Nonprofits not meeting demand for services

Despite the rebound in the economy, nonprofits still are hurting, and many are looking for new funding models, a new survey says.

“The struggle nonprofits face are not the short-term result of an economic cycle,” Antony Bugg-Levine, CEO of the Nonprofit Finance Fund, says in a statement. “They are the results of fundamental flaws in the way we financial social good.”

Eighty percent of more than 5,000 nonprofit leaders who participated in the 2014 State of the Nonprofit Sector Survey, the sixth annual survey from the Nonprofit Finance Fund, reported an increase in demand for services, the sixth straight year of rising demand.

Fifty-six percent of respondents were not able to meet demand for services in 2013, the highest in the survey’s history, and only 11 percent expect 2014 to be easier than 2013 for the people they serve.

Among respondents whose organizations received government funding, nearly half have seen report drop over the past five years.

To generate new funds in the next 12 months, 31 percent plan to change the main ways they raise and spend money, 26 percent will pursue an earned-income venture, and 20 percent will seek funding other than grants and contracts, such as loans or other investments.

Achieving long-term financial stability is a top challenge for 41 percent of respondents.

Still, 55 percent have cash on hand to cover only three months or less, 28 percent ended fiscal 2013 with a deficit, only 9 percent and 6 percent, respectively, “can have an open dialogue” with funders about developing reserves for operating needs, and about 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 says.

In the past 12 months, the survey says, 49 percent of respondents collaborated with another organization to improve or increase services; 48 percent invested money or time in professional development; 40 percent upgraded hardware or software to improve organizational efficiency; and 39 percent conducted long-term strategic or financial planning.

Respondents also said more than 70 percent of their funders requested impact or program metrics, and 77 percent agreed the metrics that funders ask for are helping in assessing impact.

But only 1 percent reported that funders always cover the costs of impact measurement, and 71 percent said costs were rarely or never covered.

Todd Cohen

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