Challenges Faced by Community-Based Organizations in the Eighth District

We recently examined the impact of ongoing disruptions from the COVID-19 pandemic in low- to moderate-income (LMI) communities within the Eighth Federal Reserve District. Today, we turn to the condition of organizations responding to these communities’ needs to foster a more inclusive economic recovery.This article is the second in a two-part series analyzing data from the 2022 Community Impact Survey. The goal of this series is to provide an informative update on the conditions that LMI communities and the organizations serving them have faced since the pandemic’s onset. For the following analysis, we used a subset of the 2022 Community Impact Survey sample that includes 226 observations from entities headquartered in the seven Eighth District states.The Eighth District includes all of Arkansas, eastern Missouri, southern Illinois, southern Indiana, western Kentucky, western Tennessee and northern Mississippi.

We found that organizations providing services to LMI communities within the Eighth District have experienced fewer COVID-19-related disruptions compared with what they experienced in 2021. However, only half of the entities surveyed were able to meet most of their demand in 2022. Difficulties recruiting staff and fundraising were cited as primary reasons these organizations are still experiencing disruptions.

Fewer Entities Are Facing Significant Disruptions than in 2021

To understand the changing impact of the pandemic, the survey asked respondents to recall conditions in 2021 and compare them with conditions during the August 2022 survey period.Comparisons made throughout the report are not based on previous surveys. To understand changes in 2022 relative to 2021, the survey asked respondents to recall conditions in 2021 and also indicate current conditions. The percent change between the two time periods is calculated as the related change in total responses. The difference does not refer to a percentage point change. (See the first figure.)

Conditions for organizations serving LMI communities in the Eighth District seemed to be improving, with 63% fewer respondents noting significant disruptions. This is similar to what we found at the national level. However, many Eighth District organizations (60%) still faced at least some disruption, and recruiting staff and volunteers, as well as raising funds, were cited as primary challenges.

Disruptions Reported by Eighth District Entities

SOURCES: 2022 Community Impact Survey and authors’ calculations.

...But Challenges Persist

A tight labor market has been a challenge for many employers, and community-based organizations are no different. (See the second figure.) When asked about challenges related to staffing, more than half of respondents indicated that their staffing levels decreased relative to those in the previous year. The two primary challenges they identified were hiring and retaining staff and offering competitive positions in the labor market. Additionally, 86% of the entities surveyed reported increased expenses, with the need to raise wages being one of the primary causes. Other factors, such as nonlabor costs and high demand for services, also contributed to increasing expenses.

Additionally, 42% of respondents reported that their revenue from various sources decreased relative to that in 2021. This is especially challenging for those entities relying heavily on donations; 40% of respondents indicated that donations had decreased over the previous year. Slightly more than a third did note that they saw an increase in government funding, which may help to relieve budgetary pressures, but with pandemic-related relief winding down, organizations may face an uncertain financial landscape.

As these organizations face challenges in recruiting staff, as well as financial volatility, they continue to see an increase in demand. Demand for services increased for approximately 70% of service provider organizations we surveyed, with slightly less than half of entities (44%) reporting that the increase in demand has been significant.

Change in Demand, Staffing, Expenses and Revenue, 2022 vs. 2021

SOURCES: 2022 Community Impact Survey and authors’ calculations.

Many Eighth District organizations were able to adapt to the pandemic’s disruptions and continue responding to the needs of their communities. Whether it was helping communities navigate the new landscape of relief and recovery funds or expanding services for vaccine information and distribution, when asked about their entities’ ability to adapt to COVID-19 disruptions, almost 85% of respondents said that they were able to adapt to some, but not all, disruptions they faced last year. Nevertheless, only 30% said that they were “well prepared” to face disruptions in the coming year.

Foreseen Hardships in Meeting Communities’ Needs

Higher expenses combined with fewer resources affects an organization’s financial health. (See the third figure.) A quarter of respondents indicated being able to operate for at most six months before facing financial distress that would require reducing services, laying off staff, closing locations or shutting down entirely. Almost half of respondents indicated they were able to operate for at most 12 months before exhibiting financial distress. Another 43% of respondents reported being able to operate for more than a year in the environment current to the survey period.

Financial hardship together with higher demand reduces entities’ ability to meet that demand. In 2022, only 50% of the entities surveyed were able to meet most of their demand (defined as meeting 75% of demand or more). While there are positive expectations for 2023, less than 60% of entities expect to meet most of their demand this year.

Time to Financial Distress among Eighth District Entities, 2022

SOURCES: 2022 Community Impact Survey and authors’ calculations.

The impacts of the COVID-19 pandemic continue to be felt in the Eighth District’s LMI communities. Although these communities are in a better place than they were at the peak of pandemic-related distress, there are some whose needs have not been fully addressed. Organizations serving LMI communities have played an important role in economic relief and recovery efforts since the beginning of the pandemic. However, this analysis demonstrates that these organizations themselves are not immune to the aftermath of pandemic-related public health and economic crises. Monitoring the health of these entities allows a better understanding of the state of the social infrastructure on which LMI communities rely, as well as of their capacity to continue helping communities in need.

Notes and References

1. This article is the second in a two-part series analyzing data from the 2022 Community Impact Survey. The goal of this series is to provide an informative update on the conditions that LMI communities and the organizations serving them have faced since the pandemic’s onset.
2. The Eighth District includes all of Arkansas, eastern Missouri, southern Illinois, southern Indiana, western Kentucky, western Tennessee and northern Mississippi.
3. Comparisons made throughout the report are not based on previous surveys. To understand changes in 2022 relative to 2021, the survey asked respondents to recall conditions in 2021 and also indicate current conditions. The percent change between the two time periods is calculated as the related change in total responses. The difference does not refer to a percentage point change.