Nonprofit Finance Fund Survey of 5900+ Nonprofits: Organizations Innovating and Adapting to New Reality

39% Will Change the Main Ways They Raise and Spend Money

NEW YORK, March 25, 2013 /PRNewswire-USNewswire/ -- Nonprofit Finance Fund (www.nonprofitfinancefund.org) today released the results of its 2013 State of the Nonprofit Sector Survey, which details the substantial changes that many organizations are making after years of economic stress. The fifth annual survey, supported by the Bank of America Charitable Foundation, includes information on the finances, operations, and outlook of 5,983 organizations across the country.

"Nonprofits are changing the way they do business because they have to: government funding is not returning to pre-recession levels, philanthropic dollars are limited, and demand for critical services has climbed dramatically," said Antony Bugg-Levine, CEO of Nonprofit Finance Fund (NFF). "At the same time, 56 percent of nonprofits plan to increase the number of people served. That goal requires change and innovation– for nonprofits, for those who fund them, and for the broader systems we need to preserve and expand economic opportunity and social progress."

Nonprofits need new funding sources and models.

• 42% of survey respondents report that they do not have the right mix of financial resources to thrive and be effective in the next 3 years. 
• 1 in 4 nonprofits has 30 days or less cash-on-hand.
• Over the next twelve months, 39% plan to change the main ways they raise and spend money.
• 23% will seek funding other than grants or contracts, such as loans or investments.

"Our biggest challenge is decreased grant funding," said Gwen Relf, Executive Director of the Rehoboth Community Development Corporation in Phoenix. "We are creating social enterprise ventures, such as acquiring and rehabbing foreclosed homes and a children's learning center, so that we are not totally reliant on grants. We are building a business that directly advances our mission to increase social and economic justice, combat poverty, and demonstrate compassion for people in need."

Nonprofits that receive government funding face particular challenges:

• Only 14% of nonprofits receiving state and local funding are paid for the full cost of services; just 17% of federal fund recipients receive full reimbursement.  Partial reimbursements require additional funding to cover the growing gap as nonprofits serve more people.
• Government is late to pay: Among those with state or local funding, just over 60% reported overdue government payments; over 50% reported late payments from the federal government.

Under these challenging conditions, many nonprofits are unable to meet growing need in their communities:

• For the first time in the five years of the survey, more than half (52%) of respondents were unable to meet demand over the last year; 54% say they won't be able to meet demand this year.
• This represents a worrying trend; in 2009, 44% of nonprofits said they were unable to meet demand.
• Jobs (59%) and housing (51%) continue to be top concerns for those in low-income communities.
• 90% of respondents say financial conditions are as hard or harder than last year for their clients; this is actually a slight improvement from prior years' outlook.

Nonprofits are changing the way they do business to adapt to the new reality. In the past 12 months:

• 49% have added or expanded programs or services; 17 percent reduced or eliminated programs or services.
• 39% have collaborated with another organization to improve or increase services.
• 39% have upgraded technology to improve organizational efficiency.
• 36% engaged more closely with their board.

"As a corporate funder of nonprofits across the country, we recognize that open discussions about finances are essential to forging deeper connections with nonprofit partners," said Kerry Sullivan, president of the Bank of America Charitable Foundation.  "We hope this latest Nonprofit Finance Fund survey sparks a wider conversation about how funders can help nonprofits navigate economic challenges toward better financial stability and effectiveness and work together toward creative solutions to create greater impact on critical community needs."

In its work with nonprofits over the past 30 years, NFF has seen economic ups and downs; current trends go beyond these cycles and point toward more lasting changes in the way social services are funded.

"Philanthropists, nonprofits and private sector partners need to work together in new ways to support the most promising adaptations by organizations and the sector as a whole," said Bugg-Levine.

Full survey results, along with an interactive survey analyzer and a look at trends over the past five years, are available at: www.nonprofitfinancefund.org/survey.

About Nonprofit Finance Fund
Nonprofit Finance Fund (NFF) unlocks the potential of mission-driven organizations through tailored investments, strategic advice and transformative ideas. Founded in 1980, NFF helps organizations connect money to mission effectively, and supports innovations such as growth capital campaigns, cross-sector economic recovery initiatives and impact investing. A leading community development financial institution with over $80 million in assets, NFF has provided over $250 million in loans and access to additional financing via grants, tax credits and capital in support of over $1.4 billion in projects for thousands of organizations nationwide. NFF is headquartered in New York City and serves clients from offices across the country.

SOURCE Nonprofit Finance Fund