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nonprofitfinancefund.org 2011 Nonprofit Finance Fund
Nonprofit Finance Fund
2011 State of the Nonprofit SectorSurvey Results
March 2011
For more information, please contact Jen Talansky or Anjali Deshmukhat 212.868.6710 or visit nonprofitfinancefund.org
For full survey results, please visithttp://nonprofitfinancefund.org/2011Survey
Data is based on a nationwide Zoomerang survey of nonprofit leaders conductedby Nonprofit Finance Fund, January-February 2011.
Generously supported by Bank of America Charitable Foundation
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nonprofitfinancefund.org 2011 Nonprofit Finance Fund
Adjusting to a New Normal
Nonprofit Finance Fund (NFF) recently conducted its third State of theSector nonprofit survey. The survey focused on the intersectionbetween finance and mission: what financial strategies are nonprofitsemploying to keep up with ever-climbing demand for services?
We asked nonprofit managers nationwide to assess the currentfinancial challenges they face, and to share the coping and adapting
strategies theyre using to manage through these times.
1935 nonprofit leaders responded to our survey. Respondentsstretched from coast to coast, representing 48 states. They came fromlarge organizations and small, and from all sub-sectors.
What did we learn from their collective reply?
While there are some signs of hope, many nonprofits arestraining under year-after-year increases in service demand.As an ever-resourceful sector, they are creatively respondingto these conditions.
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nonprofitfinancefund.org 2011 Nonprofit Finance Fund
Contents
Meeting the Survey Respondents
Examining the Financial Situation
Taking Action
Working with Government and Funders
Taking a Look at Lifeline Organizations
Conclusion
2
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What Areas of Need Do SurveyRespondents Address?
Human Services organizations represent overone-third of respondents
rganizational Sectors
9%
4%
4%
9%
35%
9%
7%
%
%
%
rt , Culture, and Hu anitie
Education
En iron ent and
ni al
Healt
Hou e of or ip
Hu
an
er
ice
International, Foreign
ffair
utual/ e er ip Benefit
Pu lic, ocietal Benefit
Ot er, plea e pecif
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What Are the Annual Expense Sizesof Respondents?
ost respondents fro s all- to id-sized nonprofits
7%
3%
33%
6%
9%
5%6%
$0-2 0,000
$2 0,001- 00,000
$ 00,001-2,000,000
$2,000,001- ,000,000
$ ,000,001-10,000,000
$10,000,001-20,000,000
greater t an $20,000,000
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Contents
Meeting the Survey Respondents
Examining the Financial Situation
Taking Action
Working with Government and Funders
Taking a Look at Lifeline Organizations
Conclusion
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What Levels of Service Demand HaveNonprofits Experienced?
Service demand has climbed over the last years, witheach years increase coming on top of the prior years
! " #
$
$
%
& " #
7
0%
'%
10%
1'%
20%
2(%
) 0%
) '
%
0
0%
0 '%
a1ignificant increa
1e in
de2
and for1
er3
ice1
a1 4
ig5t increa
1e in
de2
and for1
er3
ice1
no c5ange in de
2and for
1
er3
ice1
a decrea1e in de
2and for
1
er3
ice1
2006
2007
2010
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Are Nonprofits Able to Keep Up with theIncreases in Demand?
We see a growing trend of organizations struggling tomeet demand
8
9
@
9
A @
B
C D
E F D
9 9
@
8 A @
0G
10 H
20G
I 0 H
P 0 G
Q0
G
R 0 H
NoYeS
Able to full meet demand for ser ices?
2011 T xpected
2010
200 U
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What Are Organizations OperatingResults?
More organizations reported a surplus in 2010compared to 200 . of respondents ended 2010with a surplus vs. in 200 .
Respondents' Operating Results
V2
W
V
X
W
V
Y
W
2X
W
Y
0W
V ` W
Y Y
W
V0
W
28W
2 a W
22W
Y Y
W
0 b
c b
10 b
1 c b
20 b
2 c b
d 0 b
d c b
e 0 b
e c b
c 0 b
2008 200f
2010 2011g h
p
an operating deficit
an operating i urplu i
p rea q -e r en financ ial re i ult i
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How Many Months ofCash DoOrganizations Have Set Aside?
For therd
year in a row, 0 of organizations have0 days or less of cash on hand
s4
t
u 7 v
w u v
u
x
v
s
y
t
s t
s
t
w u v
u
x
v
0 v
u 0 v
s
t
t
u v
u
x
v
0 10 1 20 2 0
None
Enough to co er 1 month of
e penses
Enough to co er 2 months
of e penses
Enough to co er months
of e penses
Enough to co er more than months of e penses
Months of cash
2009
2010
2011
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The Recession Is Officially Over. Does It FeelLike It Has Ended for your Organization?
