Document Type
Event
Abstract
Abstract — Scholars and practitioners have argued that effective financial management, particularly the development of operating reserves, can help nonprofits survive economic shocks. The COVID-19 pandemic, which has had a significant impact on the nonprofit sector, provides an opportunity to test whether nonprofits have followed that recommendation, and if so, whether nonprofits with operating reserves were better prepared for the pandemic. Using data from an original survey of more than 600 nonprofit human service and arts organizations, administered when most states had stay-at-home restrictions, we show that most nonprofits experienced an immediate impact on their programs and financing. Yet, those nonprofits with more reserves were less likely to reduce operating hours, lose staff, or experience difficulty acquiring supplies or vendor services. Our study provides rare empirical data on the benefits of operating reserves for nonprofits. Our results also confirm that arts and culture nonprofits were more severely affected than human service nonprofits.
Included in
Finance and Financial Management Commons, Nonprofit Administration and Management Commons
The Financial Impact of COVID-19 on Nonprofit Organizations
All things COVID - Breakout Session 1
Abstract — Scholars and practitioners have argued that effective financial management, particularly the development of operating reserves, can help nonprofits survive economic shocks. The COVID-19 pandemic, which has had a significant impact on the nonprofit sector, provides an opportunity to test whether nonprofits have followed that recommendation, and if so, whether nonprofits with operating reserves were better prepared for the pandemic. Using data from an original survey of more than 600 nonprofit human service and arts organizations, administered when most states had stay-at-home restrictions, we show that most nonprofits experienced an immediate impact on their programs and financing. Yet, those nonprofits with more reserves were less likely to reduce operating hours, lose staff, or experience difficulty acquiring supplies or vendor services. Our study provides rare empirical data on the benefits of operating reserves for nonprofits. Our results also confirm that arts and culture nonprofits were more severely affected than human service nonprofits.