Although the research shows that nonprofits around the nation may still struggle, there’s also hope that nonprofits who can adapt and change, leveraging nonprofit software and unique communication and working methods, will see light at the end of the tunnel.

The Research: Effects on Various Sectors

The global pandemic disproportionately affected multiple sectors within the nonprofit world. Nonprofits that relied upon in-person events, such as tickets to live theater, music performances, and similar events found revenues down as local mandates forced them to close their venues. Other nonprofits, such as animal shelters and humane societies, found themselves welcoming many new faces to their doors as more people spending time at home took the plunge and adopted dogs and cats. Depending on your industry sector, you may be on either side of the spectrum.

Survival to Growth Mode

Some nonprofits hunkered down and went into pure survival mode. With revenues curtailed by restrictions on in-person meetings, they rapidly shifted from fundraising to awareness building. Many arts groups hosted their first virtual events. Faced with numerous challenges, some rose to the occasion with creative solutions.

New York University, for example, could not open their concert hall doors to group performances decided to host intimate "evenings with the artist." The artists live-streamed from their homes, playing their favorite compositions and entertaining questions and answers from the audience. This event proved so popular it went viral, resulting in more people discovering the works of composer and NYU alumni Elenor Bindman and other artists thanks to streaming events and social shares.

Managing Change

Although everyone was affected by the pandemic, now several years later, how they responded is reflected in the recent 2024 State of the Nonprofit Sector Report. According to this report, 71% of survey respondents saw an increase in demand for programs and services.

Key findings from the report show:

• As the economy accelerated from 2023 to 2024, most organizations (50.60%) report being in a better financial position now than they were one year ago.
  
  
• More than half (55.60%) saw their net income increase and less than one-third (30.80%) experienced a decrease. Several respondents attributed a loss of revenue to inflation and delays in government payments.
  
  
• The impact of inflation drove up costs of labor, goods and services, and implementation of programs and services. As expected, salaries and benefits increased for more than 85% of nonprofits as they attempt to keep pace with wages in other sectors. Fees for professional services, e.g., legal, IT, consulting, rose for more than two-thirds (69%) of the respondents. 
  
  
• To minimize the impact of inflation, organizations were forced to make some uncomfortable cuts to programs and services. Nonessential expenses such as travel and education were most likely to be eliminated or scaled back. Organizations turned to volunteers, contract employees, and interns to save money and fill workforce gaps.
  
  
• Many of the positions lost during the pandemic have been filled. But according to a 2023 report by the U.S. Chamber, the overall share of the population participating in the labor force has dropped. There simply are not enough workers to fill job openings.
  
  
• 78.77% of organizations believe digital transformation is very important to enhance processes, improve reporting, and protect their data.

Given these statistics, it's good to note that no matter how rough it was during the initial days of the pandemic, nonprofit leaders remain optimistic about their finances. Part of this is likely due to the organizations that responded to increasing challenges with fresh ideas. But another part of this optimism may be found in the smart handling of nonprofit finances and the use of nonprofit accounting software to actively manage budgets and make smart choices about budget cuts during an uncertain time.

Yet through it all, nonprofits are surviving and thriving, and many are ready to return to serving constituents as best as they can within whatever confines their local health authorities are requesting.

Preparing for Growth: Where to Find Funds

Among those organizations that experienced growth during the pandemic, many sought to manage their budgets through a combination of cutbacks and new funding sources.

Grants
Many organizations renewed their focus and efforts on grant funding sources. Investing in grant management software, seeking new and specific community and local grants, and providing extensive fact-based reports to granting organizations is an important way to increase funds with non-service or program-related funds.

Donations
Americans have always been a generous people, and many responded to the calls for help from humanitarian organizations by donating early and often. Citizens recognized the needs within their local community for everything from financial relief to supplemental nutrition and donated whatever they could afford to human services organizations. Donations didn’t dry up during the pandemic; in some sectors, they increased. Organizations may wish to reinvigorate donor campaigns, especially as people have adjusted to the new economy and found their pace working from home, back at the office, or in a hybrid model.

New Concepts
Some nonprofits remain optimistic that things can only get better. After all, with readily available vaccines, increased flexibility in the work environment, and people getting used to many events moving to a virtual environment, things are improving.

Others areas we have mentioned adopted new strategies to program delivery such as online course delivery (education), telemedicine (health), streaming theater and concerts (the arts), and more.

Not every sector can adapt its delivery services, but for those who can, there's room for growth. It takes a period of adjustment, monitoring, and acceptance, but it can be done, as we've seen from those nonprofits who remain viable and financially healthy during uncertain times.

Uncertainties Remain

Yet even with this level of optimism, there remain major concerns.

A big uncertainty is the availability of labor. Nonprofits are no exception. Those who relied upon volunteer labor find themselves searching for help as many have decided not to risk in-person exposure for volunteer work. Others simply cannot find qualified candidates for open positions and feel they can’t expand or grow until that gap is closed.

Nonprofit Accounting with AccuFund Prepares You for Growth

Like you, we hope – and truly believe – that the worst is potentially behind us. For the arts sector, even limited reopening for in-person gatherings is great news. For all sectors, focusing on what is within your control, rather than focusing on what’s not, is the best way to boost optimism and form a strong plan for growth.

Nonprofit accounting software such as AccuFund supports growth by providing you with the tools you need to review your financial data quickly and easily. Up-to-date reports offer facts that can be used to base timely decisions on budget issues, program revenues, grant status, and much more.

Learn more about AccuFund and how it can help your nonprofit weather the changes brought about by the pandemic and prepare for growth.

Sources:
Forvis & Mazars, 2024 State of the Nonprofit Sector Report

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