The Federal Reserve’s COVID-19 Community Impact Survey
Introduction
As COVID-19 began to spread widely across the United States in early spring, the pandemic halted economic activity across the nation. By mid-March, individuals, communities, and businesses were feeling the disruption of the virus and social distancing orders. Around this time, all 12 regional Fed banks and the Board of Governors developed and fielded a survey to gauge the impacts of the pandemic on low- and moderate-income (LMI) communities and the organizations that serve them. The survey also gathered information to help identify economic and social policy responses to the crisis. This survey was intended to provide community-based organizations, including nonprofits, financial institutions, government agencies, and others, an opportunity to reveal how the COVID-19 pandemic is impacting their operations as well as the people they serve.
The online survey was first fielded from April 8 to 10, garnering about 3,900 responses. From June 3 to 10, a similar survey was administered, which asked several questions from the first round but also included new questions and changes to the April survey instrument. The second round of the survey attracted just over 1,800 responses. For both iterations, this effort relied on a convenience sampling method: The survey was sent to lists of stakeholder contacts from each Fed bank and the Board of Governors. Because of this, the individuals who received and responded to the surveys vary between the April and June survey.
National reports of the April and June survey results are publicly available, but this Regional Matters post focuses specifically on results from jurisdictions in the Fifth District, which include the District of Columbia, Maryland, North Carolina, South Carolina, Virginia, and most of West Virginia. In the first and second round of the survey, there were 387 and 380 Fifth District respondents, respectively. This represented less than 10 percent of total responses in April and roughly 20 percent in June. It is important to note that many respondents included in our analysis do not exclusively operate within the Fifth District footprint.
April and June Sample Composition
The distribution of organizations represented in the Fifth District sample from June differs from the pool of national survey respondents. The majority of survey respondents that operate in the Fifth District represented private industry (62 percent), which includes consulting firms that provide services to nonprofits and government entities. Only 22 percent of the national sample, inclusive of the Fifth District respondents, represented private industry. Nonprofits, including 501(c)(3)s, philanthropic organizations, member associations, and faith-based organizations, accounted for 21 percent of the Fifth District sample but 45 percent of the national sample. Nine percent of Fifth District respondents represented government or quasi-government agencies. The remaining Fifth District respondents spoke on behalf of financial institutions (3 percent) and other organizations that did not fit into a category provided (5 percent). The April survey garnered a considerably different sample as 66 percent of Fifth District respondents represented nonprofits and just nine percent represented private industry.
The organizations represented in the Fifth District sample work on a range of issues within the District and beyond, and many operate across multiple sectors. More than half of June respondents (54 percent) serve small businesses, compared to 41 percent in the full national sample. Respondents working on public and community services, including a broad range of government services, represent 36 percent of organizations in the Fifth District (42 percent nationally). Housing was a dominant focus area within the national sample (44 percent), while only 26 percent of Fifth District respondents reported working on the issue. Fifth District respondents also reported working on health (23 percent), workforce development (22 percent), education (21 percent), food (19 percent), and consumer finance (9 percent). Thirty percent of the Fifth District sample cited working on issues not included in the categories provided, including legal services, engineering, construction, and transportation.
COVID-19 Impacts on Respondent Organizations
When we asked about the current scale of impact of COVID-19, respondents operating in the Fifth District reflected trends in the national sample. The majority of Fifth District respondents (57 percent) indicated COVID-19 is causing significant disruption on their organization, and more than half of this group expects recovery to be difficult. One-third of respondents reported a manageable level of disruption on their organization. Fewer than nine percent of respondents stated that the pandemic has had minimal or no disruption on the entity they represent. These sentiments are a positive shift from April when Fifth District respondents largely answered that the pandemic was causing serious disruption (75 percent) to their organization, and 34 percent anticipated recovery would be challenging. At that time, a smaller share also reported a manageable level of disruption (21 percent) compared to June respondents.
We asked respondents about specific operational and financial challenges to understand how the COVID-19 pandemic had impacted their organizations over the past eight weeks and how they expected their organizations to fare if economic conditions did not improve. The dominant impact across the June sample was a change in demand for services, with 46 percent of respondents reporting a decrease in demand and 26 percent reporting an increase. Private industry respondents, which represent 62 percent of the Fifth District sample, accounted for 87 percent of the organizations reporting a decrease in demand. Conversely, more than half of nonprofits in the sample reported an increase in demand, and another 16 percent of nonprofits anticipated an increase in future demand for services. The variation in responses reflects the diversity in the focus areas, structure, and revenue sources of the organizations. Organizations serving industry or government clients that have temporarily closed or suspended operations may account for the decrease in services, while organizations serving individuals and families may see additional needs for their services as economic conditions impact household income.
In the latest round of the survey, more than 30 percent of Fifth District respondents said COVID-19 had caused a decrease in their organization’s ability to provide services, and an additional 17 percent expect future declines. Of the Fifth District respondents citing an increased demand for services (n=97), only 37 percent reported an increase or anticipated increase in the ability to provide services. More than half of the Fifth District sample reported no change in staffing, but nearly a quarter of respondents reported decreased staffing over the preceding eight weeks. Of these respondents, 78 percent reported decreased demand for services or expected demand to decrease if conditions did not change.
