COVID’s Tale of Two Nonprofit Worlds: The Haves and the Have Nots
Updated: Jan 4, 2022
Them that's got shall get Them that's not shall lose So the Bible said and it still is news.
- God Bless the Child, by Billie Holliday
Billie Holliday was jazz singer, not a nonprofit consultant, but she may have perfectly captured the impact the pandemic has had on charities in America.
How much damage did COVID-19 do to nonprofits? Early on, the projections were grim. A year ago, 75% of nonprofits said the pandemic negatively impacted fundraising and this past spring an economic analysis predicted that up to a third of nonprofits could be forced out of business within two years. However, Americans dug deep to help charities and giving was up in both 2020 and the first half of 2021.
Unfortunately, not all nonprofits benefited in the same way. The Urban Institute’s annual Nonprofit Trends and Impacts Report is one of the most authoritative looks at the health of charities. It shows that most of those gains in donations went to larger organizations. In fact, nearly half of smaller nonprofits, those with budgets of $100,00 or less, lost revenue last year, while just 15% of larger nonprofits, those with budget of at least $10 million, lost revenue.
The big get bigger. The small struggle to keep up. That has been the trend in most fields, and the nonprofit world is no exception. If anything, the pandemic just sped up a change that has been building for years. Before the pandemic, more donations were going to a smaller pool of nonprofits.
This graphic from the National Council on Nonprofits puts it into perspective. More than 80% of the nonprofits in America raise less than $250,000 per year, which means they struggle. For these organizations, a handful of staff members, or maybe just one dedicated founder, have a hard time finding enough hours in the day to run programs, raise money and generally keep the wheels on the bus.
At the other end of the spectrum, larger organizations can take advantage of economies of scale, on staff expertise and sophisticated approaches to fundraising. We saw that during the pandemic as they shifted strategies to reach donors in new, creative ways. How effective were they? One analysis says the top 100 charities in American increased their fundraising success to the point where they are receiving one out of every 11 dollars donated last year.
If you run a nonprofit that is somewhere in the middle, with annual revenue between $500,000 and $1.5 million, this should concern you. Your donors expect you to deliver big nonprofit services on a small nonprofit’s budget. And if the history of other sectors is any indication, the gap between the haves and have nots will widen. So how do you compete for scarce dollars?
Find your lane
Businesses talk about finding their niche. In the nonprofit world we call that “being mission focused.” It has never been more important to know exactly who you serve, what you provide and how you do that better than anyone else in the world.
Make sure your organization can turn on a dime. Stay on top of the fundraising techniques the big guys are using and find ways to do them on the cheap. Live by the words of pioneering Admiral Grace Hopper: “The most dangerous phrase in the language is ‘we’ve always done it this way.’”
Tell your story!
If you are living up to your mission, you are changing the world, and the story of how you do that is what turns strangers into supporters and supporters into donors. Sometimes you tell your story with data, like the 12 million children in America who may go to bed hungry. More often it is through the real-life impact of your program, like the girl who went to bed with a full belly because of your program. The point is, it has never been more important for nonprofits to share the impact of their work and the urgency of their mission.
The immediate threat of the pandemic is fading, but the lessons it taught us have changed the nonprofit world forever. Success, or even survival, depends on taking those lessons to heart.