The Nonprofit Finance Fund has released the results of their 2013 State of the Nonprofit Sector Survey and it is chock full of important information and analysis tools for nonprofits. The study had nearly 6000 respondents and the online survey analyzer allows you to do subset analysis. This article features some highlights of the overall survey and an analysis for my home state of New Jersey. New Jersey had 111 respondents. A thank you goes to the Bank of America Charitable Foundation for funding this study. As always, this article features the study results mixed in with my commentary.
This is the fifth annual report and the percent of nonprofits responding that they were able to meet the demand for services decreased from 56% in 2008 to 46% in 2012. This is one of the most dramatic changes over the five year period that I saw in the report.
Nonprofits that don’t have government funding often covet it. But government funding comes with all sorts of requirements that cost money – usually more money than is provided. Here’s the actual data - 83% of nonprofits with federal grants say it does not cover the full cost of the program and 52% say they receive payments late. It is even worse for state and local grants – only 14% say that grants cover the full cost of services and 60% report late payments. Amongst my clients the statistics are even worse. I realized later that NJ confirms it is worse in NJ.
When you couple this with that 56% of nonprofits say they have 3 months or less cash on hand, you can see why stress due to finances is such major problem for many nonprofits. This is something that nonprofit executives and Boards need to discuss when considering applying for government grants. I always recommend that an organization plan on the funding will cover only 70% of the cost and you have a line of credit and/or reserve in place to deal with deferred payment. If you do this it will relieve the almost certain financial stress that comes with government grants.
There is even stronger stress for nonprofits serving low income communities. 85% responded that there was an increased demand for their services and 67% said that they were not able to meet the demand. I have clients in this position. They are jockeying to change how they serve people, initiating fees and ramping up other than grant fundraising. An interesting piece of data is that 61% of nonprofits serving low income communities were asked to measure impact compared to 44% that do not serve these areas. Hmmmm…what is that all about? Pretty significant difference. I love results, measurement and impact but the truth is that most small nonprofits struggle with the time and money spent on this versus working directly on their mission.
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. Over the next twelve months, 39% plan to change the main ways they raise and spend money. I can take these findings to many of my clients and say simply….You are not alone.
Interaction with Funders
Percent that can have open discussion with their funders on this topic:
60% Program expansion
30% Developing Reserves
16% Cash flow Concerns
5% Debt Burden
Really? I have been talking to my clients about working these financial topics into the Major Donor campaigns. They would be even more effective if the had a funder matching grant. Why not bring up this topic?
Quick Look at New Jersey Results and How the Data Can Be Used
Looking at New Jersey, the need for job creation and affordable housing was even greater than for the overall USA results. Jobs (59% vs. 63% in NJ) and housing (51% vs. 58% in NJ) continue to be top concerns for in low-income communities and in NJ
Not a surprise - late payments from state and local governments in New Jersey is much worse than the nation as a whole with 75% of nonprofits reporting late payments. No wonder that 25% of NJ nonprofits had to reduce or eliminate services in 2012 versus 17% for the nation overall. Wow – there is some great advocacy data for New Jersey here!!!!
The analyzer tool with this report is easy to use and allows for filters by state, sector, size, and low income communities. This is an important study with excellent information and advice. I strongly recommend that you review the whole report and use the analyzer to do a self assessment.
Click here to see the report.
Click here to see the report.