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COVID-19 Report: Disrupted by pandemic, Arizona nonprofits challenged to serve their communities; one in five nonprofits "very unlikely" to meet payroll this spring
New report from the ASU Lodestar Center details the dramatic impacts of COVID-19 on the Arizona nonprofit sector
May 4, 2020 (Phoenix, Ariz.) - As unemployment soars and Arizonans cope with the ongoing impacts of the COVID-19 pandemic, many nonprofit organizations, from food pantries to shelter services, are needed more than ever. But those same organizations are struggling with disruptions of their own as donations decline and volunteers stay home. Other categories of nonprofits, including education, environment, and arts and culture, have seen their operations severely reduced or halted, with a real risk of organizations closing entirely.
ASU’s Lodestar Center for Philanthropy and Nonprofit Innovation surveyed the Arizona nonprofit community to see the extent of the disruption caused by the pandemic. The results from 449 responding organizations are grim.
- Nearly 80% of Arizona nonprofits reported a reduction in their normal services.
- 11% of organizations are not operating at all.
- Almost 40% of all arts and culture nonprofits are not currently operating.
- Just under 20% of nonprofits say they won't meet payroll in eight weeks.
- Only 5% of nonprofits say they are operating normally.
The new report highlights the dramatic impacts of the pandemic on Arizona's fifth largest non-government employer - one in 16 employees works for a nonprofit, representing $8.3 billion in annual wages.
“Arizona’s nonprofits are a vital part of the economic and social fabric of our state, and citizens everywhere rely on these organizations for everything from emergency services to cultural enrichment,” said Dr. Robert Ashcraft, executive director of ASU’s Lodestar Center for Philanthropy and Nonprofit Innovation and Saguaro Professor of Civic Enterprise. “While citizens across the state have been disrupted as a result of the COVID-19 pandemic, the nonprofit sector too is facing challenges. Leaders from business, government and philanthropy can learn from what this report reveals as they seek strategies to assure community well-being.”
Key insights from the report include:
- Many Arizona nonprofits are challenged to meet their missions given disruption in service delivery. More than 40% of nonprofits say it is unlikely they will be able to provide services within the next four weeks, and 78% of organizations reported a reduction in normal services.
- There is an uneven effect on the sector, with demand for some nonprofit services increasing (e.g. human services) while demand for other nonprofit activities are in abeyance (e.g. performing arts). Nearly 40% of arts and culture nonprofits are not currently operating.
- At the same time that many nonprofits are coping with revenue shortfalls, organizations are also concerned that the pandemic will negatively impact individual giving of both time (volunteerism) and money (charitable giving), further disrupting their ability to deliver services and programs.
- Due to soaring unemployment and volatile financial markets, nonprofits will lose donations from personal income at the same time that demand for many services is spiking.
- The decline in revenue from canceled fundraising events, the closing of fee-based programs and other disruptions have caused concerns about developing sustainable economic models. Nearly 20% of nonprofits are “very unlikely” to meet payroll in eight weeks.
- The well-being of staff is a concern as nonprofits determine how to develop and retain their teams, especially for those expecting difficulty in making payroll within the coming weeks.
Infographic by Alex Davis/ASU