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Nonprofit Pulse, Summer/Fall 2016
The summer/fall 2016 Nonprofit Pulse survey reveals that a significant majority of nonprofit leaders anticipate increasing challenges in financial health and donor expectations over the next year. Funding reductions are impacting organizations' ability to meet service demand, with many experiencing erratic cash flow and having to dip into reserves. Additionally, a growing service gap is noted as nonprofits strive to serve more populations with limited resources and staff.
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Nonprofit Pulse, Summer/Fall 2016
- 1. NONPROFIT PULSE Nonprofit Outlook:Challenges, Finances, Funding, Demand for Services, Organizational Issues, Donor Expectations Summer/Fall 2016
- 2. Introduction 2 | markspaneth.com MarkPaneth’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 ChallengesAhead 3 | markspaneth.com 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 Concernsare Financial 4 | markspaneth.com 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 AboutLong-term Financial Stability 5 | markspaneth.com 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 areReal 6 | markspaneth.com 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 FundingAffect Operations 7 | markspaneth.com 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’sa Limit to Doing More With Less 8 | markspaneth.com 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’sa Limit to Doing More With Less 8 | markspaneth.com 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 Gapis 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? 9 | markspaneth.com Nonprofit Leadership Pulse Survey Summer/Fall 2016
- 11. The Prognosis: NonprofitFatigue 10 | markspaneth.com 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: NonprofitFatigue 10 | markspaneth.com 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 Bea Killer for Nonprofits 11 | markspaneth.com 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 ofFunding Sources 12 | markspaneth.com 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 13 |markspaneth.com 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 14| markspaneth.com 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 MeasuringOutcomes: Mind the Gap 15 | markspaneth.com 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 reportedhere 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. 16 | markspaneth.com 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 17| markspaneth.com 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