nonprofit finance fund's 2011 nonprofit sector survey highlights

8/7/2019 Nonprofit Finance Fund's 2011 Nonprofit Sector Survey Highlights

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Board, Sta and Volunteers pulled together in anticipation o a negative economic impact and the

actually improve our nancial situation. And we did it by not cutting services, but to actually improve u

and services. We have implemented a new system to more careully track expenditures so we ca

inormed decisions or program budgets. We restructured aterschool program oerings to mak

aordable to cash strapped school districts. In 2010 we were able to add a substantial amount (or u

reserves. It was a result o several years o increased grants rom smaller oundations, increase

undraising, improving the eciency o our thrit shop operations and better procurement polici

services we consume. Provided we can continue this approach, we should program services should

sustainable in the uture.We are most proud o taking swit action once we projected a revenue d

made signicant expense cuts to limit the impact on our reserve unds. We are now positioned to

improving conditions and replenish reserves.Leadership members have actively worked on reducing

expenditures, nding ways o reducing routine expenditures and have been personally charged wi

ways o bringing in unding to oset the diminishment o past routine unding venues. In spite o

economic climate, we have been able to maintain a high level o service to our residents. We ha

awareness on the board level or the need or proactive undraising.We began with a $2.3m debt to

an operating decit o $130k. Our debt to the bank has been retired completely through the sale o re

have downsized into one building renovated to suit pro bono by the building trade unions. We have

and recongured programming without interrupting service. We are still here!One nonprot worki

(arts) went out o business, and we took up some o the slack. The public was so appreciative an

services so badly that they contributed ar in excess o the amount we needed to pay or the services

to provide. LESSON: The arts are not a luxury. The public considers

them a necessity or survival. We have been very ortunate that our

donors are coming through or us and we have been able to apply or

a couple o smaller grants. It all helps!We survived almost 4 months without our major income so

[local government] by laying o 2/3 o the sta and operating on minimal expenses. Our laid o sta

1000 hours o volunteer time during that period. All o the sta except 8 teachers were laid o, the

worked without pay or the entire time and took a $46,000 second mortgage on her home to keep u

under. It was a terrible situation, 4 bridge unding resources, 11 banks a

and numerous individuals and oundations were contacted or help. No

one would help. Partnered with other organizations who seek to serve

same clients we are serving so we can combine publicity eorts. They

also provide logistical support or clinics and at least one partner pa

transportation expenses.We had created a long term strategic plan beore the economic downturn a

prepared when things went really bad. We had a reserve and we were able to expand our services

when the services were most needed. We reduced expenses and were able to end the FY in the bl

very dicult undraising year. We "turned the corner" in terms o engaging our board in undraising

MUST be actively engaged with und development along with sta

and are taking actions. We reached the 95% mark in our $6.55 million

capital campaign and expanded operations. We eel truly ortunate to

in this challenging environment. Had substantial reserves in

o a recession (surprise on how bad the recession was, but had pre-

building reserves), restructured business plan to develop new operational structures to adjust to declining government unding that wil

be permanent, establishing more collaborative, partnering relationships that will bring benets in

terms o shared revenues...We have served and helped 100s o homeless amilies get back up

provided a quality caring service to 1000s o people. We have gone rom just providing a handout to h

accountable and giving them the tools they need to succeed.We are placing more emphasis on progra

In 2010, we spent time examining how we deliver services and whether o

programs were reaching objectives. From this evaluation process, we h

to decrease the number o students served in order to increase the a

services provided to each student. We strongly believe that this will

help our students to better meet objectives and our organization to

better serve our mission.Most proud o the way the sta has come together, made huge sacrices, in

workload so as not to compromise our program oerings - all the while, reducing expenses whi

revenues. Most proud o the sta's "We Can Do It" attitude. In addition to the budget amendments, th

became debt-ree.As the Executive Director or eighteen years, I knew our budget/cash fow so weldecisions about how to get through this economic landscape was easy or

me to do. What was stressul was not knowing exactly how it would all come

out at the end o the year. Most o our private unding comes in the last quarter. S

the Board to agree to use our reserve unds i needed--and we did not need them. W

our building/land and it is worth alot--so i had to we could borrow against it. That would no

choice. The act that I am doing three jobs here or now more than two years makes my lie exhausting--but it also got us th

