An Economy That May Result in Nonprofit Closures and 20,000 Job Losses
By: Rhett Wilkinson
Tags: Jobs, Pandemic, Covid 19, Economy, Nonprofit

When nonprofits close, communities suffer. Utahns rely on nonprofits to feed, heal, shelter, educate, inspire, enlighten, and nurture people of every age, gender, race, and socioeconomic status in Utah. The economic crisis caused by the pandemic creates a bleak outlook for nonprofits. Nonprofits rely on public donations, revenue from services provided, and grants from governments, foundations, and corporations to complete their missions.

The economic crisis has either diminished or threatened the financial stability of funders of nonprofits making them unable or unwilling to give, resulting in a perfect storm for nonprofits. This storm means that more people in need will find themselves without resources — or have already.

“To put it mildly, the future for nonprofits across Utah is sobering,” says Liz Dana, executive director of Wabi-Sabi, a nonprofit in Moab. (photo courtesy WabiSabi)

“To put it mildly, the future for nonprofits across Utah is sobering,” says Liz Dana, executive director of WabiSabi, a nonprofit in Moab.

The reduced funding that has shuttered or threatens to shutter nonprofit organizations spares few and hits poorer rural communities even harder. According to a recent Utah Nonprofits Association Survey, 14.6% of respondents told UNA that they would only be able to continue to provide services for five or fewer months — and 26% of respondents believed that their organization would be unable to survive the pandemic. Without the CARES Act and Paycheck Protection Program loans, many of these organizations would have already closed.

According to the Bureau of Labor and Statistics, nonprofits comprise 6.7%, or 78,235 of Utah’s 1.17 million jobs. The closing of 26% of Utah’s nonprofits would amount to job losses of just over 20,000 — with 11,000 of those job losses coming in the next five months. The survey, completed Aug. 5 through Aug. 11, asked nonprofit staff about the financial conditions at their organization and received 199 responses.

The impact of the pandemic and its economic consequences have been even greater for nonprofits outside of northern Utah as well as for those serving the arts or environment and animals. Of those agencies outside the Wasatch Front, 19% predicted the end of services within five months, compared to 13% along the Wasatch Front — an increased closure rate of just over 46%. Organizations providing health and human services saw an increase in donations in the immediate aftermath of the pandemic, and many directed these funds to meet the increased demand for food and other necessities. Without additional funding, this relief will most likely be a temporary reprieve as these organizations, as a whole, now find themselves facing the same closure rates as the rest of nonprofits in Utah.

Reduced funding for nonprofit agencies hurts Utah’s most vulnerable populations. Safe Harbor Crisis Center finds itself in crisis mode. Gladys Larsen, director of development, said: “Domestic abuse and sexual assault have increased exponentially during the pandemic. Our donations have decreased and funding from some programs has been diverted towards COVID-19 efforts, thus leaving our programs with higher demands and less funding.”

Cherlyn Johnson (photo courtesy Utah Down Syndrome Foundation)

Cherlyn Johnson, CEO of the Utah Down Syndrome Foundation (UDSF), echoed these same concerns.

“We have lost a substantial amount of revenue … We have put all of our in-person activities on hold, but babies are still being born with Down syndrome and families desperately need the support UDSF offers.”

Arts organizations find themselves in an untenable position. Tessa Vachel, Executive Director of the Davis Arts Council, sees little hope for improvement.

“As an arts organization, we will be among the last industries to return to full capacity,” Vachel said. “Additional unemployment assistance and additional grant funding will be essential for us to continue to support our employees and provide programming to our community because we cannot return to anything resembling normal, revenue-generating work until this pandemic ends.”

When a nonprofit shuts its doors, employees and the community feel the pain. As people employed by nonprofits join other Utahns in the ranks of the unemployed, fewer agencies will be operating to help them with food, housing, and health care — leaving them unable to receive the care they had provided in their jobs. The ramifications are not lost on UNA Board member Shawn Newell.

Shawn Newell (Utah Nonprofits Association)

“It’s heartbreaking,” Newell said. “Just heartbreaking to think that the people who have devoted years, careers, and lives to missions that protect and nurture our communities are now in desperate need for the community and our elected officials to now reach out and support them.”

The longer-term impact of the loss of nonprofits on Utah’s communities is even more daunting than today’s reality.

“Imagine a Utah with more hungry people, more people experiencing domestic violence without hope for care, fewer people able to receive assistance for addiction and other mental health issues, increased pollution and worse air quality, and more people living on the streets as safety net after safety net fails them, UNA CEO Kate Rubalcava said. “Our arts — museums, music, dance — express our shared culture and inspire us. Losing them creates an even darker world.”

Riley Brown of St. George’s Children’s Museum said: “Donations and public support can be the difference between an organization weathering the storm or permanently closing.”