{ Accounting & Auditing | Nonprofit accounting }
COVID-19 and Nonprofits Big changes — and big differences between grant- and contribution-funded organizations
N By Denes Tobie, CPA
umerous factors (both internal and external) can affect the success of nonprofits’ fundraising and recruitment efforts, but the effects of the COVID-19 pandemic on these organizations — as in nearly every sector and industry — have often been more far-reaching than anything we’ve seen before.
In a recent Wipfli LLP survey of nonprofits , three primary concerns emerged: employee burnout, fundraising and recruitment. As nonprofits navigated the early months of the pandemic, many found themselves facing the challenge of keeping staff and volunteers safe as they provided essential services. Fundraising naturally became a challenge, as communities faced a unique level of need. Yet these effects were not felt equally across nonprofits. Grant-funded clients (GFP) for the most part remained open throughout 2020. Many received stimulus funding — sometimes in the millions of dollars. For those groups, careful documentation of how they are spending this money will be a top concern. This is especially true for those who have not yet (or only recently) received the funds and now must determine how to spend that money while staying within the confines of the grants’ parameters. These GFP organizations were able to continue serving their communities, thanks in large part to that funding. Their core staff continued working to provide essential services — many times in response to exacerbated community need. These workers might now be facing increased burnout.
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In contrast, many community-based nonprofits, most of whom are contribution funded, were required to close their doors for indefinite periods. Their primary means of fundraising — local in-person events — was shuttered. For these organizations, the pandemic made it impossible to conduct business as usual for staff and visitors as well as those they served. One silver lining was the unexpected success of virtual fundraising drives, many of which exceeded previous years’ efforts. Any community-based groups that received pandemic funding will also need to focus on staying on the right side of any regulatory demands — which might be an even bigger challenge for organizations unused to managing the ins and outs of government funding. For almost all nonprofits, the pandemic magnified — albeit in different ways — internal challenges and opportunities for improvement. The need to conduct virtual fundraising events,
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