This week the Nonprofit Finance Fund (NFF) released the results of their fifth annual State of the Nonprofit Sector survey.
As far as I can see the data relates only to US cause-based organisations but the information is useful and the lessons for Australian organisations are obvious.
Approximately 6000 organisations participated and shared how they are adapting their organisations to economic conditions.
The survey reveals that 2012 was a year in which organisations either made or planned to make significant changes to cope with mounting economic stress. As NFF CEO Antony Bugg-Levine explained:
Nonprofits are changing the way they do business because they have to: government funding is not returning to pre-recession levels, philanthropic dollars are limited, and demand for critical services has climbed dramatically. At the same time, 56 percent of nonprofits plan to increase the number of people served. That goal requires systemic change and innovation– both within the sector, and more broadly as a society that values justice, progress and economic opportunity.
Key findings were:
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 need more 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. (We are not aware of this being a problem here but let us know if it is)
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 earlier 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 % 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.
If you wish to slice and dice the data further you can dive in here
About the Author: Chris Gandy is a Director of Cause and Effective. Cause and Effective assists cause-based organisations achieve greater social impact and financial sustainability via coaching, consultation, facilitation and leadership transition services.