When asked about the expected future impact of COVID-19 on their organization’s ability to operate, only 5 percent of April respondents and 11 percent of June respondents reported that it had no impact on the financial health of their organization and expect no related operational challenges. In June, one-quarter of the respondents expected their organizations to experience financial distress that could lead to reducing services, laying off staff, and/or closing locations within three months of the survey date, and another quarter of respondents expect similar operational challenges in three to six months if current conditions persist. Expectations of how long respondent entities can operate without financial distress has increased in the months since the first round of the survey. Nearly 60 percent of Fifth District respondents in April anticipated experiencing financial distress within six months, versus less than half of June respondents.
COVID-19 Impacts to Communities
We asked respondents about the degree and impact of the COVID-19 pandemic on the LMI communities they serve. A vast majority of Fifth District respondents (91 percent in April and 78 percent in June) reported significant disruption in economic conditions for the people and communities they serve, and close to two-thirds of these respondents in both survey periods expected recovery to be difficult. The remaining one-third of June respondents (27 percent) and 21 percent of April’s sample expect their communities to bounce back quickly in spite of significant disruption. Fewer than 4 percent of Fifth District respondents saw little or no disruption in economic conditions within the communities they served in June. Nationally, 60 percent of the sample reported a significant impact with a difficult recovery, while 21 percent observed significant disruption but expected a relatively quick recovery.
When asked about the primary impact of COVID-19 on organizations’ respective communities, 47 percent of June respondents reported that business impacts, including closures, supply chain disruption, and reduced demand, was the core issue. Of the respondents who expect recovery to pre-pandemic levels to take more than 12 months, 73 percent report business impacts getting modestly or significantly worse in the preceding period. An additional 34 percent said income or job loss had the largest impact on their communities. These issues dominated the national survey responses as well, with 42 percent of respondents reporting income and job loss as the primary impact and 32 percent citing business impacts. The divergence likely reflects the composition of the Fifth District sample, which disproportionately represents organizations working on small business-related issues relative to the national sample. A higher proportion of entities working in housing, workforce development, and public and community services, are included in the national sample.
We asked respondents about changes they had seen across key dimensions in the preceding eight-week period. Roughly half of respondents (52 percent) indicated that the pandemic’s impact on education (including child care, K-12, and higher education) was getting significantly or modestly worse over the preceding eight-week period. One-quarter of respondents reported that access to basic consumer needs was getting better, and an additional 30 percent reported no change over the preceding eight weeks. This may reflect the stable access to food and consumer products after the initial demand shock earlier in the spring. Of respondents who provide services directly to individuals and families, 72 percent report income and job loss impacts getting worse. Just under half of respondents whose organizations serve individuals and families report health in their communities getting worse, while 17 percent saw modest or significant improvement.
We asked respondents how long they expected the communities and people their organizations serve to return to pre-COVID-19 conditions. The distribution of the June Fifth District responses mirrors that of the national sample overall. The largest share of respondents (41 percent in the Fifth District) expected recovery to take more than one year. Just 15 percent expected recovery to take six months or less, while one-third of respondents expected it to take more than six months but less than 12 months to return to pre-pandemic levels. Compared to April responses, a larger share of organizations foresee longer-term impacts on LMI communities.
Respondents were also asked what programs and initiatives, if any, have presented notable opportunities and/or barriers for LMI communities during the COVID-19 pandemic. A larger share of respondents expressed that federal efforts have provided opportunities (30 percent) rather than barriers (16 percent), specifically citing the Paycheck Protection Program (PPP) and the coronavirus relief bill — including consumer stimulus checks and temporary changes to unemployment insurance — as opportunities. Of the respondents who detailed how federal programs have provided barriers for their communities, many said that the coronavirus relief bill and the PPP were difficult or impossible to access for LMI communities. Respondents also frequently mentioned that access to food, broadband, education, and COVID-19 testing created both opportunities and barriers at local and state levels.
Conclusion
Over the last three months, Fifth District respondent organizations marked slight improvements in their ability to operate, considering the significant challenges they continue to face due to COVID-19. At the same time, a larger share voiced that disruptions from the COVID-19 pandemic were severe and expected to be long-lasting for LMI communities. Challenges for lower-income areas brought about by the pandemic are expected to remain in those communities for more than a year, and many respondent organizations expressed that federal programs that are intended to support Americans may not be reaching LMI individuals effectively. Slightly larger shares of June respondents expect community impacts to persist into next year, compared to those in April, signifying that aid efforts are not anticipated to make a substantial impact on LMI individuals. At the same time, more respondent organizations in June anticipated being able to withstand the negative effects of the pandemic for longer than those in April, and many respondents expressed appreciation for the PPP.
The Fed banks and the Board of Governors aim to administer this survey every eight weeks. Over time, this survey will allow researchers and policymakers to gain a clearer sense of how COVID-19 is impacting individuals and businesses, and hopefully, in the future, inform how to improve the economic resilience of communities and the entities that serve them.
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Views expressed are those of the authors and do not necessarily reflect those of the Federal Reserve Bank of Richmond or the Federal Reserve System.
