Some 10 to 40 percent of nonprofits could consolidate or close their doors during the next 12 to 18 months as the need for nonprofit services dwarfs available capacity and resources, according to authors of a new report.
The 25-page report, “An event or an era? Resources for social service decision-making in the context of COVID-19,” outlines scenario planning by Deloitte’s Monitor Institute. The impact from the crisis will fall disproportionately on community-based organizations that serve people of color and other marginalized groups, which typically have less access to capital and thus, at greater risk for insolvency. Scenarios in the report vary based on levels of the continued severity of the crisis and level of social cooperation and its impact on the social sector.
“It’s worth noting that even the most optimistic futures painted here present difficult challenges and significant threats. There isn’t one best scenario that you’ll read -- most will involve glints of progress combined with varying degrees of negative consequences stemming from the virus, the economy, and widespread inequities,” the authors wrote.
Nonprofits that rely on earned income, government contracts, and fees for service are likely to be among the hardest hit. Meanwhile, organizations in the arts, education and other sectors that don’t lend themselves to remote service delivery might be particularly vulnerable, as many must fundamentally re-imagine their program and financial models.
The report notes that institutional funders, with existing endowments and donors, will often be the last backstop for many nonprofits, putting funders in the position of picking “winners” and “losers.” That might exacerbate already pronounced power imbalances between funders and nonprofits.
The Monitor Institute is the social impact unit of the global professional services organization, Deloitte. It launched a national effort with pro bono investment from Deloitte Consulting LLP to apply scenario planning to help funders and nonprofits “get on their front foot” in preparing for the post-COVID-19 landscape. For two months starting in April, the Monitor Institute began a dialogue with a diverse group of more than 75 nonprofit leaders, foundation executives, and social service experts to understand what they were seeing and experiencing, and what they anticipate might come in the future.