COVID-19 is transforming the NFP sector: here are five changes that are here to stay

COVID-19 is transforming the NFP sector: here are five changes that are here to stay


Recently Nous Group brought together CEOs and Executive Directors from the Australian not-for-profit sector for a roundtable to discuss how they are balancing the tension between addressing immediate challenges from COVID-19 and reimagining how they will have the impact they seek. This discussion painted a picture of their experiences so far during the pandemic and revealed changes that look likely to be part of the new normal for NFPs.

The pandemic is placing unprecedented strain on the not-for-profit sector. Many have been unable to deliver their services as normal, are seeing significant declines in revenue, and are incurring significant losses as donations drop and their commercial activities close or are restricted.

At the same time, demand for services is rising as more people need help and the vulnerability of marginalised groups of people grows. The pandemic is also driving innovation, with many not-for-profits exploring new partnerships, adopting new technology and trialing new business and service models.

Some changes will only last as long as the pandemic, but others will be permanent. NFPs are assessing what changes and innovations make sense to continue, what needs to be adapted and where they should revert to pre-COVID practices.

We heard that leading NFPs had done a terrific job in pivoting and adapting to online service delivery (where possible). COVID has shown NFPs they can adapt rapidly and that services can be delivered differently. This comes with a caution – access to virtual mechanisms should not be an automatic default or just a way of reducing costs to the NFP or government. Some services will be better done through in-person delivery.

Here are five changes the leaders at our roundtable believed were likely to endure.

Good decisions demand alignment with a clearly understood purpose

As the pandemic unfolded, NFPs’ balance sheets were significantly impacted as fundraisers were cancelled, commercial activities adversely affected and programs that could not be transitioned to online ceased. These resulted in staff being stood down and (often older) volunteers being unavailable.

Many NFPs ran government-funded programs at a loss – digging into reserves to maintain operations. It was common for NFPs to not be eligible for JobKeeper funding due to the level of continuing government funding.

Those financial constraints shone the spotlight on the unique purpose of each NFP and forced them to make tough decisions about what services were core and what needed to stop. Those constraints accelerated tough choices that may have been avoided in other circumstances. More than ever before, they are focused on aligning their organisations around their purpose.

Similarly, many NFPs have taken the opportunity to restructure and improve their operational effectiveness, to ensure that they can survive the current environment and be stronger and better equipped for the post-COVID context.

Comments from participants included:

  • “Next year we will need to move from survival to what good looks like.”
  • “Keeping a focus on our purpose – this is what maintained us.”

Virtual service delivery is a reality, but we must guard against support being merely transactional

While many participants had been sceptical about the ability to deliver services virtually, it has succeeded in many cases, with productivity increasing and vulnerable clients receiving the support they need.

In the online service environment, NFPs learnt a lot about the people they are supporting and what they require. For some people, receiving support at home made a positive difference. This highlighted the great potential of online service delivery going forward and validated the NFPs’ significant investments in IT.

At the same time, concern was expressed that a focus on online service delivery can harm the relationship between NFPs and the people they serve. There is the risk that this approach draws services towards transactional encounters and away from deeper and potentially transformational relationships. The risk with going digital (alone) is a belief that transformative change for people can be reached by one nudge rather than ongoing connection and support.

Similarly, the tighter fiscal pressure can result in governments and service providers seeing online service delivery as a silver bullet, at low cost. As a result, quality of services could suffer and many vulnerable people without access to technology would be left behind. The leaders identified that NFPs will need to define for themselves what “excellent online service delivery” looks like and strike the right balance between virtual and in-person service provision.

Comments from participants included:

  • “As a leader, this year has been one of most exciting in my leadership experience – I got things done for community I would have struggled to do otherwise.”
  • “It’s not just about who we’ve served, but the transformation for our staff. We will help communities in a way we haven’t done before.”
  • “Who have we left behind in this rush to the brave new world?”
  • “There is a threat having moved to transactional based encounters as opposed to relationship based transformative care – we need to put people at centre.”

Leaders need to be vigilant about the welfare of their team members

The highest priority for the NFP leaders was supporting the wellbeing of clients, some of whom were vulnerable people with a history of trauma that was exacerbated by the crisis. NFPs also directed their attention to supporting informal carers, staff and volunteers – many of whom experienced elevated stress and a deterioration in resilience and mental health.

