You are currently viewing It’s been three years since COVID-19 hit. How have nonprofit finances changed?

It’s been three years since COVID-19 hit. How have nonprofit finances changed?

Reduced Funding

One of the most significant challenges nonprofits have faced since the pandemic started is reduced funding. Many donors have had to cut back on their giving due to economic uncertainty and record-high inflation, and events that nonprofits rely on for fundraising have been canceled or postponed.

Many nonprofits have also reduced their programs and services due to funding constraints. This has had a significant impact on vulnerable communities that rely on these services (i.e., the homeless, the elderly, and low-income families).

Nonprofits have had to find new ways to fund and adjust their operations. Some have shifted to online fundraising, while others have focused on grant applications. As a result, the competition for grants has become more intense, with more nonprofits vying for a limited pool of funds. 

Increased Demand for Services

The pandemic led to an increase in demand for nonprofit services. As businesses closed, people lost their jobs, and the economy stagnated, more people turned to nonprofits for assistance.

Food banks, homeless shelters, and mental health services have been overwhelmed by the surge in demand. Nonprofits have had to find ways to meet this demand while also maintaining social distancing and other safety measures. The increased demand for services has also put financial pressure on nonprofits to cover the costs of providing additional services and support to those in need. 

Now that pandemic-era safety measures have relaxed, the challenge to bounce back in the wake of high demand and low resources is acute amid the current state of inflation. Nonprofits are fully in recovery mode again now that restrictions are lifted and they are offering in-person events and services again. But the challenge will be maintaining that momentum with increased costs of doing business, operating, and retaining talent.

Volunteers and Digital Transformation

The pandemic caused nonprofits to lose several thousands of volunteers due to the lockdowns and social distancing measures in place. It also forced many nonprofits to take on remote work and digital transformation strategies. This has been a significant change for many organizations, with some still struggling to adapt given the nature of their intense social work.

However, remote work and digital transformation have also presented opportunities for nonprofits to reach a wider audience and engage with donors and supporters in new ways. Nonprofits have been able to organize virtual events, webinars, and online campaigns to raise awareness and generate funds for their causes.

The shift to remote work has also enabled some nonprofits to reduce overhead costs, such as rent and utilities, which has helped to mitigate some of the financial challenges they’ve faced. But most nonprofits function in a social nature that values on-the-ground volunteer involvement. 

Global Fund for Children conducted a global survey among its partners, and found that while 65% of respondents said that staff had shifted to working virtually,  access to technology and stable internet connection remained a challenge. 

So the challenge of recruiting volunteers back into the fold (many completely disengaged during the pandemic) will persist as nonprofits find ways to make the return worthwhile. This will come down to adequate funding. This will also require managing that funding well in order to improve services, empower volunteers and staff with the best possible resources available, and possibly rebrand your cause.

Long-Term Sustainability

Nonprofits that had to adapt to a new reality in the wake of the pandemic are now focused on long-term sustainability on the other side. This includes initiatives to find new ways of funding operations, reducing costs, and delivering services more effectively.

Some nonprofits have explored new revenue streams, such as social enterprise or fee-for-service models. Others have focused on building partnerships with other organizations to share resources and deliver services more effectively.

However, achieving long-term sustainability requires a significant shift in mindset and a pivot in strategy when it comes to financial management practices, and many nonprofits are still struggling to find a way forward.

The Future of Nonprofits

The pandemic has created a new reality for nonprofits — one that is likely to persist for some time. The sector will need to continue to adapt, finding new ways to fund their operations, deliver services, and engage with donors and supporters anew.

Nonprofits will also need to be more agile to respond to future crises or challenges. This means building stronger partnerships, investing in technology and digital transformation, and a more strategic approach to financial management in nonprofits.

Overall, the pandemic has highlighted the critical role nonprofits play in our communities and the challenges they face. It has also shown the resilience and adaptability of the sector, which persists now that the dust has settled and the real work of recovery continues.

Steps you can consider:

  • Adopt a flexible mindset, and openly discuss metrics or other indicators to adapt your practices and finances.
  • Listen to the concerns of both your partners and your volunteers.
  • If you are established and have enterprise risk management processes in place, revisit and update them.
  • Take inventory of your resources and in-house skills. How can you enlist technology or remote resources to make the most of your budget, and help your nonprofit deliver the highest standard of service you can give? 

How Temple can help

Have you considered how your nonprofit can adapt its financial operations to meet the challenges of our post-pandemic world? 

A virtual accountant who specializes in nonprofit finances could be one of those steps forward for your organization.

Temple Management consists of industry professionals whose virtual bookkeeping and nonprofit accounting services help nonprofits prepare annual filing, audits, establishing financial best practices, and more. Temple‘s team of Certified Public Accountants (CPA)s and Accountants can help you define your financial needs and, do the legwork of managing your fund accounting. 

In a post-pandemic world, there is a very real and personal need for your nonprofit more than ever. Don’t let decoding your finances get in the way. Let us help you leverage virtual service where it counts, so you can focus on your most important work — the people you serve. 

Reach out to our team virtually here, or give us a call at 770-892-2087.


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