While the COVID-19 pandemic continues to race across the globe, it’s leaving economic fallout in its wake. Beyond a financial shock, the disruption is upending the models we use to make predictions about consumer behavior and business outcomes. As of this writing, the number of unemployment claims in the USA jumped from 282,000 the week ending March 14 to 3,307,000 the week ending March 21 to 6,648,000 the week ending March 28 (a new record). The most significant increase in claims this last week-over-week was in California (+692k new claims), followed by New York (+286k), Michigan (+183k), and Florida (152k). More state data can be found here on page 5.
Like you, Pursuant strategists have been monitoring the news and listening to experts in the field. McKinsey & Company today released this report on assessing the near-term economic impact of COVID-19.
These stats are sobering—but we believe Pursuant has the right tools for helping nonprofits assess what might be scary national trends against the real impact on their organizations. Below, we’ve paired some essential takeaways with recommended actions for leveraging Pursuant’s GivingDNA™ Platform to assess potential economic consequences for your organization.
- 44 million to 57 million jobs are vulnerable to inactivity that could lead to reduced income, furloughs, or even layoffs, potentially affecting up to one-third of the entire US workforce.
- Our Take: However, 3 million of these workers could find short-term employment as community health workers, warehouse staff, delivery drivers, and other critical roles.
- 86% percent of these vulnerable jobs paid less than $40,000 a year.
- Recommended Action: Look at your client’s demographic data in the GivingDNA™ Platform. What percentage of your donors have a household income of $40k or less? Knowing this number may help you ascertain what percentage of your file may be unable to continue their support during this time (either at the same level or at all).
- More than half of the vulnerable jobs in the private sector were in firms with fewer than 500 employees—and almost 40 percent from businesses with fewer than 100 people. In addition, 16 million self-employed workers are not captured in their analysis due to a lack of available data. But many of them are either unable to do business as usual or facing a sudden drop in demand.
- Our Take: Some businesses and self-employed workers may find relief through the Payment Protection Program as part of the CARES Act. So, the number of unemployment claims may reduce in the near future as businesses apply for and are awarded the funds available, preventing millions of temporary layoffs from becoming permanent.
- 46% of vulnerable jobs are in food service, customer service, and sales
- Recommended Action: Take a look at your client’s demographic data in the GivingDNA™ Platform. What percentage of donors have a Top Occupation of Sales/Service? This may provide an indication of what subset of your file may be unable to continue their support (either at the same level or at all).
- Looking at the impact across geographies, tourism-reliant states like Nevada, Hawaii, Montana, Florida, Wyoming, South Carolina, and Louisiana are likely to be the hardest hit in percentage terms.
- Recommended Action: Look at your client’s demographic data in the GivingDNA™ Platform. What percentage of your donors are located in these tourism-reliant states? That might give you an indication as to the percentage of the file that might be unable to continue their support during this time (either at the same level or at all).
- Even before the pandemic, some 40 percent of Americans reported that they could not cover an unexpected $400 expense without borrowing or selling assets. Finances were already precarious for many of the people who are now without work.
- Recommended Action: Look at your client’s demographic data in the GivingDNA™ Platform. What percentage of donors have predicted discretionary spending of $0-$10k? That number may indicate what percentage of the file may be unable to continue their support during this time (either at the same level or at all).
- Taking things a step further, filter your donors by mid and major levels, possibly targeting current donors and those in the sales/service sector most likely to be affected. Looking at those donors with discretionary spending of $0-$10k might give gift officers a list of donors to check in with—not to ask for a gift, but maybe just a phone call to touch base and see how they are doing (the personal connection could go a long way).
- Recommended Action: Look at your client’s demographic data in the GivingDNA™ Platform. What percentage of donors have predicted discretionary spending of $0-$10k? That number may indicate what percentage of the file may be unable to continue their support during this time (either at the same level or at all).
McKinsey also has compiled some significant data on US Consumer Sentiment. The charts in the middle of this article help assess how Americans currently feel, their spending habits, and their income changes. Some key takeaways and recommendations:
- On the whole, Americans are more optimistic that the economy will recover than European countries. Optimism has stayed relatively constant over the last three weeks, despite the ever-changing situation. Levels of optimism trend about the same across generations. However, it is highest for households earning $100k+.
- Recommended Action: Look at your client’s demographic data in the GivingDNA™ Platform. What percentage of donors have a household income of $100k+? If your donor file consists of higher wealth donors, they might not be as fearful of the current environment. However, their stock portfolios might make it challenging to give as freely right now.
- Americans are more concerned with not knowing how long this crisis will last (69%) and overall public health (68%) than with the negative impact on job or income (43%) or not being able to make ends meet (42%).
- 18% of Americans expect no impact to their personal finances; 33% expect finances to be impacted for 1-3 months; 25% expect finances to be impacted for 4-6 months, and 25% expect finances to be impacted for 6+ months
- Our Take: Currently, half of Americans expect the financial impact of the crisis to last no more than three months. We could expect a slump in fundraising results for a few months, but most donors are not anticipating long-term impact.
- 65% of consumers say their incomes and ability to make ends meet have not been impacted; however, 59% of consumers say that given the economy and personal finances, they have to be careful how they spend their money.
- Our Take: Despite the majority of donors’ incomes remaining stable, they may still be wary of giving at this time. Being your donor’s charity of choice is going to be more critical than ever before as they start to prioritize their philanthropic support. Now is the time to ensure your case for support is clear and that donors understand why they need to continue to support your mission during this crisis.
- Boomers are the most resilient generation. 75% of boomers expect their income to stay the same or increase; 61% expect household spending to remain the same or increase (compared to 62% and 56% for the national average).
- Recommended Action: Take a look at your client’s demographic data in the GivingDNA™ Platform. What percentage of donors are 64+? If your donor file is made up mainly of boomers, then you might not see a significant impact on giving.
- While consumer spending is declining overall, there is a shift to the online channel, which is less affected.
- Our Take Americans are adopting new digital activities. What innovative strategies can you deploy with your clients through their digital channels? Do they have any content they can push out for virtual learning (11% increase since COVID-19 started) or maybe the nonprofit could start a private Facebook Group to support personal connection (15% increase).
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