Mark Paneth’s Nonprofit Pulse collects the opinions of nonprofit leaders twice a year. Findings from the Summer/Fall 2016 survey provide insights into the impact of funding challenges on meeting demand for services, attracting and retaining staff and the financial stability of organizations facing funding gaps. The majority of respondents are senior leaders of human-service nonprofits operating in the US, including executive directors, CEOs, CFOs, board members, and directors.

1. NONPROFIT PULSE
Nonprofit Outlook: Challenges,
Finances, Funding, Demand for
Services, Organizational Issues,
Donor Expectations
Summer/Fall 2016

2. Introduction
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Mark Paneth’s Nonprofit Pulse collects the opinions of nonprofit leaders twice a
year. Findings from the Summer/Fall 2016 survey provide insights into the impact of
funding challenges on meeting demand for services, attracting and retaining staff
and the financial stability of organizations facing funding gaps.
The majority of respondents are senior leaders of human-service nonprofits
operating in the US, including executive directors, CEOs, CFOs, board members, and
directors.
Nonprofit Leadership Pulse Survey
Summer/Fall 2016

3. Leaders See Challenges Ahead
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2%
0%
5%
37%
44%
11%
Not Sure
Much Easier
Somewhat Easier
About the Same
Somewhat More Difficult
Much More Difficult
Over half of nonprofit leaders expect
conditions in the nonprofit sector to be more
difficult in the next 12 months.
What’s driving their assessment?
Compared to last year, what do you think
conditions will be like for your nonprofit
organization over the next 12 months?
Nonprofit Leadership Pulse Survey
Summer/Fall 2016

4. The Biggest Concerns are Financial
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Leaders are concerned about both the long-term and the short-
term financial health of their organizations.
Over 87% of nonprofit leaders told us that financial reporting
was either “critical” or “important.”
Identification of programs that generate positive cash flows was
also “critical” or “important” to 81% of nonprofit leaders.
Nonprofit Leadership Pulse Survey
Summer/Fall 2016

5. Leaders Worry About Long-term Financial Stability
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1%
5%
2%
1%
3%
4%
4%
6%
8%
12%
12%
15%
28%
Not Sure
Some Other Challenge
Marketing and Communications
Meeting Donor Requirements
Capital for Infrastructure and Technology
Leadership Deficit
Meeting Demand for Programs and Services
Right People on the Board
Attracting and Retaining Staff
Diminished Funding
Stabilizing Revenues and Cash Flow
Covering Overhead/Indirect Costs
Achieving Long-term Financial Stability
What is the biggest challenge facing nonprofit organizations today?
Nonprofit Leadership Pulse Survey
Summer/Fall 2016

6. Financial Concerns are Real
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Almost 75% of the organizations surveyed experienced reductions
and/or significant delays in funding, which led to erratic cash flow and
difficulty covering overhead.
One third had to dip into cash reserves to make ends meet.
Over 28% ended the previous year with a deficit.
Nonprofit Leadership Pulse Survey
Summer/Fall 2016

7. Decreases in Funding Affect Operations
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26%
5%
22%
24%
26%
29%
33%
35%
None of These Events Occurred
Difficulty Meeting Expections for SROI Measures
Decrease in Non-governmental Funding
Erratic Cash Flow Disrupting Operations
Decrease in Governmental Funding
Significant Delays (60+ Days) in Receiving Funds
Dipping into Cash Reserves
Difficulty Covering Overhead
In the past 12 months, has your organization experienced any of the following funding issues?
Nonprofit Leadership Pulse Survey
Summer/Fall 2016

8. The Dilemma: There’s a Limit to Doing More With Less
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Funding is down. Demand for services is up.
Organizations are struggling to serve more people with
fewer resources.
Nonprofit Leadership Pulse Survey
Summer/Fall 2016

9. The Dilemma: There’s a Limit to Doing More With Less
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Changing demographics mean that organizations are
also trying to expand services to new target populations.
The service gap is growing.
Nonprofit Leadership Pulse Survey
Summer/Fall 2016

10. The Service Gap is Growing
12%
6%
15%
29%
39%
43%
47%
48%
52%
None of These Events Occurred
Fewer Services Offered Per Client
More Services Offered Per Client
Inability to Meet Demand/Service Gap
Expansion of populations served
Collaboration with Other Organizations to Meet Demand
Growth in Number of Clients Served
Expansion of Programs and Services
Increased Demand for Programs and Services
In the past year, has your organization experienced any of the following regarding
demand for programs and services?
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Nonprofit Leadership Pulse Survey
Summer/Fall 2016

11. The Prognosis: Nonprofit Fatigue
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Trying to do more with fewer hands is hard when there aren’t many hands
to begin with.
The majority of the organizations surveyed employed fewer than 100 people.
Nonprofit Leadership Pulse Survey
Summer/Fall 2016

12. The Prognosis: Nonprofit Fatigue
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Low job security and low salaries make attracting and retaining talented help a
challenge.
Nonprofit fatigue can be especially damaging when it causes turnover in senior
management or the board. Almost 90% of nonprofit leaders told us that
building a solid board was “critical” or “important” to their organizations.
Nonprofit Leadership Pulse Survey
Summer/Fall 2016