black..We really ocused on keeping our expenses low and ully utilized our sta and volunteer talents. We added more to our existin

help our moms nd gainul employment, continue their education or attend trade school. We helped to make our residents more desirable

environment.We were able to keep personnel moves and budget issues rom aecting services to clients. We were very proactive in reducing sta and ove

as well as dening what are our core service oerings. This helped when we lost 85% o our unding in October 2010. There is uncertainty how we will make it through th

however, at least a number o decisions were made prior to the crisis.Our Board determined in Spring o 2010 that we had three ailing divisions. they have met bi-weekly in subc

consider various scenarios. We have two that appear to be in a good place one more to consider. In the meantime- two more are in need o remediation.Tapping into an array o unding so

we are not overly reliant on any single source. Through careul portolio management we have been able to decrease risk and loss more than most o our peer arts organizations. We have increased

orkers with interns rom a local university, providing the students with real world varied experience and the organization with much needed people power and resh ideas. We bent our knees by reduciIn January o 2010, we prepared or a slow ourth quarter o giving (FY Jan-Dec). We used the situation to reduce administrative overhead to 18%, transition out o a bad oce lease, reduce sta

ing service partners and strengthened our under relations.We invested in exceptional nancial management. As a result cash fow is better and we have not required use o reserve unds or lines

2011 State o theSector Survey

Nonprot Finance Funds (NFF) third annual survey

drew responses rom nonprots in almost everystate, rom small community arts organizations, to

multi-million dollar health centers, to burgeoning

charter schools. What did we learn? While the

country has ocially climbed out o the recession,

recovery is slower or the nonprot sector.

Particularly or organizations providing critical

services, it's getting harder and harder to keep up

with the steadily rising demand.

NFF's Sector Survey is creating a repository o

nonprot data that can shed light on nancialtrends in our sector. By better using and sharing

data, we believe that nonprots, with assistance

rom key stakeholders, can become more resilient

in uncertain times and draw on the successul

strategies used by their peers.

We asked nonprots what they were most proud o about theirmanagement in 2010. To the right is a sample o what they had tosay. Learn more at nonprotnanceund.org/survey.

NFF's 2011 Survey is generously supported byBank o America Charitable Foundation

28% have1 monthor less o c

87% eelthe recessiisn't over

1935 nonproresponded

77% saw aincrease indemand or

services

55% added expandedprograms


2/6

*Includes Mutual/Membership Benet (1%), International, ForeignAairs (1%), Houses o Worship (1%), Miscellaneous (7%).

Now in its third year,

NFF's Annual Survey has

captured more data than

ever beore. The majority

o respondents in each

year represented small to

mid-sized organizations,

with Human Services

leading, ollowed by Arts, Culture, & Humanities, and Education. With

three sets o respondents representing similar characteristics, we're

using available data to explore possible emerging trends.

Learn more about previous years' surveys at

nonproftfnanceund.org/survey .

A Prole o 2011 Survey Respondents Demand or Services is Rising

Human Services

Arts, Culture,Humanities

Education

Health

Public/Societal Beneft

Environment/AnimalsOther*

35%

19%

14%

9%

4%

9%

10%

$0-250,000

$250,001-500,000

$500,001-2,000,000

$2,000,001-5,000,000

$5,000,001-10,000,000

$10,000,001-20,000,000$20,000,000+

33%

17%

16%

9%

13%

5%

6%

By Sector By Operating Expenses

More nonproits are reporting signiicant increases in service

demand compared to previous years 41% in 2010, up rom 31%

2008 (Chart 1). It's important to note that every increase in demand

is on top o increases in previous years. For some organizations, thi

might suggest that the need or services is signiicantly increasing

every year.

Compared to last year, even ewer organizations are able to keep up

with demand or services. I respondents' expectations or 2011 are

correct, this downward trend will continue (Chart 2).

41%

2010

35%

2009

31%

2008

36%

42%

36%

16%20%21%

7%10%

5%

SlightlyIncreased

Stayed theSame

DecreasedSignifcantlyIncreased

How Did Demand or Services Change Each Year?

For years 2008, 2009, 2010

Chart 1

Were Nonprofts Able to Meet Demand or Services?

