If there is one word that summarizes the impact of COVID-19 on Illinois businesses, nonprofits, and individuals it would have to be instability. The concerns about virus transmission led Gov Pritzker to issue forced business closures, stay at home orders, and new workplace safety guidelines to protect both employees and customers. Although these changes initially helped to “flatten the curve”, once relaxed there has been a spike in the number of new COVID-19 cases and deaths. Although startling it reflects a larger problem with COVID-19—it is nearly impossible to predict what will happen next and the pace at which the Chicago economy will make a return to prosperity.

This has left many nonprofit organizations with more questions than answers about how to manage through the next 12 to 18 months. According to the Nonprofit Finance Fund COVID-19 Survey, 60% of respondents are currently experiencing conditions that threaten long term financial stability. At the same time, 61% reported a significant decrease (25% or more) in client usage of services. When combined these numbers reflect just how deep COVID-19 has impacted organizations. To help, clients, prospects and others, Selden Fox provides a summary of key survey findings here.

Nonprofit Survey Findings

  • Demand for Services – As the pandemic progresses there have been sudden changes in demand for services which create unique challenges for organizations. This is specifically the case when there is a rapid increase in service demand because many may not have the resources to adapt. According to the survey, 17% of respondents are currently experiencing a significant increase (more than 25%) for services while 31% anticipate such an increase later in the year. At the same time, 61% reported a significant decrease in demand for services, while 32% expect a decrease to arise later in the year. As service demands shift it is important for nonprofits to remain agile and be able to quickly respond to changing needs.
  • Revenue – As economic conditions remain challenging many organizations are facing difficulties generating both earned and donated revenue. According to the survey, 75% of respondents have reported a significant decline in earned revenue against the 3% who have reported an increase. At the same time, 50% have reported a reduction in donations against the 6% that reported an increase. While some organizations are experiencing positive changes, the overwhelming number are seeing an adverse impact.
  • Workforce Issues – Maintaining programming requires the involvement of staff and volunteers. The survey was seeking to determine if there have been disruptions in availability. The survey found that 56% of respondents reported limited staff availability due to disruptions in childcare, while 43% of respondents experienced a reduction in volunteer availability for the same reason. Unfortunately, there is often support needed from staff and volunteers that do not permit them to work remotely further exacerbating the problem.
  • Long Term Instability – The combination of decreasing revenue, the reduced demand for services, and disruption in staff availability makes it very difficult for organizations to maintain a positive financial outlook. It was found that 60% of respondents are currently facing destabilizing conditions that could impact long term viability, while 64% are anticipating this outcome later in the year. This finding highlights the need for immediate funding programs for organizations to help solidify their financial position for the duration of the pandemic. While the Paycheck Protection Program (PPP) and Main Street Lending Program permit nonprofit participation, more options are needed. 

Contact Us

The challenges presented by COVID-19 will require nonprofits to streamline operations and make adjustments that not only reflect current income limitations but seek to bolster their financial position. For this reason, it is important to regularly review short- and long-term plans to make needed adjustments. If you have questions about the information outlined above or need assistance with a financial, tax, or accounting issue, Selden Fox can help. For additional information call us at 630.954.1400 or click here to contact us. We look forward to speaking with you soon.

Robert Wujek

Bob Wujek provides audit and tax services to both non-profit organizations and privately held businesses. His non-profit clients include charitable organizations, private educational institutions, trade associations, and common-interest real estate associations. He also represents the firm within the Association Forum of Chicagoland and the American Society of Association Executives.