Report Casts Dire Fiscal Picture For PA Nonprofits Amid COVID-19

By Dave Fidlin | The Center Square

Faced with increased operating expenses and persistent revenue losses amid COVID-19, nonprofits across Pennsylvania face insolvency or reducing levels of service, a recently released report suggests.

A coalition of statewide organizations in August polled Pennsylvania nonprofits on their fiscal health after CARES Act funding and similar mechanisms had been allocated this spring as the pandemic first struck.

The culmination of the polling effort – which resulted in responses from a cross-section of 808 nonprofits throughout the state – reported collective revenue losses of $612 million since March and new operating expenses of $95.3 million, according to the report, issued in October.

According to officials, the respondents represent about 2 percent of all nonprofits within Pennsylvania, as of March.

Pittsburgh-based economic development firm Fourth Economy conducted the survey in conjunction with the Pittsburgh Foundation and the Pennsylvania Association of Nonprofit Organizations, among others.

The largest group of survey respondents, according to the report, was human services organizations. A total of 290 nonprofits within the category participated in the survey. Overall, the sector reported increased costs of $64 million and revenue decreases of $255 million.

According to PANO, the survey responses from human services organizations represent 7 percent of the entire sector within Pennsylvania, but suggest widespread struggles as 2020 rounds the bend.

Anne Gingerich, executive director of PANO, said long-term losses within human sources means resources would have to be shifted elsewhere to meet critical needs.

“If nonprofits close, more individuals will look to government as their safety net, raising costs for all us,” Gingerich said. “We must have more nonprofit-designated funding, distributed as efficiently as possible. We need innovative collaboration among nonprofits, businesses and government.”

PANO and other organizations have been lobbying Pennsylvania lawmakers for changes in how the state’s allotment of $1.3 billion in CARES Act funding is assigned to nonprofits. Since the dollars were made available, nonprofits have been competing with the funds alongside for-profit entities.

To that end, a pair of bills aimed at making special considerations for nonprofits has been making the rounds in both bodies of the legislative branch. House Bill 2740 is in the hands of the Appropriations Committee, and Senate Bill 1254 is under review in the Community, Economic and Recreational Development Committee.

An August letter to lawmakers from 29 nonprofit executives called on support for both bills.

“The public health and economic crisis have most (nonprofits) reeling from lost revenue streams and exponential increases in demand for services,” the letter, in part, reads. “Many have been forced to cut back on their missions and limit operations. Some are facing permanent closure.”

While a range of other nonprofit sectors – including arts and culture, education and health care – also reported financial challenges in the survey, the overarching conclusion reached in the report stated smaller nonprofits with budgets under $100,000 faced steeper challenges than their larger counterparts.

In a statement, Lisa Schroeder, president and CEO of the Pittsburgh Foundation, said the report’s goal is to shed light on the dire needs of Pennsylvania’s nonprofits, as a whole.

“It is our hope that these findings are a call to arms to state and federal office holders to support dedicated relief for the sector,” Schroeder said. “Our ability to recover from this pandemic is very much dependent on the ability of nonprofits to continue their missions.”

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