The Most Vulnerable Nonprofits Will Be Critical When Communities Rebound
By: Stanford Center On Philanthropy, Civil Society
Tags: Nonprofit, Coronavirus, Covid 19, Philanthropy, Stanford

Many of the organizations crucial to the Bay Area’s recovery from the COVID-19 crisis are facing a daunting fall

By: Nick Sherefkin, a Ph.D. fellow at the Stanford Center on Philanthropy and Civil Society and Ph.D. Candidate in the Department of Sociology at Stanford University; and Christof Brandtner, a postdoctoral fellow at the Mansueto Institute for Urban Innovation and the Department of Sociology at the University of Chicago. Both are members of the Civic Life of Cities Lab at Stanford PACS.

As businesses throughout the Bay Area strain to cope with a second shutdown, the pandemic is also jeopardizing the efforts of people organizing for the common good. Local nonprofits are operating at reduced capacity, scraping the bottom of their cash reserves, and even shuttering. This fall and winter will be a breaking point for nonprofits that have lost their normal revenue streams — especially if individuals, foundations, or governments do not step up to help.

The results of this would be catastrophic: a stricken nonprofit sector would deepen social isolation, weaken communities’ ability to organize around common causes, and exacerbate the impact of COVID-19. An incapacitated community will impede a swift and equitable recovery.

In the current crisis, it is clear that health and social service nonprofits do critical work but all types of nonprofits make important contributions to our community. Beside their mission-related activities, nonprofits are employers, tenants, and developers. They are legal aid offices representing marginalized voices that would otherwise be unheard and cultural associations uniting people who would otherwise be alone.

With so many of these organizations in lockdown, we are concerned about our community’s resilience — its ability to rebound from the crisis.

That is why, as part of the Civic Life of Cities Lab at the Stanford Center on Philanthropy and Civil Society, we set out to understand how the Bay Area nonprofit sector is responding to the pandemic, and what we stand to lose. Last year, we surveyed nonprofits to learn about their programs, resources, and leaders. As we realized that the spread of Coronavirus was turning into a pandemic, we began collecting the updates nonprofits shared on their websites. Combining these data sources gives us a unique window into how the Bay’s nonprofit sector is experiencing the crisis.

The majority of nonprofits have posted online about the pandemic, with some organizations announcing creative ways of rising to the occasion. But over 70% of coronavirus-related posts in the first month of the pandemic were about canceling activities, postponing events, or announcing closings. Community centers, legal aid offices, and choir rehearsals alike are struggling. The pandemic was the last straw for a 150-year-old liberal arts university that closed its doors permanently.

Consider what it would mean for the overall vibrancy of the region’s community if other organizations that are struggling now were to close permanently. As of March, the Bay Area was home to almost 15,000 nonprofits, similar to the per-capita nonprofit density of other metropolitan areas such as Washington, DC, or Chicago, IL.

The nonprofit sector is now operating at less than half strength, putting the Bay Area in league with the pre-COVID levels of Detroit, MI and Tampa, FL.

Importantly, we learned that these closings are not evenly distributed. Cancellations are most common among organizations working in development, law, advocacy, and politics. Although affordable housing coalitions and food security advocates may appear less essential than health clinics and food pantries at the moment, organizational diversity is critical for a community’s long-term resilience.

In a study of the consequences of the Spanish Flu in Norway, researchers found that communities hit harder by the 1918 influenza had weaker community organizing — not only in the immediate aftermath but even decades later. A key factor for protecting communities from this lasting damage was having a robust and, most importantly, diverse nonprofit sector.

The pandemic and economic recession threatens this diversity. Before the pandemic, we asked nonprofit leaders how long they could continue operating if their funding suddenly dried up. On average, nonprofits working in health, social services, advocacy, and economic development could only last between six and ten months.

That means associations that lost their cash flow in March are running on empty now. Nonprofits with neighborhood constituents working on local issues, such as senior care centers and minority entrepreneur support groups, have the lowest cash reserves and are particularly at risk.

As more nonprofits run down their savings, these final summer weeks are critical. People who still have a steady income should give to their local housing organizations, arts programs, and legal aid funds. Foundations should throw lifeline funding to local nonprofits. And local, state, and federal governments need to explicitly consider resources for nonprofits in their plans to renew the spring’s expiring economic stimulus measures.

A strong post-COVID-19 recovery depends on the civic vitality of our diverse community. It is up to us to make sure that when the shelter-in-place orders finally lift, nonprofits of all types will be primed to reopen. If we do not take care of our nonprofit organizations now, they will not be equipped to take care of us in the next crisis.