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NPO Budgets Remain COVID Infected For 2022

Despite all of the chatter about the pandemic waning, nearly three-quarters (73.2%) of nonprofit managers who responded to a survey are more concerned about their organization’s financial position this year than they were last year.

When asked how they feel about their organization’s current financial position, nearly half (48.7%) are somewhat or very concerned about their overall, current financial condition a 28.2% increase compared to the percentage of those who were concerned last year.

The data is part of a new report from BKD, CPAs and advisors, headquartered in Springfield, Mo., with operations in 19 states. Data for the 2022 State of the Nonprofit Sector was collected through an electronic survey that included 28 questions about various aspects of organization size, function, and stability. There were 878 responses from individuals at organizations throughout the nation.

Five categories made up 79% of the responses: Environmental and animal, 22.8%; Education 20.3%; Arts/culture/humanities, 14.7%; Health 11.1%; and, Human services 10.2%.

Even though the responding managers showed concern, federal and state funding, foundation and corporate support, and an increase in generosity from individuals helped nonprofits weather the past year. Some ended the year in better financial position than before the pandemic. More than one-third of the organizations (37.18%) report an increase in net income during 2021.

Nearly two-thirds (63.6%) of reporting organizations in had seven months or more of operating reserve. Within that group, nearly one-fourth (24.2%) had enough reserves to last more than a year.

Inflation was a concern as clogged ports and supply chain bottlenecks contributed to shortages and higher prices for organizations, according to the report’s authors. While some organizations adjusted to the changes, more than one-third (39.5%) of respondents reported an increase in operational costs. More than half (55.9%) reported a decrease in such costs.

Some of the top-line responses to the 28 questions posed: 58% experienced a budget shortfall; 65% had an increase in demand for services; 77% plan to add new programs; and, 71% are hampered by staffing shortages.

Delivery of programs and services appears to be the hardest hit from remote working. About half (49.23%) responded that the change hampers their organization’s efficiency and effectiveness.

When it came to staffing, of those reporting shortages, 73% had staffing shortage of 15% or less. According to the authors, all of the respondents’ top concerns are interconnected. For instance, efficiency is impeded without proper technology and other resources. With staff turnover, program delivery and communication to donors is hurt, which has a negative effect on reimbursements and donations.  

You can download the full report here.

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