Chart 2

No: 49% Yes: 51%No: 44% Yes: 56%

No: 54% Yes: 46%2011expected

2010

2009

1,935respondents

in 20111,315

respondentsin 2010

986respondents

in 2009

Were Lieline NPOs Able to Meet Demand or Services?

Chart 4

No: 57% Yes: 43%

No: 57% Yes: 43%

No: 63% Yes: 37%2011expected

2010

2009

SlightlyIncreased

Stayed theSame

DecreasedSignifcantlyIncreased

Lielinevs.Non-Lieline 2010 Service Demand over Previous Year

Chart 3

55%

32%

10%

Looking at Lieline Organizations

49% o respondents identied themselves as providing services critical

to the health and saety o those in need. A higher percentage o these

"lieline" organizations are reporting signicant increases in service

demand, and ewer are reporting decreases or no change (Chart 3). Tomeet this demand:

60% o lielines increased the number o clients served (compared to

39% or non-lielines)

50% partnered with another organization to improve or increase

services (vs. 44% or non-lieline)

58% added or expanded programs (vs. 52% or non-lieline)

Results suggest that the higher demand is taking a toll on these critical

nonprots, with 57% reporting an inability to keep up with demand (Chart 4).

Their nancial situation, however, is similar to overall results; in 2010, 33%

reported decits, 43% reported surpluses, and 24% were at break-even.

27%

41%

21%

11%3%


3/6

ProgramExpansion

58%

Finances Show A Glimmer o Improvement

We're happy to report a slight decrease in the number o organizations

with no cash available. However, the more the economy has changed,

the more cash stays the same; three-year reports or months o cash

were strikingly similar across all categories (Chart 5). NFF generally

recommends that nonprots maintain at least 3 months o cash.

However, this amount varies depending on an organization's strategic

plans, business model, and the reliability o revenue streams.

About one-third o respondents reported a decit in 2010, similar to

previous years. When we asked respondents at the beginning o 2010

34% 44% 22%

36% 35% 29%

32% 40% 28%

26% 30% 44%2011expected

2010

2009

2008

What Was the Financial State o Organizations at Year-End?

Chart 6Decit Surplus Break-Even

2011 10%

2010 12%

2009 14%

18%

17%

18%

32%

31%

31%

21%

19%

19%

20%

19%

19%

None

1 month oexpenses

2-3months oexpenses

4-6

months oexpenses

Morethan 6months oexpenses

How Many Months o Cash Do Nonprofts Have on Hand?

For years2009, 2010, 2011

Chart 5

What Are Nonprofts' Outlooks in 2011 or...

Chart 7

Theirclients

TheirNPO

Easier than

2010 Harder than 2010 Same as 2010

9% 39% 53%

14% 41% 45%

to predict their nancial results or the year, 18% expected surpluses;

in contrast, 44% actually ended 2010 with surpluses. This year, more

respondents 30% expect surpluses by the end o 2011 (Chart 6).

The last three years o data paint a picture o nonprots ghting

or nancial stability while acing ast-climbing demand. 41% o

respondents believe that 2011 may be even harder than 2010 or their

organizations. Many believe that 2011 will be similar to the already

dicult circumstances o 2010, suggesting that nonprots may be

adjusting to the new normal o our post-recession environment (Chart 7

Open Dialogue

Facility

Needs 32%Building

Reserves

9%

Debt Burden 5%

Working Capital

Needs 23%

O

peratingReserves19%

CashFlow21%

No OpenDialogue 23%

Nonprots' perceptions about their support rom unders infuence their

management strategies and the ways they cope with problems. The data

cloud to the right describes what nonprots eel they can openly discuss

with unders. The topics most dicult to see?: Only 5% elt they coulddiscuss Debt Burden, ollowed by 9% or Building Reserves. 23% didn't

eel that their unders would engage in dialogue about any o the topics

listed. Outside o program expansion, no category received a response rate

over 32%, raising the question: what issues are nonprots and unders

discussing, and how can we better t nancial issues into the conversation?

We asked nonprots what they wished their unders would do dierently.

In interpreting this qualitative data, we ound that 50% asked or more

general operating or capacity support, while 11% asked unders to

und what already works, rather than asking or something new. These

concerns contrast with the emphasis on Program Expansion to the right.

