While many nonprofits have floundered during the COVID-19 crisis, a new report highlights some of the qualities that have helped organizations thrive despite these difficult times.
While some associations have struggled to survive due to the COVID-19 pandemic, others have managed to thrive, pivoting their resources to meet member needs. A new report from BDO, Nonprofit Standards: A Benchmarking Survey, includes a section on what has helped nonprofits thrive during the pandemic.
“Organizations that are unable to adapt to the current environment and prepare for the next crisis risk having to close their doors and abandon their mission, while those that can stay resilient in the face of uncertainty will be able to forge ahead into our collective ‘new normal,’” the report said.
The report divided organizations into three categories: thriving, sustaining, and struggling. It found “thrivers” had several things in common: having six months in reserves, spending 80 percent of expenditures on program-related activities, and investing in new technology.
Andrea Wilson, BDO’s Nonprofit & Education Advisory Services leader, discussed what associations can learn from the report about being thrivers in today’s uncertain times.
“I think that one of the big factors of the thrivers is the financial reserves,” Wilson said. “Fifty-eight percent of thrivers had over six months of reserves. The reserve factor is a significant indicator on whether organizations can go on and thrive.”
But reserves are an either-or prospect. Either an organization had them prior to the pandemic, or it didn’t. For organizations that didn’t have the cushion of reserves, it doesn’t mean they can’t pivot and do well. Wilson said that using technology can help organizations find more success during the COVID-19 crisis.
“Technology was a significant factor in organizations being able to sustain operations in a remote environment under COVID-19,” Wilson said.
Nonprofits that thrived with technology didn’t just have it and pivot to remote, they examined their needs and determined the ways to best deploy technology to meet those needs.
“For a lot of organizations, their traditional delivery method is not sustainable in the COVID environment,” Wilson said. “They asked, ‘How do we lean into our mission, providing alternative programs or augment the programs we already have?’ By answering that, they figured out how to not only maintain the mission of the organization but also the relevance of the organization in the current world we are living in.”
She noted that for organizations that are struggling, a lack of technology or capital to invest in it often kept them from innovating in the ways needed to thrive. “The costs to cover that [technology] is what fuels the growth in operations and ability to innovate,” she said.
Those associations that don’t have the financial reserves and that haven’t been able to use technology must instead focus on shoring up their financials.
“First and foremost, look at your current revenue sources,” Wilson said. “If you have individuals or sponsors who have been significant contributors, have those frank conversations. The high touch right now is going to be really critical for those strugglers.”
Another option to consider is a merger or strategic partnership. The report, which was done mostly prior to the pandemic and updated later to include the section on what’s contributing to thriving nonprofits, noted that few organizations were interested in mergers.
“For a number of years, we have anticipated an increase in mergers and acquisitions activity, and that hasn’t come to bear,” Wilson said. She noted that past research indicated organizations were reluctant to merge because they didn’t quite find mission alignment. Now, with financial pressures, that wave of mergers and acquisitions may actually happen.
“I think there is a renewed interest,” Wilson said. “Because many organizations are starved for financial reserves, they may need to look to align with an organization that can carry them through it. Now it’s about financial alignment.”
This article was sourced directly from Associations Now here, and is written by Rasheeda Childress.