13. Turnover Can Be a Killer for Nonprofits
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24%
6%
9%
17%
17%
20%
60%
None of These Events Occurred
Merger with Another Organization
Unexpected Changes in Board Membership
Layoff of Staff
Challenges in Volunteer Recruitment and Management
Change in Executive Leadership
Staff Turnover
In the past 12 months, has your organization experienced any of the following organizational issues?
Nonprofit Leadership Pulse Survey
Summer/Fall 2016

14. The Importance of Funding Sources
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4%
32%
41%
45%
46%
54%
78%
78%
Not Applicable/Not Sure
Investment Returns
Other Funding Sources
City Grants
Federal Grants
State Grants
Individual Donors
Foundations and Corporations
What funding sources do you rely on?
0
10
20
30
40
50
60
70
Government
Funding
Private
Funding
60%
43%
Percentage Saying Funding Source is
“Critical” or “Very Important” to Their Operations
Nonprofit Leadership Pulse Survey
Summer/Fall 2016

15. Fundraising Resources
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14%
24%
34%
69%
83%
Other
Third-Party Fundraisers
Volunteers
Board Members
Internal Staff
Most organizations rely on multiple sources for
fundraising.
Internal staff and board members are heavily
relied upon.
A little more than one in three organizations rely
upon volunteers.
Less than one in four said that their organization
used professional, third-party fundraisers.
What resources do you rely upon for fundraising?
Nonprofit Leadership Pulse Survey
Summer/Fall 2016

16. Funding for Overhead
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What percentage of GOVERNMENT FUNDING permits your organization to use a portion of the funds
to cover costs associated with overhead? What percentage of PRIVATE FUNDING covers these costs?
Government funders were less likely to cover overhead expenses than private funders, with 18%
paying nothing at all. Private funders were more likely to pay a higher percentage of overhead
costs, with 49% of private funding covering 51-100% of program overhead.
Overhead Coverage % Government Funders % Private Funders
Funders that pay
NOTHING for overhead
costs
18% 8%
Funders that pay 1-50% of
overhead costs
49% 44%
Percent of funders that
pay 51-100% of overhead
costs
34% 49%
Nonprofit Leadership Pulse Survey
Summer/Fall 2016

17. Funding for Measuring Outcomes: Mind the Gap
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More and more donors expect nonprofits to measure the social return of their investment
(SROI). SROI measures the social and/or environmental value of programs and services
provided by a nonprofit.
However, only 17% of nonprofit leaders said that their organizations were adequately
funded for the costs associated with measuring such outcomes.
For the majority of organizations (58%), internal staff is their only resource for reporting
SROI. A minority of one in four employ both internal staff and third-party resources. Few
(6%) rely entirely on outside help.
Of the organizations surveyed, 48% said that it was a challenge to meet donor
expectations regarding SROI reporting.
The challenge is due to a gap in resources for measuring and reporting SROI. Sixty one
percent of nonprofit leaders surveyed said that their organization experienced such a gap,
with 33% saying that the gap was large.
Nonprofit Leadership Pulse Survey
Summer/Fall 2016

18. Methodology
The results reported here are based on completed, self-administered online surveys fielded in
late August and September 2016. Marks Paneth supervised the survey design. Galloway
Research hosted the data collection site. Business Research Solutions managed the research
project, analyzed the data and reported the findings.
The majority of respondents (85%) were senior leaders, including executive directors, CEOs,
CFOs, board members, and directors. Ninety-one percent of respondents worked for domestic
nonprofits.
The majority of organizations were nonprofit corporations or trusts. Sixty-two percent focused
on human services, followed by education (34%), health (31%), community development
(22%), public policy (14%), legal/justice (10%), commerce (8%), science & technology (7%),
environmental (6%) and animal welfare (4%). Note that an organization could identify as
belonging to multiple sectors.
The majority of organizations were small. Twelve percent had less than five employees. Forty-
one percent had 50 or fewer employees. Fifty nine percent had 100 or fewer employees. One
in four organizations had between 100 and 500 employees. Only 16% had over 500
employees.
Over one in four organizations (28%) ended last year with a deficit. Twenty percent broke
even. Forty-four percent ended the year with a deficit. Six percent of respondents said that
they did not know.
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Sample Size: 371
Fielding Date: Aug/Sept 2016
Methodology: Online Survey
Analysis: Business Research Solutions (BRS)
Survey Questionnaire: Marks Paneth, BRS
Nonprofit Leadership Pulse Survey
Summer/Fall 2016

19. For More Information
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If you have any questions, please contact Michael McNee, Partner-in-Charge of the Nonprofit and Government
Group, or any of the other partners in the Group.
To participate in future surveys and receive results, please email us at contacts@markspaneth.com.
Media: To schedule an interview, contact John McKenna at (203) 682.8252 or john.mckenna@icrinc.com.
Nonprofit Leadership Pulse Survey
Summer/Fall 2016