How the Coronavirus affects the nonprofit sector
The Coronavirus (i.e., COVID-19) has already affected the nonprofit sector in the United States. Nonprofits employ ~22.2 million people (14% of the U.S. workforce), pay employees a combined $960 billion in wages and benefits each year, and spend $210 billion on third-party service providers that help enable nonprofit missions. The Coronavirus greatly affects the nonprofit sector, not only through increased demand for services, but also through decreased earnings caused by market volatility and stay-at-home regulations.
This article analyzes lost revenue caused by government policies to address Coronavirus that prohibit group gatherings, require social distancing, and close non-essential businesses. These lost revenue sources — fundraising events, conferences, conventions, meetings, admission fees, and ticket sales — raise more than $33 billion annually for over 110k organizations. Depending on the prevalence and duration of these policies, when nonprofits hold their events, and whether nonprofits can reschedule their events, nonprofits could lose $5.7 billion to $16.9 billion in income.The Coronavirus greatly affects the nonprofit sector, not only through increased demand for services, but also through decreased earnings caused by market volatility and stay-at-home regulations
How Coronavirus affects fundraising events
Many fundraising events — galas, golf tournaments, luncheons, dinners, auctions, festivals, banquets, runs, walks, marathons, raffles, etc. — can no longer occur due to government policies to limit the transmission of COVID-19. For example, The Mountaineers, a Seattle-based outdoors education and advocacy organization, had to cancel its annual gala, which last year grossed $366,664 for the organization. How many organizations does this affect, and how much?
The above Cause IQ graphs are for the 85,423 nonprofits that earn more than $25k from fundraising events. The graphs analyze the gross income from fundraising events, including both tax-deductible donations and non-deductible contributions. Half of these organizations earn more than 27% of their total revenues from fundraising events, and 25% of these nonprofits (~21k organizations) earn more than 76% of their revenues from fundraising events. In total, fundraising events contribute $20 billion to nonprofits annually.
The overall impact of the Coronavirus on nonprofit fundraising events depends on how long social distancing and stay-at-home regulations are required to quell the outbreak, the prevalence of fundraising events in different months of the year, which states have these regulations in effect, and to what degree events can be rescheduled (or held online). Assuming an equal distribution of events throughout the year, all states having regulations in place, and no event rescheduling, here are the potential impacts:
- Two months stay-at-home: ~$3.33 billion decrease in nonprofit sector revenue from fundraising events
- Three months stay-at-home: ~$5 billion decrease in nonprofit sector revenue from fundraising events
- Six months stay-at-home: ~$10 billion decrease in nonprofit sector revenue from fundraising events
What types of nonprofits are most reliant on fundraising event revenue? No one type of organization stands out, but parent teacher associations, community service clubs, and animal shelters are towards the top by number of organizations affected.
How Coronavirus affects nonprofit conferences, conventions, and meetings
Policies to address the Coronavirus also impact nonprofit's ability to hold conferences, conventions, and meetings. For example, NTEN, a Portland-based association of nonprofit technology and communications professionals, had to cancel its annual conference, which last year earned $2,268,796 for the organization (~71% of total revenue).
| Revenue type | Number of Nonprofits | Median Revenue | Median Percent of Revenues | Combined Revenues |
|---|---|---|---|---|
| Conferences | 6,742 | $125,325 | 19.4% | $3.42 billion |
| Conventions | 2,024 | $106,089 | 17.2% | $0.92 billion |
| Meetings | 5,101 | $71,709 | 12.6% | $2.52 billion |
| Seminars | 2,348 | $63,547 | 10.5% | $0.93 billion |
| 16,215 | $96,188 | 15.1% | $7.79 billion |
The above table shows that ~16k nonprofits earn a combined $7.79 billion annually from conferences, conventions, meetings, and seminars, with half of these nonprofits relying on them for more than 15% of their budgets. Conferences are most important, with half of nonprofits that hold conferences relying on them to raise more than 19% of their budgets. Ten percent of nonprofits rely on their conferences to earn more than 73% of their revenues.
