The economic recovery is not offering signs of relief for the nonprofit sector, and many organizations are examining new models of funding, according the results of the Nonprofit Finance Fund’s 2014 State of the Nonprofit Sector Survey. Leaders from more than 5,000 nonprofits nationwide participated in this sixth annual survey.
Many organizations have daunting financial situations, and respondents said they are looking at new ways to secure the future of their organizations for the benefit of the people they serve. The Bank of America Charitable Foundation and the Ford Foundation provided financial support for the survey.
The economic recovery is leaving behind many nonprofits and communities in need:
“Americans rely on nonprofits for food shelter, education, healthcare and other necessities, and everyone has a stake in strengthening this social infrastructure,” said Antony Bugg-Levine, CEO of Nonprofit Finance Fund. “The struggles nonprofits face are not the short-term result of an economic cycle, they are the results of fundamental flaws in the way we finance social good.”
The funding landscape is changing for many nonprofits. Of respondents who receive government funding, nearly half have seen support decline during the past five years. Nonprofits are working to bring in new money; in the next 12 months:
“Today’s environment requires creative problem-solving and good communication with funders and partners,” said Robert Chávez, chief executive officer of Urban Corps of San Diego County, which provides a high school education and green job training to young adults. “As a conservation corps, we have always relied on a fee-for-service program model to fund job training projects. Now, we are diversifying our services and exploring new income-generating partnerships in order to supplement at-risk funding, become fully self-sufficient, and ultimately better serve youth.”
Some 41 percent of respondents selected “achieving long-term financial stability” as a top challenge, yet:
“The closer a system gets to failure, the harder it becomes to devote scarce resources toward building a better future,” said Bugg-Levine. “The nonprofit sector’s greatest asset is tenacious, creative, smart leaders who, despite significant challenges and with the right support, have the capacity to lead the United States into a new era of civic and social greatness.”
Nonprofits are taking wide-ranging steps to survive and succeed. During the past 12 months:
For the first time, the annual survey delved into impact measurement, a core component of some emerging funding models such as pay-for-success. Respondents said that more than 70 percent of their funders requested impact or program metrics and 77 percent of respondents agreed that the metrics funders ask for are helpful in assessing impact. Only 1 percent reported that funders always cover the costs of impact measurement and 71 percent said costs were rarely or never covered.
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