The NFP leaders said there was not enough open discussion in the community about the experience of poor mental health and wellbeing arising from the pandemic. Nor are there adequate supports in place to help them deal with people experiencing these issues.

For staff, the actions of NFPs ranged from ensuring that the home environment was safe and ergonomic to significantly increasing the frequency of communication. Despite the recognition that much was being done, there is still a sense of people’s resilience being worn out. These leaders will maintain a strong focus on continuing and creative support of their staff.

For clients, in addition to continuing to provide quality support, approaches include extending the hours of helplines, increasing their social media presence and setting up virtual social networks.

For informal carers, many of whom were experiencing deterioration in mental health and increased stress, loneliness and depression this meant providing more respite, connections and supports.

Comments from participants included:

  • “We were clear: our goal was to maintain wellbeing of residents and safety of staff – whatever it costs.”
  • “How can we look after our people during this intense time while holding onto optimism?”
  • “My main concern is the trauma of our staff. They have constantly needed to be battle-ready. This can’t be the new normal.”
  • “We didn’t want them to be wondering ‘what will happen?’ Our internal and external communications were key.”
  • “We were concerned about informal carers – without supporting their wellbeing they couldn’t care for their loved one.”

Decentralised decision-making is essential to agile responses

COVID has provided a much-needed burning platform to lead transformation projects, including the reengineering of operating, business and service models.

Leaders were forced to make high-stakes decisions in suboptimal circumstances – but through the process learnt that fast decision-making does not mean poor decision-making. At the same time, they identified the need to better equip leaders for decentralised decision-making and to invest in their capacity and capability to lead under stressful circumstances. They also recognised the need to identify risks early and work with stakeholders to resolve them quickly.

Comments from participants included:

  • “We think we are old – not innovative or agile – but it’s remarkable how quickly we did change our services.”
  • “As an ancient organisation – we were forced to be agile.”
  • “We benefited from making decisions and pivoting on daily basis. We realised that for our board members and executives, thinking fast doesn’t result in bad decision-making in a crisis.”

NFPs need to demonstrate their value to government

The crisis has brought into sharp focus the relationship between NFPs and government, and the value that NFPs provide. Throughout the pandemic, government has sought urgent input from NFPs on the rapidly changing circumstances of groups of vulnerable people. NFPs have also been used by government to quickly respond to changing needs through expanded and adapted support mechanisms.

Despite this, the leaders identified that government often lacks an informed understanding of NFPs, how they operate, their financial situations and funding sources, and the nuances across different sectors – often grouping all NGOs in the same basket. The leaders perceived government’s view of NFPs as an avenue to outsource service provision and risk.

Some NFPs have become more assertive in their relationship with government, reminding them of the level of reliance by government on the NFP sector to respond to emerging needs. This situation highlights the requirement for NFPs to articulate their value to government and society.

Another concern of the leaders was that the improvements made by governments for vulnerable people during this pandemic, in areas such as income support and accommodation options for people at risk of homelessness, will be foregone in the COVID-19 recovery phase.

Similarly, they highlighted that the release of additional government funding to NFPs – while welcomed by the sector – was time-limited and only enough to ramp up services over the short term. This made it incredibly difficult to recruit enough staff with the required skills and often only provided enough time to deliver support for a single cohort of clients.

Longer-term funding is needed to enable NFPs to plan, recruit and train staff and to address the significant bottlenecks in a system that must expand to meet growing demand. In its push for more sustainable funding, the sector needs to highlight the problem of a short-term dramatic ramp up of crisis funding being followed with just as quick removal of funding.

Having a strong NFP sector will ensure that their evidence-based advocacy continues to influence government policy for our most vulnerable people.

Comments from participants included:

  • “Never waste a crisis.”
  • “We needed to monitor our cash flow daily – without fundraising we would lose millions.”

There are big potential benefits to getting this right

High unemployment, tighter government budgets and a society recovering from a pandemic means extra demand for NFP services is likely to continue. Inevitably organisations will need to make changes at the same time as they serve more clients.

The potential benefits of getting this right are huge – more people receiving better help, stronger financial positions, improved staff wellbeing and a more agile and responsive NFP sector. So the consequences of getting it wrong are also great.

NFPs and their clients have a lot at stake.

Get in touch to discuss how Nous can help your not-for-profit have a greater impact and articulate its value to funders.