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Jul 06

For nonprofits, moving forward requires looking back

By Sponsor Insight

Research reveals top concerns among nonprofits as they work on recovering from pandemic

by Leslie Wells, assistant director of communications, Paul H. O’Neill School of Public and Environmental Affairs at IUPUI

New research on COVID-19’s impact on the nonprofit sector finds that organization leaders who want to find a way forward must first look back at how they have weathered the pandemic thus far. While the past 15 months have been a challenge for every sector, associate professor/researcher Marlene Walk is optimistic about the future of nonprofits.

“It’s very interesting how nonprofits rose to the challenge while still serving those in need,” says Walk, who teaches at the Paul H. O’Neill School of Public and Environmental at IUPUI. “For many smaller nonprofits, this was a survival situation for both their clients and them as well.”

After analyzing data and examining trends, Walk has three pieces of advice for nonprofits as they navigate the return to work and the future of their organizations:

  • Ask employees for their opinions, including about remote work and whether it can/should continue.
  • Determine which organizational practices can be improved upon.
  • Evaluate which new technologies adopted during the pandemic should be institutionalized.

Walk and O’Neill student Abby Klippel recently worked with Mandi Stewart, an associate professor at North Carolina State University, and Kerry Kuenzi, assistant professor at the University of Wisconsin-Green Bay, to analyze 77 COVID-19 impact reports collected through the National Council of Nonprofits. These reports detail how nonprofits have operated since March 2020. The data analysis covers more than 23,000 nonprofit organizations across 43 states.

The team released its updated report on May 5, 2021, focusing on three areas of impact: financial indicators, human resources and employees, and the most common COVID-19 concerns.

Survey results: Common COVID-19 concerns

Organizations in 13 states answered questions about their most pressing issues. Among them, finances were the most common COVID-19-related worry for organizations in nine of those states.

Nonprofits in eight other states ranked “struggling with how to safely offer services during a global pandemic” as their top concern.

Lastly, nonprofits in six states were primarily worried about their own organization’s human resource considerations, including their employees’ job status, salaries, and overall well-being.

The human toll

That third area is Walk’s primary research focus — the employee side of the equation.

Previous studies from Johns Hopkins University showed the nonprofit sector lost about 13% of its workforce from March 2020 to February 2021.

“That mirrors what we see in our research,” Walk says. “It will take years for that workforce to recover that number of lost workers.”

She says while large organizations will likely be fine, how smaller organizations handled the pandemic will have a big impact on their future.

“We’re really interested in the employee perspective,” Walk explains. “How do they perceive their organization’s changes? If a nonprofit laid off 20% of its workforce, how does that impact those who are still there?”

Their research found that many nonprofit workers saw their hours reduced, their pay cut, and, in some cases, their jobs put on hold or eliminated. Much like in other sectors, many also saw a shift to predominately remote work.

“These organizations need to look at what worked well from an employee perspective, not just a financial perspective,” Walk says. “Our fear is that employees may feel this pandemic was such a critical incident, and that their employer didn’t handle it well, that they will choose to leave.”

Another report Walk is working on, due out later this year, seems to also show the other side of the spectrum.

“Our initial research is showing that some employees have doubled down on their commitment to the nonprofit sector,” she says. “It really depends on how they were personally affected by COVID and how they think their organization handled it. Was their psychological contract, those unwritten expectations of their organization, violated? That has a big impact.”

Financial stressors

When it came to the financial impact of COVID-19, Walk admits the team wasn’t surprised by the findings. Many organizations reported individual donations and membership fees were down. In fact, 90% of responding organizations in Nevada saw individual donations plummet and 68% of nonprofits in Texas saw a decline in earned income.

Grant revenues were down as well. Nearly 35% of respondents in Texas reported a delay in grant processing, which can affect cash flow. About 16% of those in Connecticut saw a reduction in state grant funds.

But one of the hardest hit areas were arts-related nonprofits.

“It’s important to keep in mind that nonprofits are really diverse,” Walk says. “How an organization was impacted really depends on what types of nonprofits we’re looking at. The arts sector was hit very hard because they often have outward-facing events as a main source of revenue. Having concerts virtually is just not the same.”

In fact, 90% of West Virginia’s responding nonprofits reported cancelling events due to pandemic precautions, while the same was true of 25% of nonprofits in Alabama and Georgia. Reports like these indicate that the arts sector is the slowest sector to recover, with studies projecting it will take at least 18 months for it to bounce back.

Walk stresses that it’s important to focus on more than earned income, though. She uses social services as an example of organizations that were hit from both sides.

“Social service organizations had to adjust to drops in volunteers, increases in demand and expenses to provide for clients, and shifts in procedures due to distancing and cleaning requirements,” she explains.

Respondents in Missouri indicated an average expense increase of $302,417 per nonprofit during the study period, while Pennsylvania respondents indicated a total estimated $95.3 million in additional operating costs.

Looking ahead

Between the numbers, Walk sees signs of hope and further proof that the nonprofit sector is resilient and capable of adapting to change.

She points to the increase in collaboration, resource sharing and partnership development during the pandemic that helped nonprofits survive and serve their clients. Some smaller nonprofits even added health care to their employment packages, which would be a positive trend — if it sticks around.

“There will be collateral damage, unfortunately, but I tend to be more positive than negative,” Walk admits. “I think the sector as a whole will recover and continue its mission to serve.”

To read the full article and access the data tables, visit States of COVID-19: Synthesis of State-level Nonprofit Reports on the Impact of the COVID-19 Pandemic.

