Agents of Pluralism: Nonprofit Organizations in an Age of Turmoil

• In Event: Philanthropy in Perilous Times: Help or Hindrance?

Abstract

Background: A growing body of evidence shows that Americans’ investment of time and money in nonprofits is declining. Research indicates that recent tax policy changes from the 2017 Tax Cuts and Jobs Act may have exacerbated declines in giving over the past 15 years, particularly among low and middle-income households (Giving USA, 2019). Such findings suggest that nonprofits are increasingly relying on fewer American households to donate. Smaller nonprofits and those serving marginalized communities are more likely to depend on individual giving and small to medium sized donations. It means these philanthropic trends could disproportionately affect those organizations and the communities they serve.

The current pandemic situation has taken a disproportionate toll on nonprofits that serve marginalized communities, potentially leading to a double-impact of declines in philanthropy. Such trends could produce long-term negative impacts on the nonprofit sector and especially on already under-resourced communities. Unfortunately, the sector lacks the information necessary to fully understand how a shrinking donor base may fundamentally change what civil society looks like in the future. This study attempts to address these important data and research gaps with a large, nationally representative study, which we expect to help effective policy prescriptions.

Research Goals: Multi-disciplinary researchers have collaborated to detail the effects of changes in giving trends, the COVID pandemic and economic collapse on nonprofit organizations that serve different types of constituents in diverse communities. Using an original survey of a national representative nonprofits, we assess the sizes and types of nonprofits most affected and whether impacts of these giving trends vary by the type of populations nonprofits serve, sizes and types of communities, and services provided. We also assess changes in finances, operations, clients, board and staff, before and during the COVID pandemic. Our research questions ask how trends in philanthropy are affecting nonprofits in the US and whether certain nonprofits are affected in different ways by these general trends in giving.

Specifically, we explore how the decline in small and mid-sized donations has affected the programs and advocacy activities of individual nonprofits. For instance, our analysis tests whether service-oriented nonprofits are more or less affected than community organizing nonprofits, arts groups, advocates and others. The target population an organization serves could also make a difference in terms of how nonprofits are affected by the changes in giving trends. We also explore the impact of the COVID pandemic on nonprofits, especially on how it has affected nonprofits that serve low-income communities and communities of color.

Methods: We developed samples (overall N=25,000) that are representative of formally established charitable organizations across the US based on known parameters of IRS 990 filing organizations. Organizations in minority and low-income zip codes were oversampled to ensure adequate representation of organizations in the most vulnerable communities. The sample design also incorporated additional geographic oversamples, including oversamples of large metropolitan areas to understand disparities between organizations within the same general geographic areas relative to community income levels, demographic differences, and urban-rural divides. We use standard survey techniques with analyses including descriptive statistics and regression analysis as appropriate.

Results to be Presented: During the conference, we will present a national portrait of nonprofits with the focus on giving and volunteering trends. First, we will show the basic statistics of giving amounts and changes over time, and such portraits will be presented by different organizational size, type of activities, financial status, primary sources of revenues, location, and primary target populations. Then, we will provide additional analyses of nonprofits that serve low-income communities and/or communities of color. These communities would be defined by the answers provided by survey participants as well as the census records of the surrounding communities. Lastly, we will examine the giving trends of organizations by types of activities and by the characteristics of populations they serve. We will complement these analyses with sub-analyses focused on the more recent impacts of COVID-19 on nonprofits. Overall, these findings will provide a representative understanding of giving trends in the US, the impacts of these trends on organizations and the communities they serve, and the long-term challenges facing the sector and US communities. We intend for this study to contribute empirical evidence to inform policy discussions to address underlying issues that affect the flow of resources into nonprofits.

Authors

• Lewis Faulk, American University

• Mirae Kim

• Elizabeth T. Boris, Urban Institute