Earlier this week the Nonprofit Finance Fund released the results of their 7th annual State of the Sector survey about the financial health of the American nonprofit sector. This on-going survey, now in its 7th year, has become a fascinating marker to gauge how the nonprofit sector is evolving amid a changing economic climate.
The Nonprofit Finance Fund launched the survey in 2008, when the economic crisis was just beginning. This year results from 5,451 respondents show some positive signs of adaptation and growth, but also recurring challenges that continue to face the sector.
Nonprofits are unable to meet a growing demand for their services:
- 76% of nonprofits reported an increase in demand for services – the 7th year that a majority have reported increases.
- 52% couldn’t meet demand, the third year in a row that more than half of nonprofits couldn’t meet demand.
- Of those who reported that they could not meet demand, 71% said that client needs go unmet when they can’t provide services.
Nonprofits still (not surprisingly) struggle to make ends meet. While some nonprofits are achieving financial sustainability (47% ended 2014 with a surplus, the highest in the history of the survey), many still face real challenges:
- 53% report three months or less of cash-on-hand.
- 32% find achieving long-term sustainability a top challenge.
- 25% struggle to be able to offer competitive pay and/or retain staff.
- 19% can’t raise funding to cover their full costs.
And these financial challenges are due in large part to the catch-22 funders place nonprofits in by routinely covering only a portion of the full costs of the programs they intend to support:
- 70% of survey respondents receiving Federal funding report that the government never or rarely pays for the full costs of delivering services.
- 68% of respondents who receive state funding say the state government never or rarely pays for the full costs of delivering services.
- 47% of respondents who secure foundation funding report that foundations never or rarely cover their full costs.
- While 89% of nonprofits are asked to collect data to capture the effectiveness of programming, 68% of funders rarely or never cover the costs associated with measuring program outputs or outcomes.
So we still have a long way to go.
But those nonprofits who are faring well in this environment are those being strategic. As one human services nonprofit leader put it:
“Sustainable funding continues to be our greatest challenge. Our actions to address this challenge include developing and adhering to a strong and dynamic strategic plan; diversifying our program funding streams as much as possible; developing and communicating a strong community impact statement for our programs; and focusing on increased donor engagement in order to increase fundraising dollars.”
You can dig further into the data from this and past years’ surveys here.
Photo Credit: Nonprofit Finance Fund
It’s that time of year again – the Nonprofit Finance Fund’s annual State of the Sector Survey of nonprofit leaders.
If you are a nonprofit leader struggling with increasing demand for services amid diminishing funding, if you are frustrated with funders’ lack of understanding of the challenges you face, if you want the sector to recognize the hurdles and get better at addressing them, you need to voice your perspective by taking the survey.
The Nonprofit Finance Fund is one of the country’s leading community development financial institutions (CDFI) making millions of dollars in loans to nonprofits and pushing for fundamental improvement in how money is given and used in the sector.
They started the annual State of the Sector survey when the recession hit in 2008. Collective efforts to understand the extent of the challenges the economic restructuring was having on the nonprofit sector were decentralized and largely anecdotal. NFF’s survey is an effort to bring information about the nonprofit community together so that it can be used to address these challenges. You can view the results from past surveys here.
The anonymous survey takes 10-15 minutes to complete and asks about your organization’s recent financial and management challenges. The knowledge gathered through the annual survey is shared with funders, government officials, nonprofits, media, lending institutions, and many others through conferences, policy recommendations, and other efforts. And now with more than 5 years of Sector Survey data, we can analyze and understand trends and begin to make a larger argument about what nonprofits need and what funders and policymakers must do differently to support their work.
The survey really is the only effort of its kind to take the pulse of the sector. And I am excited to see how the results are increasingly used to advocate for some significant improvements to the state of the sector.
This year’s Sector Survey will be open to responses until February 17th, so if you are a nonprofit leader, click here to take the survey and let your voice be heard. The results of this year’s survey will be available in early April.
Photo Credit: Nonprofit Finance Fund
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