What's the impact of social distancing and stay-at-home policies to combat COVID-19 on nonprofits that rely on holding conferences, conventions, meetings, and seminars? With the same caveats as above about equal distribution of events throughout the year, all states having regulations in place, and no event rescheduling, here are the potential impacts:
- Two months stay-at-home: ~$1.3 billion decrease in nonprofit sector revenue from conferences, conventions, meetings, and seminars
- Three months stay-at-home: ~$1.95 billion decrease in nonprofit sector revenue from conferences, conventions, meetings, and seminars
- Six months stay-at-home: ~$3.9 billion decrease in nonprofit sector revenue from conferences, conventions, meetings, and seminars
What type of nonprofits are most impacted by fewer conferences, conventions, meetings, and seminars? By far, the biggest impact is for trade and professional associations, which account for about half of the ~16k organizations. Beyond these, community service centers, research institutes, and historical societies are affected, among dozens of other types of nonprofits.
How Coronavirus affects museums, theaters, and symphonies
Many nonprofits rely on admissions and ticket sales to fund their operations, especially arts nonprofits like ballets, symphonies, operas, museums, and theaters. With social distancing policies in place, ticket sales and admissions have all but stopped for most of these nonprofits. For example, The Phillips Collection, a fabulous art museum in the District of Columbia, earned $846,781 last year in admission fees for its special exhibitions (~6% of all revenue), but is temporarily closed due to COVID-19.
| Revenue type | Number of Nonprofits | Median Revenue | Median Percent of Revenues | Combined Revenues |
|---|---|---|---|---|
| Admission fees | 5,253 | $50,427 | 7.7% | $3.1 billion |
| Performances | 4,047 | $92,533 | 19.1% | $3.0 billion |
The above table shows ~9k organizations earning revenue through admission fees or performances, for a combined total of ~$6.1 billion in revenue. Organizations that earn income through performances are far more reliant on this revenue than organizations that charge admissions fees. For nonprofits with performance revenues, this income is a larger percent of total revenues (19.1% of total revenues) than for organizations that rely on charging admission fees (7.7% of total revenues).
| Nonprofit type | Number of Nonprofits | Median Revenue | Median Percent of Revenues | Combined Revenues |
|---|---|---|---|---|
| Museums | 1,609 | $73,296 | 7.2% | $1.5 billion |
| Performing arts organizations | 4,049 | $92,234 | 17.9% | $3.5 billion |
| Other arts, culture, and humanities nonprofits | 2,745 | $37,026 | 7.8% | $993.5 million |
Looking at the type of nonprofit instead of the type of revenue (but still only looking at revenue from admission fees and performances) shows that performing arts organizations like theaters, symphonies, and dance groups depend more on performances to fund their organizations than museums. Whether due to smaller endowments, less membership income, or some other cause is irrelevant to the immediate impact of the Coronavirus on arts and culture nonprofits.
What is the overall revenue impact of the Coronavirus on these arts, culture, and humanities organizations? As previously mentioned, it depends on when performances occur, whether states have similar responses to the Coronavirus, and to what degree performances and exhibitions can be rescheduled. With these caveats in mind, here are potential impacts:
- Two months stay-at-home: ~$762 million decrease in museum and performing arts revenues from admission fees and ticket sales
- Three months stay-at-home: ~$1.14 billion decrease in museum and performing arts revenues from admission fees and ticket sales
- Six months stay-at-home: ~$2.29 billion decrease in museum and performing arts revenues from admission fees and ticket sales
Overall impact of COVID-19 policies on nonprofits
This analysis looks at one specific piece of the overall impact of the Coronavirus on the nonprofit sector: how stay-at-home and non-essential business closures affect nonprofit income earned through fundraising events, conferences, conventions, meetings, admission fees, and ticket sales. While only one aspect of the impact on the nonprofit sector, the impact is nonetheless large:
- 110,041 organizations: Number of nonprofits that earn income through fundraising events, conferences, conventions, meetings, admission fees, and ticket sales
- $33.89 billion: Amount nonprofits earn annually through fundraising events, conferences, conventions, meetings, admission fees, and ticket sales
- $5.7 billion to $16.9 billion: Potential lost revenue to nonprofits due to policies to contain the Coronavirus pandemic, depending on how long policies last
