Charities, NFPs and COVID-19: Where to?

COVID-19 is having an impact on all parts of our society. Some of the most vulnerable organisations are the ones that in turn help those most in need. While business has a strong voice to advocate for assistance what about charities, NFPs and community organisations?  What are the unique challenges they are facing and how might they respond to the new world we will be facing? 

This is not a small sector, although it is so diverse that it sometimes lacks a unified voice. Statistics New Zealand recently highlighted data showing the monetary value of non-profit institutions at $12.1 billion in 2018. According to Charities Services, there are more than 27,000 registered charities who employ around 130,000 staff and millions of hours are given in volunteer hours each week.  But the importance of this sector goes beyond the statistics – each of us will be aware of a charity or NFP that we know or support which embodies the best of us: demonstrating kindness, compassion, empathy and understanding. That is what is most needed, yet the organisations at the front lines offering it are also most at risk in this crisis.

When Allen Curnow wrote the words above in 1942 he had in mind the first explorers to New Zealand and certainly not COVID-19 and its aftermath. But perhaps this will turn into an opportunity for many organisations to reflect on their purpose and strategy and then begin to sail in a new direction too.

What are the key challenges currently facing the NFP sector?

The good precautions in place to reduce and eliminate the spread of Covid-19 have resulted in normal fundraising grinding to a halt with a number of usual activities and new initiatives being postponed or cancelled.  Uncertainty around employment is causing many donors to tighten their purse strings as well.  With both fundraising and a reliance on donations being vital for many NFP organisations, this has left a financial hole to be filled.  

All of this is heightened by the fact that many charities do not carry significant reserves, will not be able to access additional capital or debt easily, and will have reduced access to volunteers.  The outcome is a situation that will affect the ability of many of these groups to survive, which in turn will most impact the vulnerable in our communities who they most often serve.

A letter sent in early April from a collective of charity, non-profit and community groups to the Prime Minister highlighted that such groups will be hard hit by the crisis. It suggested ways the Government could assist to alleviate some of the financial pressure that is currently being felt by many, such as an emergency stabilisation fund, special low interest loans, tax relief to incentivise donations and dedicated support to provide assistance to the unique challenges faced by the sector.

What action should NFPs be taking in the short term to address these issues and, in particular, those NFP’s currently worried about their solvency?

The Government has tried to offset the financial burden felt by many due to Covid-19 with a number of financial packages. This included $27 million for essential services in the social sector to ensure such services can continue to assist during the lockdown. However, for those unable to access these funds there are other options:

• Wage subsidy scheme: If they have not already and are eligible, these groups can apply for the Government’s wage subsidy scheme.  What many are realising is that this doesn’t cover all costs (or even all of the wages) but it will help.
• Emergency funds: If you have funds reserved for that ‘rainy day’, this situation may just be that. Consider your options, as accessing your emergency funds may relieve some of the financial pressure.
• Virtual fundraising: If you do not have an online fundraising plan, this is the time to create one. As many New Zealanders are spending more time on the internet than ever before, now is the time to get your message out there. Fundraising can be done through email campaigns or social media – an alternative is television, as Sky have just announced it is offering $1 million worth of TV advertising airtime to charities and community organisations aligned with Covid-19 support efforts.
• Get advice: If you are worried about the issues that you are facing, particularly in regards to solvency, speak to an independent advisor who will be able to discuss options and potentially a way forward with you.

What opportunities are there for the sector in the long term as a “new normal” is entered into?  What do NFP’s need to be thinking about now in order to help ensure their long-term viability?

In these unprecedented times, it can be difficult to consider the long term, when you are just trying to get by day-to-day. However, for some entities this may be the chance to look for a reinvention.  Strategic thinking is more essential than ever.  What has been outmoded or part of tradition in an organisation that needs to be trimmed back or thought through? 

There are a number of charities out there that aim to assist and serve with the same purpose. Has the option of consolidation ever crossed your mind? Now could be the time to merge and join forces. Consider the resources and skills that could be brought to the table if combined, and the opportunities that it could potentially bring.

It’s important to stay positive.  Now is the time to consider and explore new opportunities and look at the resources that are available to you.  In doing that here are some other key principles to focus on:

• Preparation: As a Board have you prepared plans regarding key issues: health & safety of employees, contingency plans in light of changed circumstances, regular review of accounts, review of contracts and analysis of leases and rights to suspend them, communications strategies etc.
• Leadership: This is the opportunity for the leadership to set the tone for the rest of the organisation to follow.  When the crisis has passed how will the leaders and their attitude towards others be remembered?  Emphasise clear and concise communication to employees, service users, donors and other stakeholders.
• Collaboration: Open up discussions with others in your sector, and beyond – what are they going through and can you learn from each other?  Is there some synergy or unexpected mutual benefit that could come from those conversations?  This is something we have seen arising several times already as people learn from others they may not have spoken to before the crisis.

One thing is for sure and that is the old ways are unlikely to work in the new environment.  It is the organisations which are nimble and able to look for opportunities which will survive. Doing that will likely involve sailing in a new direction, and as Allen Curnow said, that may result in an expanded world with new possibilities.