A Blow to Nonprofit Workers: Sweeping layoffs could come just when services are most needed.

The coronavirus pandemic, and the social and economic damage it leaves in its wake, is laying bare the nonprofit world’s lack of investment in organizations’ operations and their people.

Across the country, charities have seen a surge in demand for their services in recent weeks, and they know this is the tip of the iceberg.

"You’re going to see an increase in hunger, need for access to medical services, increases in things like domestic violence," says David Greco, CEO of Social Sector Partners, which works with small nonprofits. "The very groups that provide critical services are understaffed, underresourced, and they’re just not going to be able to respond in the way that our communities need them to."

Many nonprofits are so cash strapped they are ill-equipped to help their employees through this tumultuous period. Many small social-service organizations have only enough money to last 30 to 60 days, says Greco. As school districts close, he says, nonprofits that work with young people are losing contracts, often their only source of income.

In California, many groups struggled to pay their workers minimum wage when it rose to $15 an hour. He says they are trying to be as flexible as they can with their employees, but for groups that are losing contracts and whose workers cannot do their jobs remotely, layoffs are inevitable. What’s more, even if the groups survive, it may be some time before those jobs come back.

"When the nonprofit sector is really being pushed and strained, we’re seeing how dependent the sector has become on overworking people, underpaying them, using volunteers, and relying on people working extra hours while not being paid," says Greco. "The very gas that kept the nonprofit sector going, which is sweat equity, that’s being dried up."

Scarcity Mind-Set

There is a longstanding culture of austerity among nonprofits and the foundations that support them. Staff members are expected to work long hours for scant pay because it is for a good cause. Historically, few foundations provide general operating support, and many nonprofits don’t ask for enough money to cover the true costs of their work and the staffing it requires, says Rusty Stahl, CEO of Fund the People, an organization that is pushing grant makers to change their ways.

"We need to replace the outmoded way of deploying philanthropic dollars into the nonprofit community. And we need a new, healthier mode of funding and fundraising," says Stahl. "But the incentives are not there to make those changes."

The coronavirus crisis is exposing the nonprofit world’s chronic underfunding and poor treatment of staff, Stahl says.

Groups lack the funds necessary to survive disruptions. Staff members often lack benefits and are sometimes on the edge of poverty themselves. Stahl says that many have been responding to constant emergencies since Trump was elected president, and they are worn out and unprepared for the strains they will now face.

"There’s been so many shocks to our system that it feels never-ending and escalating. It’s a real challenge," he says. "The lack of support for people as human beings, not just as employees, is a weakness that will be exposed here."

Organizations often fail to focus on their operations and staff because they lack the funding, time, and resources to ever get to it, says Paula Morris, director of the Resilience Initiative, a project of Rockefeller Philanthropy Advisors that is funded by the David and Lucille Packard Foundation. To combat the problem, the initiative provides $15,000 grants to nonprofits so they can focus on issues like human resources, equity and inclusion, financial management, digital security, scenario planning, and the personal well-being of their staff — an area that groups have found most valuable.

"We wanted to offer the possibility that groups could pay attention to their staff’s personal resilience," Morris says. "If the nuts and bolts of the system are in place and solid enough, you can stay strong when tides are shifting outside."  

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