Providing needed services and programming for individuals and families in need is what makes so many nonprofits essential to various communities. Whether it’s offering career training, educational support and enrichment programs for at-risk youth or housing solutions for those in transition, these organizations are critical in the lives of many. While the services offered, and programs provided often differ from their for-profit counterparts, the management, operational and financial issues are often similar. These organizations need to ensure there is an ample supply of resources, both human and financial, to maintain and enhance the quality of programs offered. Unfortunately, this is a challenge that appears to continue for most organizations. According to the State of the Nonprofit Sector Survey 2018, conducted by the Nonprofit Finance Fund, many organizations are being challenged to do more with limited staff and funding in order to meet expanding service demands. To help clients, prospects and others interpret the results of the survey and implications for their organization, Barnes Dennig has compiled a list of key findings below.
About the Survey
The survey was conducted online and reflects responses from 3,370 nonprofit executives leading organizations that focused in more than 20 different service areas. The geography of survey respondents includes organizations with locations across the country ranging in total revenue size between $20M to $50M. The focus of the survey centered on key operational and financial issues faced by participants with a special emphasis on identifying additional issues and influencers impacting these areas.
Key Survey Findings
Financial & Operational Issues
Key Challenges – Identifying the key challenges that organizations face (both financially and operationally) was one of the top priorities of the study. From the financial viewpoint, 62% of respondents are facing challenges achieving long term financial sustainability, 57% raising enough funding to cover full costs and 43% raising unrestricted revenue. From the operational viewpoint, 64% of respondents are facing challenges offering competitive pay, 58% employing enough staff and 35% identifying and cultivating skilled and capable leaders.
- Increasing Service Demand – A key area the survey wanted to investigate was an organization’s ability to meet the demand for services and programming. According to the survey, 86% of respondents indicated they expect to see an increase in demand for services in 2018. Unfortunately, only 43% of respondents indicated they believe they could meet the increased demand based on operational and financial resources. This is a slight increase in expected demand over the prior year where 79% of respondents indicated they expected more demand for services.
- Managing Limited Budgets – Organizations often face limits to the amount of financial resources available and this can present challenges to where these resources are deployed and utilized. This makes having the needed financial resources available imperative to an organization’s ability to deliver programming. According to the survey, 26% of respondents are operating at break even, 24% are operating at a deficit and 50% have a budget surplus. The good news is that half of those surveyed have a surplus, but a quarter are having issues delivering programs as they operate at a deficit.
- Cash on Hand – To further understand the financial conditions of organizations the survey also assessed an organization’s cash on hand to meet operating expenses. According to the survey, 8% had enough cash on hand to last less than one month, 10% enough for one month, 13% enough for two months, 18% enough for three months, 7% enough for four months, 4% enough for five months, 13% enough for six months and 25% had enough cash on hand to meet operating expenses for six months or more. It’s an encouraging sign that a majority of respondents have enough cash on hand to fund operations a period of several months.
- Program Needs – The survey wanted to identify the most pressing needs that organizations have identified with the groups they serve. According to respondents, 40% indicated that affordable housing is the most critical community need, 22% indicated youth programs and services, 21% indicated mental and behavioral health services and 20% indicated that expanding financial capability is a critical area. The results clearly communicate the most critical needs continue to revolve around basic community and healthcare programs.
- Government Impact – There was also interest in determining how federal government policies are impacting the groups served by many organizations. According to the survey, 67% of respondents believe the policies of the federal government have made it more difficult to serve various groups including immigrants, low income individuals and families, and those who self-classify as LGBTQ+. The result is interesting because it reflects the increased difficulty many are having providing needed services to their community.
- Racial Inequality – The survey also wanted to identify what efforts organizations have been making to address and overcome racial inequality issues. While not central to every organization’s mission, for those working in urban and semi-urban areas, it has been an issue of concern. According to the survey, 64% of organizations are currently working to address racial inequality in their communities, while 50% indicated they have increased efforts, including programming, to tackle the issue.
The challenges that organizations face appears to be similar regardless of an organization’s location, mission and size. The need for robust fundraising, streamlined operations and effective management can not be overstated. Nonprofit organizations need to assess their financial and operational conditions regularly to identify new ways to maintain and enhance vitality. If you have questions about the survey findings or need assistance with a nonprofit tax, accounting or audit issue, Barnes Dennig can help. For additional information call us at 513-241-8313 or click here to contact us. We look forward to speaking with you soon.