Nonprofit Sector Layoffs Surge Due to Pandemic

The Coronavirus pandemic has pushed the economy into a sudden and deep recession, impacting local businesses as well as a number of large corporations. But the effects of this pandemic on the nonprofit organization has been even more substantial and unfortunately, gone unnoticed. Many citizens rely on the services nonprofits provide such as, social services, medical care and spiritual community. Tens of thousands of nonprofits are likely to close without the support of some kind of rescue package to help keep their doors open. The nonprofit sector is the nation’s third-largest private employer, with 1.3 million nonprofits employing nearly 12.5 million people—about 10 percent of the total number of people working in the private sector.

According to the John Hopkins University 2020 Nonprofit Unemployment Report, more than 1.6 million nonprofit jobs have been lost between March and May of 2020. Private education nonprofits lost an estimated 323,201 jobs, while health care lost an estimated 574,530. As we know, nonprofits come in many shapes and sizes, ranging from large organizations, like city hospitals to small mom and pop thrift shops that help support local charities. No matter the size, nonprofits have been severely impacted by the pandemic in more ways than one. Many nonprofits are unable to perform normal day-to-days tasks due to the number of shutdowns and social distancing requirements. For food pantries and free clinics, the economic disruption has caused an increase in clients in need of these services. While many think of nonprofits as running predominately on donations, roughly half of their revenue come from billing for services, a third from government contracts and grants, and only about 9 percent from individual donations.

While some foundations and charitable-giving funds have seen an increase in their donations, other nonprofits have not had the same luck due to relying on revenue-generating activities and fundraising. Making it not only difficult to keep people on the payroll but also impacting long-term viability of their organization.

Many nonprofits were eligible for federal pandemic aid under the Paycheck Protection Program, which extended potentially forgivable loans to small employers to keep workers on the payroll. But qualifying for such aid can be difficult. Give Kids the World received $1.75 million, however, organizations like the Y.M.C.A. of Metropolitan Chicago were left out because they had more than 500 employees.

The nonprofit sector has more of an impact on the overall economy than many realize—offering crucial contributions to the country’s health, education, social service, and cultural activities. Nonprofits not only make up the country’s third largest workforce but also generate the third largest payroll of any national industry while making important contributions to the tax revenue of the country’s national, state, and local governments. The devastation of this pandemic has put many individuals out of work while closing the doors of many other beloved nonprofits—putting pressure on the vital services these organizations offer their communities.