How 2020 forced nonprofits to adapt and what that means for 2021

While 2020 tested nonprofits unlike any year in recent memory, the sector has proven to be more resilient than many analysts feared it would be at the beginning of the COVID-19 pandemic. Nonprofits have undoubtedly been under significant strain, but despite research published earlier this year that suggested up to one-third of nonprofits would shut their doors, more recent data reveal that the impact hasn’t been quite so dire. For example, an October Independent Sector report estimated that 7 percent of organizations would close – a startling number, but evidence that the sector is more robust and adaptable than experts predicted six months ago. 

That said, the consequences of COVID-19 will be with us for the foreseeable future, and it’s clear that the nonprofit sector will face no shortage of challenges this year. Here are the top three trends that emerged as a tumultuous and unpredictable year came to an end, and what they mean for 2021.

1. Nonprofits have been adapting. According to a November 30 survey conducted by Nonprofit Quarterly, COVID-19 was by far the most significant force organizations had to contend with last year – 82 percent said the pandemic had affected them a “whole lot” or a “good deal.” However, when NPQ asked organizations if they terminated programs, put them on hold, or innovated and continued to deliver them, 77 percent of respondents selected the third option. While this number dipped to 55 percent for fundraising, it was still by far the highest proportion. To take just one example of this adaptation at work: by the spring, more than 81 percent of organizations were already in the process of digitizing their programs. 

As 2021 gets underway, nonprofits should be working closely with grantors and community stakeholders to develop a plan for fundraising, collaboration, and capacity-building that will guide them through the post-COVID recovery. 

2. Overall donations increased. Considering the immediate negative impact the pandemic and economic contraction had on nonprofit fundraising activities and revenue, it may come as a surprise that charitable giving actually “grew by 7.6 percent during the first nine months of 2020 compared to the same time period in 2019,” according to data from the Association of Fundraising Professionals (AFP) Foundation for Philanthropy. On Giving Tuesday alone, Americans gave $2.47 billion – a 25 percent increase over last year. Beyond the news of massive donations like MacKenzie Scott’s $4.1 billion to 384 organizations across the U.S., there was also an unprecedented surge in funding for nonprofits focused on issues of racial justice and equality. 

Grantors and donors have demonstrated that they’re willing to step up and support nonprofits in a time of crisis, but they’re also increasingly expecting to see evidence that their investments are being put to good use. This is why it’s more important than ever for nonprofits to rigorously track and report their outcomes. 

3. Demand for services has surged. This summer, the Center for Effective Philanthropy published a report which found that 55 percent of nonprofits had experienced an increase in demand for their services – a proportion that increased to 61 percent for organizations that serve historically disadvantaged communities. In the months that followed, this demand only increased for many organizations, despite the fact that two-thirds of volunteers “decreased the amount of time they volunteer or stopped entirely due to the pandemic” (according to a survey conducted by Fidelity Charitable). 

Although many organizations struggled to cope with the spike in demand for their services, it’s clear that donors were paying close attention to the fact that many communities became reliant on the nonprofit sector at a time when government wasn’t delivering the support they needed. But nonprofits can’t take this uptick in donations for granted – they have to refocus their energy on outreach, capacity building, and scaling impact if they want to maintain the momentum going into 2021.