One month in, what do nonprofits know about the Coronavirus crisis?
Risk management is applied mindfulness: a combination of radical acceptance of reality, coupled with taking the next reasonable steps in the face of one’s circumstances. I live in Virginia, where the governor of our Commonwealth declared a COVID-19 emergency on March 12, 2020. So let’s take stock of what our nonprofit sector knows one month into this crisis. Let’s confront our reality, so that we can take reasonable steps in response. In short, we face a world in many ways turned upside down.
Ten Tough Facts
COVID-19 kills. Contrary to public statements made by senior federal government leaders around the time our governor declared a state of emergency, COVID-19 is neither a “hoax” nor something akin to the common flu. As I write this, COVID-19 just recently the leading cause of death in the United States. While it particularly impacts the elderly and those with preexisting conditions, it also kills 10% of hospitalized middle-aged patients.
Social distancing works. Rigorous social distancing is associated with a reduction in the spread of disease.
Social distancing undermines many nonprofit business models, particularly those involving the arts, performance, exhibition, daycare and school-related activities, and face-to-face interaction with vulnerable populations.
Even among nonprofits whose business models remain relatively unscathed, organizations in affected areas have to adopt work-from-home models that place a strain on technology, human resources, and delivery of services.
Every jurisdiction in the United States is impacted. Every state has the disease. While some states seem to be bearing the brunt of the outbreak, even the least affected state has more than 250 cases (and growing). Most have issued stay-at-home orders.
Stay-at-home orders, social distancing, and costs related to responding to the virus have dislocated the economy. Many small for-profit businesses will fail, and many people will be unemployed or underemployed. We currently have no sound basis for predicting the depth or length of the resulting recession or depression, but the early numbers are sobering.
We have no basis for predicting when a new social and economic “normal” will arise or what that new “normal” will look like.
Numerous funders have expressed interest in providing emergency funds for nonprofits. Nevertheless, there is no indication that these funding sources will be able to cover the total amount of either nonprofit economic dislocation or charitable beneficiaries’ needs.
The federal government passed the CARES Act, which provided some relief for nonprofits. That relief is patently insufficient.
At some point, the federal government will likely provide additional assistance to nonprofits, but the nature, magnitude, and timing of that relief are entirely uncertain. Furthermore, because the nonprofit sector will be one of many supplicants, the sector will almost certainly receive less money than it needs.
No Time to Despair
Those ten elements constitute our collective reality. They describe the obstacles we face. Those obstacles have uncertain boundaries. In such circumstances, forecasting the future is absurd. Strategic planning is laughable. Instead, it is time for sound risk management. If this is our reality, what are our next reasonable steps in the face of these uncertainties?
I will provide my answers tomorrow, but these are not times to despair. While our current reality may seem bleak, humanity has faced harsh prospects throughout its history. During the Great Depression, unemployment reached nearly 25% in the United States, but that meant that 75% of Americans had jobs. During the Black Death, England lost somewhere between 40 and 60% of its population, but rose thereafter to world domination. The Spanish Flu occurred during a devastating world war and killed 675,000 people in the United States alone (perhaps 50 million worldwide), yet the world economy grew from $4.74 trillion to $63.1 trillion during the balance of the 20th century.
We will get through this. One reasonable step at a time.
Stay current with COVID-19
To keep up-to-date with current information on COVID-19 and how nonprofits are affected, go to our Coronavirus Nonprofit Risk Management Resources page.