Tech Supported Uptick In Nonprofit Financial Liquidity

The pandemic caused an uptick in nonprofits’ financial liquidity and it led to an acceleration in technology adoption, according to a new survey. Nonprofits where there was an influx of revenue during the past year might have more unrestricted net assets than they previously were able to maintain. 

Leaders at almost one-third of organizations surveyed (31%) reported increased donations as a result of the pandemic, according to the Nonprofit Standards Benchmarking Survey from BDO. The fifth annual survey was fielded this past June by Market Measurement, a market research consulting firm. Data includes responses from 200 nonprofits across sectors.

“While there’s no singular benchmark that applies to all nonprofits, it’s best practice to maintain liquid, unrestricted net assets to cover at least six months of operating costs,” according to the report’s authors.

Nonprofits reporting at least four to six months of reserves ticked up, from 24% in 2020 to 28% in 2021. Those with less than four months of reserves declined, from 28% last year to 18% in 2021. However, the largest proportion and biggest increase from year over year was among nonprofits with more than 12 months of operating reserves: 28% in 2020 compared with 38% in 2021.

Among those with at least a year of reserves, 42% of mid-range organizations (those with less than $25 million) and 43% of upper-midrange organizations ($25 million to $75 million) had reserves of more than 12 months. Slightly more than one quarter (26%) of large organizations ($75 million or more) had reserves of at least a year.

In addition to 31% of organizations reporting increased donations, 33% reported improved workforce culture and unity as a result of the pandemic. 

Managers at more than half of organizations (64%) were already planning to invest in new technologies during early 2020, and the pandemic pushed most to quickly take action. Of those surveyed in 2021, 60% report that they accelerated investments in technology due to COVID-19, and many are planning to continue moving in this direction. And, 43% of respondents said they experienced a new service or program offering, faster decision-making, and increased awareness of mission as a result of the pandemic.