Resilience of Nonprofit Organizations during the COVID-19 Pandemic: A Racial Equity Perspective

Background and Purpose: The COVID-19 pandemic has caused massive upheavals in every aspect of our society. The nonprofit world is no exception. In the face of the unprecedented lockdown, increasing demands, financial uncertainty, and staffing shortage, many nonprofit organizations exhibit adaptive resilience as well as continued commitment and creativity in serving disadvantaged populations and communities. Using the latest national COVID-19 community impact survey data in the US, this study aims to understand the resilience of nonprofit organizations during the pandemic. We look into 1) changes, as a result of the pandemic, in nonprofit organizations’ finances (including individual donations, corporate donations, fee for service, foundation funds and government funds), service demands, service capacity, staffing, and expenses; and 2) factors associated with organizational resilience, in particular factors indicating presence of racial minorities in organizational leadership and target populations.

Methods: The study uses data from the Federal Reserve COVID-19 Survey conducted by the Federal Reserve System and its eight national partners in August 2021. Representatives of nonprofit, government, and business entities across the US were invited to participate in the survey via emails, newsletters and social media posts. A convenience sample finally included 2,561 nonprofit organizations providing a range of direct or indirect services to low-to moderate-income (LMI) communities in areas such as child welfare, food, education, health, housing, etc. We first look into organizational resilience by examining adverse impacts of the COVID-19 pandemic on nonprofits and then explore the association of organizational resilience with leadership (by people-of-color or not), target populations (primarily people of color or not) and organization’s size (indicated by assets) when geographical location (rural vs. urban) and provision of direct service (or not) are controlled for. Linear probability regression analyses were conducted on each dependent variable indicating organizational resilience.

Results: The results reveal several findings: 1) Nonprofits led by people of color were 10% more likely than their counterparts to run into significant decreases in individual donations and corporate donations 5% more likely than their counterparts. A similar pattern is also observed in small organizations as opposed to large organizations. 2) While governments and foundations increased their support for nonprofits during the pandemic, small organizations and those serving people of color were less likely to receive increased support from government. 3) Despite financial turbulences, significant increases in demands for service were 10% more likely to be seen by nonprofits serving communities of color. Moreover, there is no major difference across these groups in perceived decreases in service capacity despite the fact that small nonprofits are more susceptible to the external environment.

Conclusions and Implications: Our findings reveal that inequities in funding exist in the nonprofit world. Yet, small nonprofits, those led by people of color, and those serving communities of color are resilient and often step up to meet challenges arising from the pandemic. To enhance their resilience and close racial disparity gaps, it is important to channel more resources in times of emergencies and crises into small nonprofits with close ties with disadvantaged communities and racial/ethnic populations.