Nonprofit Finance Fund 2012 Survey: After Year of Adaptation, Fundamental Challenges Remain

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Apr 02, 2012, 08:30 ET

60% of Human Service Organizations Can't Meet 2012 Demand

NFF CEO Antony Bugg-Levine: "We must make systemic changes to the way we address social problems."

NEW YORK, April 2, 2012 /PRNewswire-USNewswire/ -- Nonprofit Finance Fund (NFF) today released the results of its 2012 State of the Nonprofit Sector survey. More than 4,500 respondents at nonprofits across the country shared the details of how they are adapting their organizations and finances to current economic conditions. The survey, which was supported for the second year in a row by the Bank of America Charitable Foundation, reveals that while 2011 was a year of significant organizational and programmatic changes, many nonprofits are still facing fundamental challenges that threaten the stability of the sector and the well-being of the people they serve.

"Over the past 3 years, the length of stays at our shelter has increased from 11 to 27 to 33 nights, because of a lack of affordable housing," said Sarah Lange, Director of Fund Development and External Relations for Abby's House, which provides shelter, housing and advocacy to homeless women and children across central Massachusetts. "We are scrambling to come up with creative solutions to shelter women for whom we have no room. Economic recovery is still not a reality here."

85% of nonprofits experienced an increase in the demand for services in 2011.
This is on top of years of increased demand: previous NFF surveys found that 77% of nonprofits experienced an increase in demand in 2010; 71% experienced an increase in 2009; and 73% experienced an increase in 2008.
88% expect an increase in demand for services in 2012.
57% have 3 months or less cash-on-hand.
87% said their financial outlook won't get any better in 2012.

"Nonprofits are adapting to continued economic pressure in all sorts of creative and substantive ways, but for many, these are stopgap measures that won't make up for the bigger forces at play: decreasing government support, the unwillingness of some private foundations to evolve funding practices, and a lack of necessary support from some boards," said Antony Bugg-Levine, CEO of Nonprofit Finance Fund. "We must rethink the way we fund solutions to our most pressing social problems."

Responses from human service organizations, which form the backbone of our social safety net, reveal that reductions and delays in government funding are of paramount concern and threaten services to vulnerable populations:

58% of human service organizations were unable to meet demand in 2011.
60% won't be able to meet 2012 demand.
56% of human services respondents received federal government funding or contracts; 69% receive state or local funding.
52% reported late payments from the federal government; 62% said state or local government payments were late.
65% or more of human service nonprofits receiving late federal, state or local government payments used reserves to cover the gap.

"We are reducing services and changing our business model to compensate for the decline in government funding– but changing business models requires resources, and organizational time and money are in short supply as we focus on the people we serve," said Darryl Evey, Executive Director of Family Assistance Program, a California-based organization that provides services to victims of domestic violence and their children.

There were bright spots as nonprofits dug deep to serve constituents and maintain employment:

55% of survey respondents added or expanded programs or services.
52% increased the number of people served.
50% hired for new positions.
While 23% of respondents cut staff in 2011, just 10% expect to do so in 2012.

"Nonprofits are an engine of the economy – providing critical services to people in need and providing employment to millions of Americans," said Kerry Sullivan, President of the Bank of America Charitable Foundation. "The changing funding landscape requires greater collaboration between government, private foundations and nonprofits in order to ensure that critical services remain in place and that the nonprofit sector remains a vibrant contributor to our country's economic health."

This year's survey underlined the need for a more open conversation among funders, boards, and nonprofits:

Just 1 out of 5 nonprofits feels comfortable talking with their funders about cash flow concerns.
Only 6% feel comfortable talking with funders about debt.
73% say their boards don't do enough to leverage their relationships to support fundraising.
38% report that their boards aren't able to sufficiently understand and communicate their expense drivers.

"Year after year, our survey finds nonprofits, and many of the people they serve, in dire straits," said Bugg-Levine. "Many people believe the crisis is over, but our social safety net is still in peril. Nonprofits dipped into reserves last year to tide themselves over but expect 2012 to be even worse. Government, funders, boards, and nonprofits need to work more collaboratively to ensure that crucial services can be delivered and secure a true economic recovery. "

Full survey results, along with an interactive survey analyzer, are available at: www.nonprofitfinancefund.org/survey.

About Nonprofit Finance Fund (www.nonprofitfinancefund.org)
Nonprofit Finance Fund (NFF) is a national leader in nonprofit, philanthropic and social enterprise finance. Founded in 1980, NFF provides loan financing, access to capital and direct advisory services that build the capacity and the financial health of nonprofits. A leading community development financial institution with over $80 million in assets, NFF has provided over $235 million in loans and access to additional financing via grants, tax credits and capital in support of over $1.3 billion in projects for thousands of nonprofit clients nationwide. NFF has a staff of more than 70 serving nonprofits nationally from offices in New York City, Philadelphia, Newark, New Jersey, Boston, Detroit, San Francisco, and Los Angeles.