Nonprofits shifting money model in tough economy

Faced with continuing financial stress in the wake the recession, nonprofits plan to rework their strategies for raising and spending money, a new survey says.

Among 5,983 nonprofits responding to the 2013 State of the Nonprofit Sector Survey from the Nonprofit Finance Fund, 42 percent say they lack the right mix of financial resources to thrive and be effective in the next three years, and one in four has 30 days or less cash on hand.

Twenty-nine percent plan over the next 12 months to change the main ways they raise and spend money, and 23 percent will seek funding other than grants or contracts, such as loans or investments, says the survey, which is supported by the Bank of America Charitable Foundation and looks at the finances, operations and outlook of nonprofits.

Only 14 percent of nonprofits that receive state and local funds are paid for the full cost of services, and only 17 percent that receive federal funds get full reimbursement, with partial reimbursement requiring additional funding “to cover the growing gap as nonprofits serve more people,” NFF says.

Government also is late to pay, the survey says.

Among nonprofits that get state or local funding, it says, just over 60 percent report overdue government payments, and over 50 percent report late payments from the federal government.

Fifty-two percent of respondents say they were not able to meet demand for services over the last year, marking the first time in the five years of the survey that over half the respondents say they could not meet demand.

That was up from 44 percent that said in 2009 they were not able to meet demand.

And 54 percent say they will not be able to meet demand this year.

Fifty-nine percent of respondents say jobs are the top concern in low-income communities, 51 percent say housing is the top concern, and 90 percent say financial conditions are as hard or harder than last  year for their clients, representing a slight improvement from the previous year.

Over the past 12 months, the survey says, 49 percent of respondents added or expanded programs or services; 17 percent reduced or eliminated programs or services; 39 percent collaborated with another organization to improve or increase services; 39 percent upgraded technology to improve organizational efficiency; and 36 percent engaged more closely with their board.

“Nonprofits are changing the way they do business because they have to,” Antony Bugg-Levine, CEO of Nonprofit Finance Fund, says in a statement.

“Government funding is not returning to pre-recession levels, philanthropic dollars are limited, and demand for critical services has climbed dramatically,” he says. “At the same time, 56 percent of nonprofit plan to increase the number 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.”

Todd Cohen

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