My Nonproft Can Have an Open Dialogue with Funders About...

Chart 8


4/6

Taking ActionChart 9

service-related actions taken in '10

fnancial management actions taken in '10

personnel-related actions taken in '10

pale bars represent actions planned or '11

Nonprots are working hard to serve their

communities. Over the past 12 months, 55% added

or expanded programs or services and 49% increased

the number o clients served. To meet the demand,

organizations are stretching resources and developing

strategies to do more with less. 47% partnered with

another organization to improve or increase services,

while 36% relied more on volunteers.

Group Profle: Who Made Sta Reductions?

27% o total respondents reduced sta in 2010.

Within this group, 46% added or expanded programs

and 43% increased the number o people served,

while 50% reduced or eliminated programs. 58%

were unable to meet demand or services. Over halo the nonprots in this group 57%identied

as lieline. (See how these gures contrast with

overall results in Charts 2 and 9.) This data might

raise questions about how organizations managing

nancial hardship cope with service provision. How

ar do we push sta and inrastructure to meet

demand? And how can sector advocates better help

nonprots balance capacity, money and mission?

Decreased number o clients served 9%4%

Decreased amount o service per client 5%4%

Added or expanded programs or services56%

55%

Increased the number o clients served50%

49%

Partnered with another organization to improve or increase services51%

47%

Reduced/ eliminated programs/ services15%

26%

Expanded geographies served

24%

20%

Raised amount o service per client21%

17%

Acquired new assets 10%9%

Sold assets 4%3%

Merged 2%4%

Paid vendors on time59%

64%

Engaged closely with board55%

51%

Reduced annual expenses30%

39%

41%Developed or maintained worse case scenario budget 38%

Raised more revenue than expected

48%

35%

Raised less revenue than expected8%

34%

Used reserve unds18%

34%

Held conversations with unders to explain situation27%

33%

Increased annual expenses28%

30%

Added to reserve und33%

25%

Sped up collection o receivables24%

21%

Delayed payment to vendors8%

20%

Reduced occupancy costs16%

19%

21%Collaborated on expenses 14%

Improved or increased sta benets 11%9%

Froze all replacement hires 6%3%

Made replacement hires34%

46%

Hired sta or new positions34%

44%

Gave raises32%

39%

Relied more on volunteers 34%36%

Froze or reduced salaries18%

34%

Reduced sta11%

27%

Reduced sta benets8%

19%

Reduced sta hours7%

17%

Retained all current personnel39%

35%

Responding to the New Normal


5/6

How Can We All Better Support Nonprots?

We asked nonprot leaders to tell us one thing they would like to see unders do dierently to better help their

organizations. While the responses to this open-ended question varied, strong themes emerged. Most prevalent

by ar was the need or more general operating or capacity support, expressed by 50% o respondents. They

reminded us that a strong organization is the backbone or consistent, successul programs. Along with this, they

requested that unders place greater trust in well-run and eective nonprots to allocate money according to their

own needs. Many also asked that unders support the core work an organization is already doing well, rather than

requesting new initiatives. To learn more, visit us at nonproftfnanceund.org/survey.

In their Own Words: Quotes rom the Survey

Allow or unrestricted operating grants or nonprot

organizations with a proven, successul track record.

Allot sucient (oundation) sta resources to tak

the time to listen to the value o our programs to

our community and constituencies served. Conside

the importance and value o deep impact to small

communities. Advise and counsel worthy program

during the grant-seeking process, by using ( under

eld-wide expertise and give grant-seekerseedback on the process and how they t into the

bigger picture.

Fund the organization's operating costs, not looking

or innovation, new projects, transormation. Support

the organization already doing a good job perorming

against its mission. Don't look or or avor ancy

narratives and budgets making a case that require

costly sta to write eloquently

Address the need to help nonprots diversiy unding

streams and understand the idiosyncratic actorsinvolved in achieving organizational sustainability.

Make multi-year commitments with timely

checkpoints or accountability.

Streamline the application process, and don't require

an amount o work or proposals/reports that's out o

proportion to the grant award amount.

Consider adjusting payment schedules to advance

annual payments by 6 months to improve cash

fow

not increase unding, simply time it moreeectively.

