Navigating crises: the financial adaptations of NGOs during the COVID-19 pandemic

Demand for NGO services usually increases in times of crisis. However, a new study led by Kaunas University of Technology (KTU) in Lithuania has found that the COVID-19 pandemic had a mixed impact on NGOs working in Lithuania, Croatia, Poland and the UK. Some achieved financial success, but this often meant simplifying their programmes and compromising non-financial results.

During economic, political, or other crises, non-governmental organisations (NGOs) often experience a heightened need for their support and assistance. Yet, the recent global crisis of the COVID-19 pandemic presented unexpected challenges to the NGOs: restrictions on movement imposed by governments prevented them from carrying out their activities and providing certain services. Moreover, despite the increase in demand for NGO services, organisations have faced the problem of raising funding, as some of the usual methods of fundraising have become impossible.

Lessons learned during COVID-19 are used by NGOs to fundraise for Ukraine

She notes that NGOs work to promote the interests of society, focusing on issues and needs that the government and business sectors cannot address. For this reason, the importance of NGOs’ activities increases in difficult times. However, Dr Leitonienė adds, that in times of crisis, NGOs also face certain challenges, such as attracting additional funding.

“It is important to explore how NGOs adjust their activities and overcome the difficulties they face. Differently from most of the research in this field, we focus on examining the success stories – that is, finding out how and with what solutions NGOs were able to raise funds and successfully carry out their activities during the COVID-19 pandemic,” explains Dr Leitonienė.

She believes that the findings might be useful for NGOs to prepare for future crises. According to the KTU researcher, NGOs’ flexibility such as their ability to attract additional funding by working closely with the government, founding companies, and donors and by carrying out joint projects with other NGOs is an important indicator of their resilience.

“For example, virtual fundraising, which was introduced during the COVID-19 pandemic, has been successfully used to raise funds to address the problems related to the war in Ukraine today,” says Dr Leitoniene.

Among success factors – collaboration, virtual fundraising and publicity

The study analysed 240 NGOs from four countries: Poland, Lithuania, Croatia, and the United Kingdom. Each country contributed 60 organisations to the research sample. The study focused on comparing revenues from two periods (2019 and 2020) to determine the financial impact of the COVID-19 pandemic on the organisations.

Using a mixed-method approach – content analysis of NGO financial reports and statistical methods, including logit regression – changes in financing models and critical success factors, and their interrelationships were established.

The study revealed that although some NGOs managed to achieve better financial results, i.e. to maintain the same level of funding or even to increase it, they didn’t achieve their objectives.

“This does not mean, that NGOs received more money while carrying out fewer activities. It simply means that the NGO carried out other activities or in a different way than planned,” explains the KTU’s School of Economics and Business researcher.

She says that many of the financially successful NGOs linked their activities to the societal problems caused by the COVID-19 pandemic instead of focusing on their previous objectives. Moreover, the transfer of activities online was not always possible or did not ensure the previous quality of services or advice.

The study revealed that the main factors contributing to the NGOs’ financial success during the COVID-19 pandemic were working with governments and taking on additional projects, working closer with the founders of the organisations, virtual fundraising and publicity, and working with other NGOs to combine resources to implement joint projects.

Being transparent helps build public trust

The KTU researcher notices that the NGO sector’s development and the availability of their data in the countries chosen for the study are very different.

“Strong and competitive NGOs are a sign of a vibrant civil society. Public trust and involvement in NGOs’ activities are crucial for the success of these organisations,” says Dr Leitonienė.

In Lithuania, citizenship and activism are only slowly gaining ground, as are NGOs. In the World Giving Index Rankings 2024 report, Lithuania is ranked 139^th, Poland 142^nd, Croatia 137^th and the United Kingdom – 22^nd. Dr Leitonienė believes that this might be due to the different historical circumstances, funding opportunities and cooperation between the NGOs and the governments in the selected countries.

“One thing that could be learnt from the UK organisations, is increasing the transparency of NGOs by encouraging them to disclose financial and non-financial information to the public,” says the KTU researcher, adding that in Lithuania, it is not easy to find information even on the number of NGO’s operating in the country, and the large number of NGOs do not provide sufficient information on their activities.

“By being more transparent, the NGOs would contribute to increasing public trust and engagement in their activities,” says Dr Leitonienė.

The peer-reviewed publication “To survive in the COVID-19 pandemic: the financial aspects of NGOs” was published on Contemporary Economics, Vol. 18 Issue 3 2024 and can be accessed here.