Short-Run Effects of Covid-19 on the Nonprofit Sector

Abstract

This paper studies the effects of the coronavirus pandemic on the U.S. nonprofit sector. Using a difference-in-differences framework, we leverage variation in the timing of charities’ fiscal years, finding that government intervention helped keep charities afloat during the pandemic. On average, government grants rose by $975,000, while private contributions fell by $380,000. Despite the net increase in their contributions, charities exposed to the pandemic lost employees and made fewer program expenditures than non-exposed charities. However, charities which had Paycheck Protection Program loans approved during the first year of the pandemic fared better than eligible charities without approved PPP loans.

Keywords: Nonprofit sector, COVID-19, Paycheck Protection Program, fiscal policy