2020 Not-for-Profit Governance and Performance Study: The COVID-19 Edition

The annual Not-for-Profit Governance and Performance Study is the world’s largest study in NFP governance. This year’s COVID-19 edition highlights that targeted funding is critical for the survival of many NFPs, while revealing that a large number of organisations were under threat even before the challenges of COVID-19.

Now in its 11th year, the 2020 study reveals – unsurprisingly – that COVID-19 dealt a huge financial blow to the NFP sector. However, many organisations were facing considerable financial challenges even before the crisis.

It shows that while a majority of NFP organisations expect to make a loss this financial year, almost 40 per cent of organisations had made a loss in the previous three years.

The study also highlights the disparity between the different sub sectors’ abilities to navigate the crisis, with organisations in the arts, sports, health and aged care sectors seeing greater impacts than those in other sectors.

Sources of funding played a significant role in this, with those reliant on government funding faring better than those reliant on philanthropy and face-to-face fundraising.

Key findings include:

• In FY20 the number of respondents expecting to make a profit dropped to 48 per cent, with over half expecting to make a loss, break even or come close.
• 55 per cent of survey respondents noted their organisation is receiving JobKeeper payments (as of August 2020). However, more than one third of organisations were not eligible.
• With boards focused on the survival of their organisation, merger activity and discussions on mergers reduced considerably. Only three per cent of directors reported they were currently undertaking a merger, which was down from five per cent last year.
• The onset of COVID-19 brought immediate change, with 77 per cent reporting that their organisation significantly changed the way it operates.
• Directors were particularly proud of their NFP's response to COVID-19, with 90 per cent agreeing or strongly agreeing that their organisation has responded well to COVID-19.
• When asked to rate the effectiveness of their organisation in achieving its stated purpose, sentiment was higher (94 per cent) than in previous years.
• 87 per cent of directors stated they are worried about the Australian economy and there is also a high degree of uncertainty about the future.
• 44 per cent of respondents expect client numbers to increase and 45 per cent predict service volumes will increase. However, 27 per cent expect a decrease in clients.