Government assistance helps some nonprofits and hurts others during the coronavirus pandemic
On Oct. 24, student volunteers with Home Works of America made repairs on six homes of low income, elderly people across South Carolina. After several months of shutdown, executive director Joe Huggins expressed gratitude for “a normal Home Works workday.”
But the workday wasn’t completely normal: Teams were smaller and socially distant. Everyone wore masks, and many brought their own tools. Instead of building relationships with homeowners—a core part of the ministry—volunteers could only wave through windows.
While Home Works’ volunteers and staff are repairing homes again, donations haven’t recovered from a significant drop this year. “As opposed to last year this time, we’re down almost a half a million dollars,” Huggins said. That’s half of the organization’s normal contributions.
Months after the coronavirus changed daily life in the United States, many nonprofits have resumed services. Some have even added programs to meet increased needs. As the pandemic drags on, many are fighting to survive, and government aid programs crowd out some organizations altogether.
In July, the networking organization Creating Healthier Communities surveyed 732 nonprofits and found 95 percent of respondents reported reduced funding in 2020, with an average revenue loss of $2.8 million. More than half had to cut services or programs, and 30 percent had to cut staff.
From February to March, the Central Texas Food Bank reported 200 percent more new people requesting food. Scarlet Hope, a Louisville, Ky., ministry to women in the sex industry and a 2019 WORLD Hope Awards finalist, saw new people each week at its food and supplies distribution. The group began a new program, Hope for Her, to provide immediate resources for women leaving the sex industry.
Other charities saw demand decrease. Fewer people came to Hope Food Pantry in Austin, Texas, even though the food bank and local churches received more donations. Nathan Mayo, director of membership for the True Charity Initiative, wrote in August that poverty-fighting organizations in southwestern Missouri were reporting some 50 percent fewer clients. He said those numbers were “particularly puzzling given that the national unemployment rate has vaulted over 11 percent.”
Mayo investigated and concluded the government’s expanded food stamp program and unemployment benefits filled the gaps nonprofits normally do. He argued the expanded benefits could ultimately hurt the poor, since smaller charities provide relationships and accountability better than government programs.
Home Works applied for and received CARES Act loans to sustain operations and keep paying employees. Huggins said those funds “kept us alive.”
That government money has since run out. According to the National Council of Nonprofits, most charities have less than six months in savings, and even those with stronger budgets are running out of funds. Meanwhile, the needs they meet will likely increase, especially as enhanced unemployment benefits expire in January and Congress remains deadlocked over another relief bill.
Rick Cohen, chief communications officer for the National Council of Nonprofits, said it will take roughly three years to learn how many nonprofits the pandemic shuttered. Groups that don’t file tax forms for three years lose tax-exempt status, providing some measure of closures. But Cohen pointed to early indicators: A survey in Kentucky showed 4 percent of responding nonprofits had already closed, with another 5 percent expecting to do so before the year’s end.
Huggins, of Home Works, has learned to maximize each day because he doesn’t know the future. “We’re going to do what we can today for as many people as we can,” he said. “We’re going to tell the story to as many people as want to listen, and God’s going to provide.”
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