Candid, a nonprofit information service, estimates that as many as 38% of organizations could be forced to close in the wake of COVID-19, vs. 4% in a typical year. The service looked at more than 300,000 U.S. nonprofits and considered 20 possible scenarios that fall into three categories. The 38% figure represents the direst scenario, with 12 months of “disruption” and a 35% drop in revenue.
“Baseline” scenarios illustrate what might have happened in the absence of the pandemic. “Core” scenarios reflect a range of possible effects of the financial crisis based on surveys conducted by various other organizations, such as the Nonprofit Finance Fund and CAF America. Finally, “miracle” scenarios envision immense generosity, cost-cutting measures and an increase in government investment over a short crisis.
It’s not all bad news. In the most optimistic scenario, only 3% of nonprofits shut their doors. That’s with nine months’ disruption, no revenue reduction across the board, and 15% expense reduction. And, under each of the scenarios, most nonprofits survive the crisis.