PANDEMIC CAUSES FINANCIAL DISTRESS FOR 33.3% OF U.S. NONPROFITS

More than one-third of US nonprofits are in jeopardy of closing within two years because of the financial harm inflicted by the viral pandemic, according to a study released by the philanthropy research group Candid and the Center for Disaster Philanthropy, Glenn Gamboa reported for the Associated Press (AP).

The study’s findings underscore the perils for nonprofits and charities whose financial needs have escalated over the past year, well above the donations that most have received from individuals and foundations.

The researchers analyzed how roughly 300,000 nonprofits would fare under 20 scenarios of varying severity. The worst-case scenario led to the closings of 38% of the nonprofits. Even the scenarios seen as more realistic resulted in closures well into double-digit percentages.

The perils that nonprofits face are similar to the economic damage from the pandemic that forced so many restaurants to either close or operate at deep losses over the past year. An estimated 110,000 restaurants — roughly one in six — closed in 2020 and, according to the National Restaurant Association, the pandemic could force 500,000 more to shut down.

Officials of Candid, which includes the philanthropic information resources GuideStar and Foundation Center, and the Center for Disaster Philanthropy, which analyzes charitable giving during crises, said the direst scenarios could be avoided if donations were to increase substantially — from the government as well as from private contributors.

“If you are a donor who cares about an organization that is rooted in place and relies on revenue from in-person services, now is the time probably to give more,” said Jacob Harold, Candid’s executive vice president.

Among the most vulnerable nonprofits, the study said, are those involved in arts and entertainment, which depend on ticket sales for most of their revenue, cannot significantly reduce their expenses and don’t typically hold much cash.

Other studies have concluded that smaller arts and culture groups, in particular, are at serious risk. Californians for the Arts, for example, surveyed arts and culture nonprofits in the state and found that about 64% had shrunk their workforces. Roughly 25% of them had slashed 90% or more of their staffs.

And a report last week from New York State Comptroller Thomas P. DiNapoli found that employment in New York City’s arts, entertainment and recreation sector tumbled 66% during 2020.

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