U.S. Nonprofits Innovating and Adapting to New Reality

The Nonprofit Finance Fund has released the results of its 2013 State of the Nonprofit Sector Survey, which details the substantial changes that many organizations are making after years of economic stress. The fifth annual survey, supported by the Bank of America Charitable Foundation, includes information on the finances, operations, and outlook of 5,983 organizations across the country.

The survey results indicate 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.
• 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.