Nonprofits in Arizona are facing some terrifying scenarios when it comes to maintaining funding amid COVID-19. News stories continue to report on the loss of revenue to date throughout a variety of sectors, with some reports say as much as nearly $53 million. Nonprofits in Arizona are looking at a potential annual loss of over a quarter of a billion dollars, with over 90 percent of groups reporting a decrease in revenue, three quarters seeing a disruption of services and volunteers pulling back on their commitments. According to the ASU Lodestar Center, only 5 percent of nonprofits reported normal operations as the pandemic first unfolded.

All of the above points are concerning, and as Kristen Merrifield, the CEO of Alliance of Arizona Nonprofits said, “it is just the tip of the iceberg.” This statement is as foreboding as it is accurate.

The reasons for financial distress are simple; nonprofits traditionally run tight margins around their organizations to make sure their programs are funded. It is not easy to run surpluses. I have spent nearly 15 years in the…

Illustration by Jocelyn Ruiz

Entering the nonprofit world as a young man was challenging. I did not expect to enter a field that was just as competitive as the for-profit sector, nor did I expect that the nonprofit world would be challenging. It’s not easy to work in this field, yet many of us do for numerous different reasons. No factor more important than the feeling we get when we help people. Helping people and serving the community can feel like an uphill battle, yet it becomes so much easier when we have someone by our side, helping and motivating us as we climb the hill.

While the world braces for the changes that occur daily with COVID-19, there is one constant that remains: teamwork. Teamwork is essential for us because it enhances our ability to communicate with our peers, our partners and our teammates. Professionals use it daily, whether it is athletes sharing roles in sports or managers sharing responsibilities with their teammates. For us to be efficient, we need to depend on our teammates so that we can amplify our organization’s ability to deliver quality services. When we can deliver quality services, our community prospers and we create opportunities for organization to get funding options, as well as free marketing that many deserve but most cannot afford.

Now more than ever, working together is critical for the nonprofit world, both internally and externally. COVID-19 has restricted us from working face-to-…

For the general public, the designation “nonprofit” is often correlated with donations. The thought of a nonprofit entity earning revenue and having customers can appear contradictory. However, these entities can earn revenue and have customers, so long as these transactions serve their mission and purpose.

Why, suddenly, is earning revenue and having customers an important topic for nonprofits?

As part of its convergence project to remove inconsistencies and weaknesses in existing revenue requirements, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This new revenue recognition standard is intended to improve the comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets, including nonprofits.

How can a nonprofit earn revenue and have customers?

Many nonprofit entities have contracts with government agencies that request the performance of specific services and are paid by the government for those services. Often time these transactions occur when government agencies elect to outsource certain services. These arrangements may be in the form of fee-for-service contracts. Nonprofit entities will now be required to review the terms of all their contracts to determine whether they need to apply the new revenue recognition standard.

Under fee-for-service contracts, the nonprofit entity…

Performance measurement (PM) informs strategic decisions. It provides critical data for nonprofit leaders, board members and funders to understand the effectiveness of organizations in serving their missions. We are in a moment where PM has the potential to be more powerful than ever.

However, those within the sector are realizing that PM has not lived up to expectations. Social problems still endure, despite PM’s prominence as a way to ensure accountability and inform strategic decisions since the 1960’s. Limitations exist because PM has created tensions, instead of bridges, between funders and nonprofit service providers. To truly move the needle towards ameliorating social challenges throughout the world, we must revisit the efficacy of what has been measured and how.

To harness the full potential of performance measurement, funders and nonprofits must join together to co-create mutually beneficial methods and metrics. Five interdependent recommendations will move the sector towards this type of partnership:

Reframe performance measurement as an ongoing process of learning, instead of a process of accounting.

According to the W.K. Kellogg Foundation, PM is no longer about proving something works, but about generating information to better understand how and why…

America has a long and rich history of national service, often turning to it as a powerful lever in times of crisis, as it did after 9/11, Hurricane Katrina and the Great Recession of 2008. Now should be no different.

A massive expansion of service is required to meet today’s challenges. It has the potential not only to help build or rebuild much-needed community support systems ravaged by this pandemic, but also — if designed intentionally — to be an integral part of the nation’s intergenerational poverty-interruption arsenal. How we drive that expansion and whom it serves must be central to our approach if we expect national service to meet our society’s most urgent post-COVID needs.

Thankfully, this pandemic will likely inspire a new wave of national service. But it is imperative that those who enlist aren’t just the most privileged people who can most afford to do so; rather, they should be as representative of and accountable to the hardest hit areas as possible. The new opportunities for national service must be fulfilled by Americans who reflect the full tapestry of diverse backgrounds, voices and experiences that make up our nation — especially those who already live in the communities of color disproportionately affected by this crisis.

The pandemic is…