Creeping COVID catastrophe: the impact of COVID-19 on nonprofits by sector

Abstract

PurposeThis study aims to provide a timely “first look” at the impact of COVID-19 lockdown restrictions on the financial distress of nonprofits.Design/methodology/approachThis study uses Internal Revenue Service Form 990 returns, US census information, and Oxford COVID-19 workplace restriction data and utilizes logistic regression to analyze results.FindingsNonprofits with greater COVID-19 lockdown restrictions are more likely to experience financial distress, whether measured by a 30% reduction in total, program, management and general, or fundraising expenses. This paper also examines results by subsector using National Taxonomy of Exempt Entities data and finds that the Human Services and Public and Society subsectors drive the full sample results when the authors use total, program, or managerial and general expenses in the measure of financial distress, and the Education and Environment and Animals subsectors drive the results when using fundraising expenses in the measure of financial distress.Originality/valueBroadly speaking, this paper contributes to the limited research stream examining the impact of crises on nonprofits. More specifically, this study is among the earliest to rely on quantitative data to investigate such effects.