Faculty Research: Covid-19 Pandemic Disrupts Nonprofit Operations

The Covid-19 pandemic has forced many firms, across all industry sectors, to rethink and reevaluate their supply chain management and operations management. Beginning with toilet paper and hand sanitizers, this pandemic has shaken up supplies of several consumables—ranging from protective gowns and masks to meat products and fresh produce to medicines and blood, and even to bicycles (with biking becoming one of the popular forms of exercise during the mandated social distancing). While there has been a constant spotlight (and, rightly so) on these industries that are of importance to the general public, there is a not-so-talked-about sector that is facing severe operational challenges during this pandemic—it is the nonprofit sector.

Pandemic or no pandemic, nonprofit organizations (NPOs) play an important role in the society. They provide critical (and in most cases, lifesaving) products and services to underserved populations. The Covid-19 pandemic has underscored that NPOs must use their scarce resources in an efficient and effective manner, so as to create the best possible social impact. For the supply of products and services, NPOs rely on altruistic donations—cash, kind, and time. The pandemic has impacted all their sources of supplies: donors have limited or no cash to donate to NPOs, and health and safety concerns have made it difficult for volunteers to show up. Plus, the majority of NPOs have cancelled major fundraisers (e.g., gala events and luncheons). For instance, in a survey conducted by Charities Aid Foundation of America, about 370 out of 544 NPOs report a decline in contributions by donors during this pandemic.

Unfortunately, while the supply side has become severely constrained, the pandemic has increased the demand for these critical products and services. For example, the disproportionately high rate of Covid-19 infections and a skewed economic burden of lockdowns on low-income families has led to extreme poverty and hunger. Also, domestic violence has risen due to the forced lockdowns in societies across the globe. In a recently published report, the United Nations Population Fund predicts that Covid-19 lockdowns will be accompanied by at least 15 million additional cases of domestic abuse.

Consequently, the NPOs face increased pressures to balance their goals of providing the right product/service to the right client at the right time, ensuring equitable access to clients who may face different challenges due to regional differences, and reaching as many clients as possible while ensuring timeliness in resolving the needs of each client. Although the Covid-19 pandemic has added to the volume and complexity of operational challenges faced by NPOs, it has also emphasized the need to balance the delicate trade-offs these organizations face.

Take the example of NPOs that help domestic abuse survivors: Even in the absence of pandemic, it is very important for such NPOs to invest in offering deep intake sessions where clients’ issues are discussed and clients select one of the many service plans, so NPOs can ensure that the clients seek and receive services that are best suited to their needs. Using an optimization model that accounts for the societal costs stemming from delays experienced by clients, my collaborators at Georgia Tech (Professors Morvarid Rahmani and Karthik Ramachandran) and I find that investing more in advisory activities will not only result in better outcomes due to faster resolution of clients’ needs, but also prevent any waste of NPO resources due to mismatches and delays experienced by their clients.

Currently, due to severe resource constraints resulting from the ongoing pandemic, many NPOs could be tempted to overlook this important activity in lieu of providing service delivery—even if in tiny dosages—to a larger volume of clients. On the contrary, the isolation and stress resulting from the pandemic (or lockdowns) underscore the need of enhanced advisory support. My participation in some of these intake sessions as well as multiple conversations with NPOs that serve distressed individuals—e.g., Houston-based Daya, which helps domestic violence survivors, and Atlanta-based Georgia Works, which helps homeless individuals—validate the study’s practical insights that NPOs can generate higher social impact by prioritizing effectiveness of services delivered over the number of clients served. That said, our study also shows that it may be desirable to prioritize the volume of reach when ill effects of not serving a proportion of clients are quite high. For example, this could occur when clients do not have access to any other form of relief or assistance (say, in rural or remote areas).

As we move into fall, this pandemic has underscored the need to ensure an equitable access to affordable and high quality child care in order to facilitate a safe and robust reopening of the U.S. economy. It is a particularly important problem to solve because many low-income families are unable to utilize the government-issued subsidy vouchers due to inadequate supply of high quality child care options in their localities. The Covid-19 pandemic has shown that equitable access to affordable child care is a necessary condition for economic stability and sustainability for all (including the children, their parents, and the society). This has enhanced the relevance and applicability of the research I conducted with my Isenberg colleagues (Professor Senay Solak, and Management Science doctoral student, Wei Wei) to find better ways to use the limited funds to improve societal outcomes in the child care subsidy voucher programs in the U.S.

The local NPOs—also known as Child Care Resource and Referral agencies—that are mandated by the state governments to manage day-to-day operations of voucher programs face the complex task of splitting their limited, and ever decreasing, budgets between different supply-enhancing activities. Multiple interviews (in-person before the pandemic and via Zoom during the pandemic) with directors at two such NPOs in Massachusetts reveal that it is important to account for regional differences in infrastructure and demographics, cost-effectiveness of investments in various programs, and socioeconomic burdens of distress on low-income families in the absence of subsidies in order to eliminate inequities faced by beneficiaries in rural and urban regions. Most recently, the pandemic has added to this complexity because of the joint need to increase the quantity and quality of voucher-accepting child care providers. This is also because several small- to medium-sized child care providers are struggling to remain afloat through the pandemic.

We have developed an optimization-based tool that can aid Child Care Resource and Referral agencies to appropriately allocate their funds toward offering partner development services, such as cleaning and sanitation and other safety related programs for the providers, and conducting outreach to enroll more private providers in the voucher program. Further, we use data from the U.S. Census Bureau, the child care and early education literature, and our interviews with multiple experts in the domain of child care subsidy vouchers to contextualize our model for an NPO in the Western Massachusetts area. Our extensive numerical experiments show an approximately 7 percent reduction in inequity in access to subsidized child care if the organization were to allocate funds as proposed by our framework. This is primarily driven by the recommendation to increase investments in conducting outreach, especially in rural regions.

Several scholars in the fields of management science and operations management have contributed to the understanding of the spread of this infectious disease, and allocation of ventilators and PPEs to the most needed locations. These are great examples of socially responsible operations. Similarly, my research shows and emphasizes that organizations in the nonprofit sector can also reap significant benefits from the use of operations management principles, which in turn will benefit not only their beneficiaries but also everyone in the society.

Read more about Priyank Arora’s work here.