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Nonprofits still hurting

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Nonprofits hurting

Nonprofits hurting

The crippled economy continues to squeeze nonprofits, with smaller organizations under the greatest stress, a new report says.

While 65 percent of 875 charities responding to an online survey in October reported higher demand for services, philanthropic support fell for 28 percent and was flat for 31 percent, says the Late Fall 2011 Nonprofit Fundraising Survey from the Nonprofit Research Collaborative.

And 46 percent expect lower levels of funding from sources other than philanthropic giving, while 55 percent of those that had government funding expect less of it.

Four in 10 responding charities reported modest plans to increase operating budgets.

Forty-eight percent of responding charities reported cash reserves totaling less than three months of operating expenses or said they rely too heavily on a limited number of funders.

That analysis suggests large numbers of U.S. charities, particularly smaller organizations, “are struggling to secure funding for the vital services they provide in their communities,” the report says.

Smaller nonprofits

Smaller nonprofits, or those with less than $3 million in annual operating expenses, are particularly at risk, the report says.

Among 563 smaller charities responding to the survey, 31 percent reported a decline in contributions to date in 2011, compared with 17 percent of larger charities.

Smaller nonprofits also were more likely to have seen declines in the number of renewing donors and in the average gift amount from renewing and new donors, compared with 2010.

And 29 percent of smaller nonprofits reported plans to reduce staff in 2012, compared with 20 percent of larger nonprofits.

Small nonprofits also were more likely to show a sign of fiscal stress.

Fifty-three percent of small nonprofits reported low cash reserves, compared to 37 percent of larger nonprofits, for example, while 54 percent of smaller nonprofits relied too much on a limited number of funders, compared to 33 percent of larger nonprofits; and 32 percent of smaller nonprofits reported uncertain cash flow because of erratic payments, compared to 19 percent of larger nonprofits.

And 20 percent of nonprofits with less than $250,000 in annual spending reported they might cease operations in the coming year for financial reasons, compared with 5 percent of nonprofits with spending above $250,000.

Budget forecasts

Nearly half of responding nonprofits plan to increase funding for program activities in 2012, with groups that saw increases in fundraising receipts to date in 2011 likely to report increases in their 2012 operating budgets, while groups facing declines in funds raised to date likely to trim their spending in 2012.

But even with an increase in operating budgets, the report says, few nonprofits plan to increase staffing levels, employee benefits or operating hours, with 65 percent planning to hold wages and salaries flat, or to decrease them.

Fundraising

Roughly equal shares of nonprofits expected increases, decreases or no change in fundraising in the final three months of 2011, compared with a year ago.

And a fourth of charities reported increases in the number of retained individual donors, compared with a year ago, while 50 percent saw increases in in the number of new individual donors, despite what the report says has been “widespread counsel in the past few years for organizations to focus on retention efforts, which are typically more cost-effective than recruiting new donors to an organization’s donor roll.”

Partners in the Nonprofit Research Collaborative include the Association of Fundraising Professionals; Blackbaud; Center on Philanthropy at Indiana University; Giving USA Foundation; GuideStar USA; and National Center for Charitable Statistics at the Urban Institute.

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