8
0 20 40 60 80 100
No
e
Does it feel like the recession has ended?
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Contents
Meeting the Survey Respondents
Examining the Financial Situation
Taking Action
Working with Government and Funders
Taking a Look at Lifeline Organizations
Conclusion
11
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What Personnel-Related Actions Did NPOs Takein 2010; What Actions Are Planned for 2011?
There were signs of personnel-related growth in 2010
0% % 10% 1 % 20% 2 % 0% % 0% % 0%
None of t e a o j e
Freeke a
l lrep
lace
ment
ires
n o
pro
e or increase staff
enefits
educe staff ours
educe staff
enefits
educe staff
Freeke or reduce sa
laries
etain a
current personne
e l m ore on j o l unteers
Gi
e raises
ire staff for ne positions
a e rep l ace m ent ires
Personnel: actions taken vs actions planned
z
a{en in 2010
| }anned for 2011
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What 2010 Financial Management Actions DidNPOs Take; What Actions Are Planned for 2011?
Nonprofits are taking a range of actions to manage theirfinancial situation
0% 10% 20% 30%~0%
0%
0%
0%
None of t e abo e
erge
it
anot
er organization
e assets suc as a bui ding or securities
cquire ne assets suc as a bui ding or securities
pand
our space
o aborate it anot er organization on e penses
educe occupanc costs
e
a
pa
ents to
endors
peed up t e co ection of recei ab es
dd to reser e funds
ncrease annua e penses
o d funder con ersations to e p ain our situation
aise ess tota re enue t an anticipated
Use reser e funds
aise ore tota re enue t an anticipated
e
e
op
aintain '
orst
case' contingenc
budget
educe annua
e
penses
ngage
ore c
ose
it
our board
a endors on ti e
Financial management: actions taken s planned
a en in 2010 anned for 2011
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What Service-Related Actions Did NPOs Takein 2010; What Actions Are Planned for 2011?
In spite of financial difficulties, many NPOs areproviding more service
0% 10% 20% 30% 40% 50% 60%
None of the abo e
educe or ignificant re tructure geographie er ed
ecrea e a ount of er ice per c ient
ecrea
e the nu
ber of c
ient
er ed
ncrea e a ount of er ice per c ient
E pand geographie er ed
educe or e i inate progra or er ice
artner with other N
to i
pro
e
increae
er
ice
ncrea e the nu ber of c ient er ed
dd or e pand progra or er ice
Service-related actions taken vs actions planned
a en in 2010 anned for 2011
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Contents
Meeting the Survey Respondents
Examining the Financial Situation
Taking Action
Working with Government and Funders
Taking a Look at Lifeline Organizations
Conclusion
1
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What Are Nonprofits Experiences withFederal Funding?
Yes
No
o
eti
es
Federal go
ern
ent pa
s for full cost of ser
ices?
0% 10% 20% 0% 0% 0% 60%
ead of c edu e
Onc
edu
e
1
0 day
ate
1
0 day
ate
0+ day ate
When do
ou recei
e pa
ent fro the federal go
t?
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What Are Nonprofits Experiences withState and Local Government Funding?
es
No
Sometimes
State/local govt pa
for full cost of services?
5
0
10
20
0
0
ead of
c
edu
e
n
c
edu
e
1
0 da
ate
1 0 da ate
0
da
ate
When do ou receive state/local govt pa ment?
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Which Financial Topics Do NPOs FeelComfortable Discussing with Funders?
At , program expansion easily tops the list
2
2
21
1
2
0 10 20 30 40 50 60 70
rogra e pan ion
Faci it need
or
ing capita
need
a f ow concern
perating re
er
!e
" ui ding re er# e
$
ebt burden
% don & t fee ' funder are wi ing to
(a
#e open dia
ogue on t
(e
e topic
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What Do Nonprofits Feel Funders Can Do toBetter Help their Nonprofits?
If I could ask funders to do one thing differently to be mosthelpful to my organization, it would be ______*
) 0
) 0
1 2
4 2
4 2
5 2
3
2
4
0
5 5 2
5 5 2
5 3 2
5 6 2
07
107
207
307
407
507
607
gi 8 e capita 9 for faci 9 itie @ & A ig proB
ect @
@upport & engage in co
9 9a
Aoration
paC
fu9 9
co@t of
@er
8ice
@
D e open to c E ange
giFe more mone
G
con@ ider ca @ H f9 o I concern @
ma P e t H e grant proce @ @ ea @ ier Q c H eaper
ot H er
pro 8 ide 9 onger term @ upport
fund R E at a S read G R or T U
Si
Uten
V
Searn
Vcommunicate
gi8e
W X Yor capacit
Cmone
C
*The themes Fund small nonprofits, provide or help us manage loans, and support theartseach represent 1% of the responses
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What Types of Technical AssistanceWould Be Helpful?
