An Era of Disruption: How Can Nonprofits Recover from the Effects of COVID-19?
Written by: Aidan Wood
COVID-19 has forced the non-profit sector, and more generally, the world economy into a dire state. Many non-profits have been forced to make tough choices. Some choose to make cuts to operations, sometimes letting go of people who’ve dedicated their lives to their organization’s cause. Some have decided to try and hold on to their employees in the face of risking their organization. Some aren’t even fortunate enough to make that decision and have forced to close entirely. This article by the CBC outlines explicitly a few of the problems the sector is facing. But what can be done for those nonprofits that are still afloat? How can they survive the pandemic?
At 180 Degrees Consulting Waterloo, we’ve been working closely with nonprofits from around the world to try to figure out just that, how to keep these phenomenal organizations alive. Here are a few of the things we’ve learned along the way.
Merge With Similar Organizations:
In any given community, there can be multiple nonprofit organizations focused on the same or similar missions. This is a problem consistent across Canada. COVID-19 has forced organizations into a tough spot financially but also operationally. At 180 Degrees Consulting Waterloo, we’ve had many discussions with Directors whose organizations are still operating but operating at capacities beyond their maximum. Many have had to make cuts to their team, forcing those who are still working to take on the workload of those who’ve left, in addition to the work they were previously responsible for.
Merging with similar nonprofits may help solve these two critical issues while ensuring that you can continue to deliver on your mission. By merging, you’ll be able to combine the financial assets of your organizations and merge the client and donor bases of the individual organizations. Likely, you’ll also be able to merge your operations and distribute the workload across more people.
Now, a merger is never as simple as adding 1 and 1. By no means can I assure you that it will solve both problems. However, in times like this, it’s essential to consider all possible opportunities.
Diversify Sources of Funding:
We’ve found that previously, many nonprofits were relying on what had historically been a single stable source of revenue. Often, these single sources make up more than 60% of an organization’s revenue stream. A typical example of these was large government grants. However, sometimes they were a legacy donor or corporate sponsorship. As a result of COVID-19, many nonprofits saw these revenue sources be cut entirely or shrunk by significant amounts.
We typically look at the three main types of donors as government, corporate, and individual. Government opportunities consist of grants or funds provided by the municipal, provincial, or federal government. Corporate sponsorships are donations made to your organization by larger, mission-aligned for-profit corporations. Individual donors are the people in your community or network willing to contribute to your cause financially.
Nonprofit organizations need to have a balanced fundraising strategy that encompasses all three of those financial avenues and doesn’t rely too heavily on a single donor category.
If you are interested in learning more about nonprofit business models, I highly recommend reading the article. It offers some keen insights into the struggles that nonprofits in Canada face.