these (whether medical needs; financial support and welfare support from increases in unemployment; increase in people displacement due to economic and political turmoil; increases in mental health support, etc.), which can include the need to implement an Emergency Response.
- Locations of many nonprofits: many are global entities and will all be working with unique political, societal, and economic implications and regulations. The pandemic has also created differences for employees and volunteers, like travel restrictions and even down to unique demands for their services based on locale.
- Restrictions on delivering normal services and adjusting to alterations of this (such as face-to-face support; delivery of goods and fundraising activities halting).
- PPE demand, supply, and availability.
- COVID-19 related safety measures resulting in increased operating costs.
- Employee and volunteer wellbeing.
Despite the doom and gloom, there is hope for this sector. Many involved are some of our most creative minds, and working in economic hardship is not an unfamiliar setting. Where possible, organizations have been able and will continue to deliver their services online and have instigated ingenious and resourceful remote fundraising initiatives
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