Recognize the ull cost o programs (including

und raising and general & administrative costs),

particularly across unding cycles. We're on a

constant roller coaster because we limp rom one

unding cycle to the next, never being able to engag

in long-term change.

50%

13%

11%

2%

11%

8%

8%

2%2%

1%

1%

1%

5%4%

4%

Themes rom Open-Ended Responses

Support General Operating & Capacity Costs753 respondents expressed the need or more unrestricted, capacity,and/or general operating support.

Listen, Learn, Communicate198 respondents wanted more dialogue and to hear honest eedbackrom current / prospective unders.

Fund What Already Works172 nonprots asked unders to support successul core programs,

not just growth and innovation.

Provide Longer-Term Support164 respondents wanted multi-year support, help planning or long-term sustainability, or help widening their unding network.

Other116 respondents represented a variety o perspectives not sharedby more than 10 other respondents.

Make the Grant Process Easier & Cheaper115 want a more streamlined process that acknowledges the coststo the organization o applying or and reporting on grants.

Consider Cash Flow Concerns

74 wished unders would provide critical working capital and makedisbursements more quickly once a grant is announced.

Give More Money63 respondents ocused on this classic nonprot problem.

Be Open to Change59 want unders to consider supporting start-ups, expansion eorts,and making grants outside their traditional areas.

Pay the Full Cost32 asked unders to pay the ull cost o services provided.

Support and Engage in Collaboration31 want unders to support nonprot collaborations and also provide

grants in strategic partnerships with other unders.

Give Capital, For Facilities & Big Projects30 respondents need capital or acility-related costs and everythingrom xed assets to growth.

Fund Small Nonprofts22 elt that small nonprots were under-recognized.

Provide or Help us Manage Loans19 want loans, PRIs, or assistance with debt relie during thesechallenging times.

Support the Arts

12 remarked that the arts are oten underunded and overlooked.


6/6

Despite expectations o continued increases in demand or services, nonprots

continue to be resourceul in making ends meet. From collaboration to cost

management to better communication, nonprots are using a variety o

strategies to protect their underlying inrastracture and enterprise while

providing the best services possible to the most people. This delicate balance

between mission, capacity, and capital becomes increasingly dicult when

organizations experience upheaval whether due to a recession, the loss o

a unding source, or unexpected expenses.

This document primarily refects national results. I you would like more

inormation on a subgroup o organizations, such as a particular sector, geography,

or nancial condition, please contact your nearest NFF oce. We'll also be posting

urther explorations o the results online at the links below.

nonproftfnanceund.org/survey

nonproftfnanceund.org/blog

twitter.com/n_news

About Us

NFF makes millions o dollars in loans to nonprots and pushes or improvement in

how money is given and used in the sector. Since 1980, weve worked to connect

money to mission eectively so that nonprots can keep doing what they do so

well. We provide nancing, consulting, and advocacy services to nonprots and

unders nationwide. Our services help great organizations stay in balance, so that

theyre able to successully adapt to changing nancial circumstancesin both

good and bad economic timesand grow and innovate when theyre ready.

In addition to providing loans and lines o credit, we organize nancial training

workshops, perorm business analyses, and oer customized consulting services.

For unders, we provide support with structuring o philanthropic capital and

program-related investments, manage capital or guided investment in programs,and provide advice and research to help maximize the impact o grants.

New York Region and

National Headquarters

70 West 36th St., 11th Floor

New York, NY 10018

212 868 6710

[email protected]

San Francisco

28 Second St., Suite 600

San Francisco, CA 94105

415 255 4849

[email protected]

New England

89 South St., Suite 402

Boston, MA 02111

617 204 9772

[email protected]

Los Angeles

626 Wilshire Blvd., Suite 510Los Angeles, CA 90017213 623 [email protected]

New Jersey

59 Lincoln Park, Suite 350

Newark, NJ 07102

973 642 2500

[email protected]

Detroit

645 Griswold St., Suite 2202

Detroit, MI 48226

313 965 9145

[email protected]

Greater Philadelphia

1608 Walnut St., Suite 703

Philadelphia, PA 19103

215 546 9426

[email protected]

DC-MD-VA

2100 M St. NW, Suite 170-329

Washington, DC 20037-1233

202 778 1192

[email protected]

