Tue, April 02 2013

The state of the nonprofit sector?  Not so hot.

Katya Andresen's avatar

Author, Robin Hood Marketing

Filed under:   Nonprofit leadership •

The Nonprofit Finance Fund (NFF) has released its annual State of the Sector survey, and it shows nonprofits like yours are struggling with a tough funding environment and increasing need for the services you provide.  This is requiring tough choices - and changing the way you do business, according to the survey.

Here’s a summary of the report from the NFF.  Does it capture your situation?  Are you better or worse off than your peers?

According to NFF:

Nonprofits need new funding sources and models:
• 42% of survey respondents report that they do not have the right mix of financial resources to thrive and be effective in the next 3 years.
• 1 in 4 nonprofits has 30 days or less cash-on-hand.
• Over the next twelve months, 39% plan to change the main ways they raise and spend money.
• 23% will seek funding other than grants or contracts, such as loans or investments.

Nonprofits that receive government funding face particular challenges:
• Only 14% of nonprofits receiving state and local funding are paid for the full cost of services; just 17% of federal fund recipients receive full reimbursement. Partial reimbursements require additional funding to cover the growing gap as nonprofits serve more people.
• Government is late to pay: Among those with state or local funding, just over 60% reported overdue government payments; over 50% reported late payments from the federal government.

Under these challenging conditions, many nonprofits are unable to meet growing need in their communities:
• For the first time in the five years of the survey, more than half (52%) of respondents were unable to meet demand over the last year; 54% say they won’t be able to meet demand this year.
• This represents a worrying trend; in 2009, 44% of nonprofits said they were unable to meet demand.
• Jobs (59%) and housing (51%) continue to be top concerns for those in low-income communities.
• 90% of respondents say financial conditions are as hard or harder than last year for their clients; this is actually a slight improvement from prior years’ outlook.

Nonprofits are changing the way they do business to adapt to the new reality. In the past 12 months:
• 49% have added or expanded programs or services; 17 percent reduced or eliminated programs or services.
• 39% have collaborated with another organization to improve or increase services.
• 39% have upgraded technology to improve organizational efficiency.
• 36% engaged more closely with their board.

For more on the survey and detailed data, go here.

  • Comment: (3)   

Comments

What a great summary of highlights of the report Katya. It’s clear more collaboration among non-profits is critically needed and long overdue. Understanding where their organization intersects with others takes thought but it’s the key to sustainability.

Always look forward to reading your blog. Thanks!

Posted by lori newton  on  04/02  at  09:37 AM

We need to recognize that a ‘budget’ based non-profit model will not provide sustainability in a time of declining donor capacity and foundations shifting from grants to program related investments along with required collective impact measurement.  When nonprofits shift to a ‘business’ based model that integrates social entrepreneurship, non-profits have hope for building a funding base that does not pressure the organization to compromise its mission in order to keep its doors open.

Posted by Kenneth Steensma  on  04/03  at  10:42 PM

It is such a big struggle for some of us. We were growing, running five projects. We are no relying on one project to run the activities and the organization. At times you feel like packing up and trying it elsewhere.

Boni Mouti
Action for Children, Tanzania.

Posted by Boniface Mouti  on  05/13  at  04:32 PM

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