Jul 24

The need for more basic philanthropy research

By Sponsor Insight

By Amir Pasic, Eugene R. Tempel Dean, Indiana University Lilly Family School of Philanthropy

Judging by the proliferation of research-inspired ventures, it may seem we’re in a golden age of philanthropic knowledge creation. But we are not focusing enough of our efforts on basic research.

Given the urgency of finding better ways to solve pressing social issues, it’s not surprising that the vast majority of research generated is applied research. Both the standard ways of doing philanthropy and the paradigm-bending (and busting) efforts to transform and disrupt conventional approaches come armed with research findings on what works, where there are strategic gaps in expectations and how some interventions are more effective than others.

This data-driven search for solutions is awesome and inspiring. Our current philanthropic research ecosystem is highly fragmented. Its inhabitants often belong to a variety of industries or professions whose connection to philanthropy is contingent on other interests and commitments. And today’s growing expectations of philanthropy are only likely to increase because of current political winds, and because total annual giving at $390 billion does not seem small compared to the nonmilitary portion of federal discretionary spending: $518 billion a year.

However, basic research also is needed to give more coherence to this burgeoning applied research engagement, and to give it a better chance at driving innovation. Shared fundamental questions unite applied and basic research. We just need to devote patience to pursuing basic questions, such as why do humans give? How does giving affect our social life? And how is giving connected to exchange relations in the market and to the power relations of authority?

A classic case for the value of basic research, The Usefulness of Useless Knowledge, was reissued this year by Princeton University Press. Written by the man who brought Albert Einstein to America, it argues that both deeper understanding and technological progress are best facilitated not by seeking immediately applicable solutions, but through “the unobstructed pursuit of useless knowledge.”

Such “useless knowledge” now resides in every smartphone built from “basic” discoveries that in their time did not have ready uses, ranging from electricity to relativity to quantum mechanics. In the social sciences and humanities, basic research leads to novel designs for our social institutions (think of social security and public health) and to the ways we form and express our identities and find meaning.

Alarm also is being raised about declining government investment in basic research, including by the president of MIT and the head of the Institute for Advanced Study, Einstein’s academic home. Realistically, philanthropy will fund only a small portion of flagging government support for basic science research. But even a campaign to fund basic science through philanthropy would benefit from better fundamental understanding of philanthropy.

We’re likely to see many more efforts to tap into philanthropy or to regulate the flow of financial resources into it. The decisions made would be improved by better understanding of what “it” is. Is philanthropy a tax dodge, the outsourcing of government, an agent of pluralism, or is it its own thing that reflects a fundamental feature of the human condition? It can be all of these things, but the last point merits more attention.

We often hear suggestions that the private sector or the government would do philanthropy’s work better. One can make that argument, but it is one that seeks not to improve or understand philanthropy, but to substitute it for something else.

This suggests that basic research on philanthropy is not going to succeed by walling it off from other disciplines and ways of approaching human nature and social interaction. But at the same time, if there is a basic puzzle to investigate that focuses on the how and why of human generosity, we cannot simply follow the practitioners and thinkers who consider philanthropy an offshoot of market behavior or authority relations that can be managed and understood better by using only these more established lenses.

There is a surge of applied research activity to draw upon.

Every association or forum for discussing the effectiveness of philanthropy is bringing its own research to the table. Just glance at the work of our established infrastructure organizations such as GuideStar, the Foundation Center, the Center for Effective Philanthropy and Independent Sector, not to mention the consultancies that advise foundations on big bets or generate interpretive strategic templates such as “collective impact.” They are generating ever more sophisticated and useful syntheses, deep dives, case studies, data tools and research reports.

The Gates-funded “Giving By All” initiative is fostering a range of applied research on interventions that might facilitate more donations by the public at large.

Even following the Stanford Social Innovation Review only begins to reveal the expanding universe of applied research and experimentation.

Our field is replete with excellent associations and consultants who serve as the McKinseys and Bains of the philanthropic world.

However, we are not so blessed with the equivalent of the multitude of excellent business schools in the world of commerce that build knowledge and allow us to discern among the flurry of urgent insights by providing rigor and the perspective of broader and longer context.

In the academic world, we have simply not kept up with the pace of innovation and experimentation that is being driven by research-savvy practitioners. We have not done an adequate job of building the connective sinews, as basic and applied research do not progress in isolation. They benefit from cross-pollination and creative tension between curiosity driven basic questions and applied discoveries.

As the first school of philanthropy, we have a role to play in pursuing the basic questions and engaging them with the repertoire of fundamental data generation and applied work for which we are already known.

But we are not alone. For example, The Human Generosity Lab is “the first large-scale transdisciplinary research project to investigate the interrelationship between biological and cultural influences on human generosity.”

And more broadly, there has been dramatic growth in the number of academic programs that teach about philanthropy. These are mostly found in schools of public affairs and public policy, where “nonprofit management” is a growing line of instructional business. But here too, more connective tissue needs to be grown to connect data-driven innovators on the one hand and scholars outside the professional school domain on the other.

Our understanding of philanthropy and our quest to make it more effective will benefit from embracing curiosity-driven research that seeks to understand what ties our disparate concerns together in the pursuit of basic questions about human generosity.

Amir Pasic, Ph.D., is the Eugene R. Tempel Dean of the Indiana University Lilly Family School of Philanthropy since 2015. Prior to joining IU Lilly Family School of Philanthropy, Dean Pasic was vice president of international operations at the Council for Advancement and Support of Education (CASE). Previously, he was associate dean for development and strategic planning at Johns Hopkins University School of Advanced International Studies (SAIS) and the executive director of the Foreign Policy Institute.