` a b
c
d
e
c f e
c g e
h c e
h
i
e
g
p
e
g f e
a q b
r
b
s b
0t
10t
20t u
0t v
0t w
0t x
0t y
0t
Fundrai ing a i tance
oo to co unicate financia to oard funder
Organizationaperfor
ance
ea
ure
ent
upport
Financia cenario p anning
rogra finance ana tic
i
tance ana
zing
our current financia
ituation
or ing capita
ine of credit
o
a
oration or
erger fea
i
i
it
ana
i
i
tance negotiating
it
an
ot
er
ender
e
t re
tructuring and
or financing
Oter
Helpful technical assistance o capital access se vices
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Contents
Meeting the Survey Respondents
Examining the Financial Situation
Taking Action
Working with Government and Funders
Taking a Look at Lifeline Organizations
Conclusion
21
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How Many Respondents PrimarilyProvide Essential Services?
Are you a "lifeline" organization?
j k
l 1 k
0m
10m
20m
30m
40m
50m
60m
nes
No
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What Are the Trends Among TheseLifeline Organizations?
Lifeline organizations that provide critical services topeople in need are finding it hard to meet the demands intheir communities:
87 saw an increase in demand for services in 2010,compared with 68 of non-lifeline organizations.
60 of lifeline organizations increased the number ofclients served in 2010, yet only 43 were able to fullmeet the demand for services.
Just 37 of lifeline organizations expect be able to fullymeet demand in 2011.
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Contents
Meeting the Survey Respondents
Examining the Financial Situation
Taking Action
Working with Government and Funders
Taking a Look at Lifeline Organizations
Conclusion
2o
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We learned to domore with littleand still maintainour budget
What Makes ou Proudest about how your NPOResponded to 2010 Financial Challenges?
We were able to keeppersonnel moves and budgetissues from affecting servicesto clients. We were veryproactive in reducing staffand overall expenses as wellas defining our core serviceofferings. This helped whenwe lost 85 of our funding in
ctober 2010...
We survived almost 4 monthswithout our major income sourcefrom the [local government] bylaying off 2/3 of the staff andoperating on minimal expenses.
ur laid off staff put in over 1000
hours of volunteer time duringthat period...
We reducedexpenses andended the F in theblack despite a verydifficult fundraisingyear. We "turnedthe corner" byengaging our boardin fundraising...
Im most proud of the way the staffhas come together, made hugesacrifices, increased their workload soas not to compromise our program
offerings - all the while, reducingexpenses while increasing revenues.Im proud of the staff's "We an DoIt" attitude. In addition to the budgetamendments, the organizationbecame debt-free.
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Conclusions
Nonprofits face ongoing increases in service demand, whilethe financial situation for many continues to be difficult. alfthe respondents say they need funders to provide moreunrestricted or general operating support.
Nonprofits are responding to this new normal with creativity
and resilience, even finding ways to increase services in theface of funding uncertainty.
While some nonprofits are adapting to changed circumstancesin healthy ways, such as strategic collaborations and carefulexpense management, others are entering into situations that
threaten their survival, such as substantial layoffs or deficits.
Now more than ever, nonprofits need open dialogue withinternal and external stakeholders, and support for the overallorganization and core programs.
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About Nonprofit Finance Fund
Where Money Meets Mission
Nationwide network of experts in nonprofit finance Served thousands of nonprofits funders since 1980
DFI with 235 million in loans and over 1.2 billion incapital leveraged for nonprofits
Financial consultant with over 1,000 customizedconsultancies/workshops
undreds of strategic partnerships to advance thesector
Debt, RI/MRI management, New Markets Tax redits
Assistance in structuring philanthropic equity forchange
Thought leadership to advance friendlier fundingpractices across the nonprofit sector
[NFF is]
arguably themostinfluentialvoice in theongoing effortto reshapethinking and
practice aboutnonprofitcapitalization.
-The NonProfitTimes
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Nonprofit Finance Fund
Where Money Meets Mission
28
For the full survey results, please visit our website, nonprofitfinancefund.org,or click on this linkhttp nonprofitfinancefund.org 2011Survey
For questions related to the survey, please contactJen Talansky or Anjali Deshmukh at 212. . 10.
Thank you.