Nonprofits Ask: What Economic Recovery?

The funding landscape is changing for many nonprofits. Of respondents who received government funding, nearly half had seen support decline over the past five years.

Thirty-one percent of nonprofits surveyed said that in the next 12 months, they would change the main ways in which they raised and spent money.

Twenty-six percent said they would pursue an earned income venture, and 20% would look for funding other than grants and contracts, including loans or other investments.

In other findings:

• 55% of nonprofits had three months' cash on hand or less
• 28% ended their 2013 fiscal year with a deficit
• Only 9% said they could have an open dialogue with funders about developing reserves for operating needs
• Just 6% said they could discuss developing reserves for long-term facility needs

"The closer a system gets to failure, the harder it becomes to devote scarce resources toward building a better future," Bugg-Levine said.

The survey found that nonprofits were taking wide-ranging steps to survive and succeed. In the past 12 months, 49% had collaborated with another organization to improve or increase services.

Forty-eight percent had invested money or time in professional development, 40% had upgraded hardware or software to improve organizational efficiency and 39% had conducted long-term strategic or financial planning.

Nonprofit Finance Fund said that for the first time, its annual survey had delved into impact measurement, a core component of some emerging funding models such as pay-for-success. It found the following:

• Respondents said that more than 70% of their funders had requested impact or program metrics
• 77% agreed that the metrics funders asked for were helpful in assessing impact
• Only 1% reported that funders always covered the costs of impact measurement, while 71% said costs were rarely or never covered.

The survey was supported by the Bank of America Charitable Foundation and the Ford Foundation.