Nonprofits In a Pandemic:

Scenarios and Impact for What's Next

Published September 2020

 

In July the Monitor Institute, a team within Deloitte LLP that works with social impact-focused organizations and their leaders, published a report entitled An Event or an Era: Resources for Social Sector Decision Making in the Context of COVID-19.  This report is based on the Institute’s interviews with 75 nonprofit leaders, foundation executives, and social sector experts that began in April of 2020.  

The report discusses how the global pandemic is intersecting with the current activism for social justice, that has emerged in a similar time frame.  It also emphasizes how the economic crisis resulting from the pandemic has put social service organizations on a tenuous financial footing, while demand for their services is skyrocketing.

The report considers the uncertainties of the current moment, reckons with the new “truths” emerging from the pandemic, and explores several possible scenarios that may develop over the next 12-18 months.  The report emphasizes that these scenarios are not inevitable but reflect not what will happen, but what could happen over this time frame.

The chief operating assumptions of the report are:

  • The pandemic will intersect with and compound with other ongoing societal trends.

  • The need for nonprofit services will dwarf both capacity and resources; and

  • A significant number of nonprofits will be forced to close.

  • The impact will fall disproportionately on communities of color and other marginalized populations.

  • Differences in outbreak rates and reopening strategies will cause varying levels of crisis and needs across geography and time. 

The report cites the following as still uncertain: 

  • The length and severity of the pandemic

  • The length and severity of the economic downturn

  • The government’s response and the strength of the public social safety net

  • The impact of technology on operating models

  • The level of social cooperation across communities

The principal analytical tool used in the report is a quadrant analysis where the relevant axes are the severity of the impact of the crisis (x-axis) and the level of social cooperation in response to the crisis (y-axis).  Based on this analysis, the authors arrived at 4 possible scenarios going forward: 

  • A rapid return to a similar but somewhat changed normalcy (assuming low impact from the crisis and high social cooperation). 

  • An unraveling of the nation’s social fabric (assuming low impact but also low cooperation). 

  • A nation on the brink of shattering (assuming high impact and low cooperation). 

  • A nation rising from the ashes of the crisis (assuming high impact but also high cooperation).

The Report's Sector Future Predictions

  • Return to “Normal” Scenario:

    • Philanthropy Impact

      • Funders face strong pressure from nonprofits to continue less restrictive grant making processes as boards begin to ask, "Was our COVID-19 response effective?

      • Funders that didn't immediately adjust their strategy in response to the crisis may have even more “dry powder” available to push for reform on the issues they care about.

    • Nonprofit Impact

      • As the crisis lessons over time, the level of community need and funding available begins to normalize, though not all organizations make it through.

      • Relationships and power dynamics with funders improve.

        • Nonprofits also improve relationships with the government to deliver services and share reforms.

    • Equity Impact

      • Racial disparities around the virus and economic recovery linger.

        • For some, the racial justice protests triggered by long-standing inequalities are a tipping point that lead to an increased focus and drive for change.

        • Others are eager to put the troubles of 2020 behind them and look to better days ahead. 

  • Social Fabric Unraveled Scenario:

    • Philanthropy Impact

      • As societal divisions and gaps in government programs grow, funders must decided how to respond. 

        • Should they fill the gaps? Which ones? 

        • Should they more fully check their values and commit to an ideological point of view?

        • Should they maintain the "sensible center" to ease growing tensions? 

    • Nonprofit Impact

      • Nonprofits, who are still recovering from the pandemic, experience increased pressure and demand as society turns to them to fill gaps as trust in government erodes.

      • The funder-grantee power imbalance grows as many grapple with how to appeal to funders' changing strategies. ​

    • Equity Impact

      • Even under a best-case ​recovery, marginalized communities and proximate organizations serving them suffer disproportionately.

      • With social cooperation, tensions around racial, ideological, and socioeconomic issues are exacerbated, resulting in deeper divides. 

  • A Nation on the Brink Scenario:

    • Philanthropy Impact

      • Failing state and local governments look to philanthropy for bailouts.

      • Faced with gross injustices, public sector demands, and a contracting nonprofit sector, funders are in uncharted waters. 

        • Some retrench, while others spend down entirely.

    • Nonprofit Impact 

      • The sector contracts significantly due to retrenchment from donors a plummeting economy.

      • Nonprofits must decide how to allocate the little they have.

      • Boards and staff are divided and see community need differently based on their degree of proximity.

      • Trust erodes between funders and nonprofits. 

    • Equity Impact

      • The unequal effects of the virus and economic recession are described as atrocities.

        • Anger at this injustice is felt by many, but their cries largely go unanswered as those in power choose to divert resources away to other, more mainstream effort.

  • Rising from the Ashes Scenario: 

    • Philanthropy Impact

      • Philanthropy is looked to as a key funder of policy and system-level change.

      • The needs and opportunities are enormous, but a stagnant economy adds pressure to focus financial resources on the spaces where they can make the most significant difference. 

    • Nonprofit Impact

      • In a world of financial scarcity, nonprofits develop new approaches and innovations that support communities in creating structural change. 

      • Organizations adopt lean operating models and empower community members to direct resources, make decisions, and shape strategy. 

    • Equity Impact

      • Black, Native American, and Latinx communities, as well as immigrants, front line workers, and others, have a growing voice as the disproportionate impacts from the virus shine a clear light on inequity in our systems.

      • As the country comes together, there is a real opportunity to center these voices in designing what comes next.  

The analysis concludes with several suggestions on how nonprofit leaders can test the preparedness of their own organization to face these scenarios and how leaders can also utilize the scenarios to make a 12-18 month plan to respond to the crisis. 

Key takeaways for the social sector include: 

  • Multiple, compounding crises are resulting in devastating blows to American communities (especially communities of color) - but also a potential opening to drive forward fundamental change.

  • Nonprofits and funders will live in the same context but experience it in very different ways.

  • The role of the social sector will be significantly determined by how federal, state, and local governments are able to respond to the crisis.

  • How private funders respond to potential significant nonprofit contraction will matter.

  • Many organizations will be torn between investing in high-risk, high-reward opportunities for systems change and a desire for a return to normalcy.

Click here to read "An event or an era? Resources for social sector decision-making in the context of COVID-19" by Deloitte's Monitoring Institute.

Please support the Executive Service Corps (ESC).

ESC's professional education, training, resources, and tools are all possible thanks to the generosity of people like you. Please help us continue our work.

www.SupportESC.org

Please Support ESC's Community Building Work

© 2020 Executive Service Corps (ESC) | 207 E. Ohio St., # 212, Chicago, IL 60611 | ESC is here to help through COVID-19