Nonproft Finance Fund is a nonproft 501(c)(3) Community Development Financial Institution (CDFI)

2011, Nonproft Finance Fund

have been able to withstand over 30,000 cuts in government grants. Continuous commu

donors either through newsletter or letter rom the president thanking them or the supp

given which ultimately made 2010 one o the best years o the organization.With a strug

able to increase our lines o credit by using invested endowment unds as collateral or

expenses are at a bare minimum. We have run this way or 3 years and we are still p

However, what is happening is that I am using my personal unds to pay or things like o

that I used to have a budget or. You do what you have to do to stay open. No sta lost

because o the economy. No elderly resident was displaced because o our nancial s

sought collaboration and aliation. Housed an additional 40 homeless mentally ill in 2

total assisting to over 230. Re revenues/expenses, sta increased eciencies re billing an

Sta stayed ocused on providing good services to clientele resulting in positive dat

Dramatically expanding service in dicult economic times.We engaged new sources o

increased several existing revenue sources. We were able to meet the growing need o ou

hire new sta and avoid layos all the while giving out bonuses and merit increase

controlling our expenses and working to attract more ee-paying clients. We were able t

provide high quality services with less sta and weather the nancial crisis with a minimum

impact on sta and amilies.. We were more aggressive in und development and wer

became more diversied in unding sources; and were able to manage expenses. These a

us to end the year with a small gain in working capital. Through some cost-cutting mea

benets, eliminate positions, control spending) plus increased revenue through one incom

program, we ended the year in the black. We are proud that we have been able to keep up

increased demand or our services, without compromising quality.We were able to re

spending and increase revenue by securing more in-kind donations and strategically targe

with aligned missions.New intiatives or projects were developed with the assistance o

or administrative and accounting unctions were outsourced which improved eciency

hiring costs. We extended services to 28% more individuals and stayed on budget. We'

ecient. Through the generosity o the donors in our area, we were able to maintain serv

levels in a time o economic down turn. This, o course, did not increase our ability

constitutents, but at least we did not decrease service. Increasing private giving, neg

County unders, did not reduce health benet to employees, transitioned programs to

Reduced expenses without diminishing services, and lowered ees. Increased number o c

while experiencing a reduction in revenue. We were able to complete all committed pro

end o FY2010, despite signicant cut-backs in reveue, due to a cut-back in overhead and s

expenses.The budget decisions were made collaboratively across service areas. Everyon

to chip in as long as we could preserve jobs. Engaging the board and sta on the proce

together the economic problems we were acing. Working together as a team and nding

mantain the program with a realistic budget.We were able to reduce costs/expense

service to one line, reduced the salary o the Executive Director,renegotiated the rent o

Managed to cut operating costs by around $5,000.00 without taking away rom our p

maintained scal discipline and so were able to raise philanthropic dollars and secure bo

or a major addition. We were able to raise more money in 2010 than at any time in our hi

the economy. Good marketing, broader grass-roots undraising eorts, many small events

to be successul. Reduced operating expenses and reallocated work among present sta

time and talents or use on new projects Continued quality services even though the uncer

unding and cash fow gives us pause - we are actively seeking to diversiy revenue stre

board understands that we may need to invest in program development in order to end

specic unding sources. We held the line with our nances in place.We learn to do more w

still maintain our budget cost. We cut costs and streamlined our program model to be m

by outsourcing a component o our service or school partners to take on, which has work

We are a leaner, more nimble organization now as a result. Made a strong commitmen

accelerating needs in our community which has allowed us to increase revenue while h

costs steady. We stayed afoat! Despite increases in the number o clients and services

those clients, we have been able to meet those needs while reducing expenses at th

through operating eciency gains. We have strengthened our und development program

to donors; strengthened board involvement i und raising; successully grown our service p

sustainability as a key element or success; developed relationships with 4 organizationscommunity we ocus on; maintained our ability to conduct a ull audit by an outside rm.

vendor contracts to reduce costs Relationship building with oundations,increas

continue our mission without urther reductions in hours or paid sta...We have b

reserves over the past ew years, but now must draw down reserves at leas

two years. Recognized a potential decit developing 5 months into the

year and took airly immediate steps to alleviate it. We been

since 2006 and continue to do it. The state is not re

payments they owe us since 2008. And no n

avaliable to continue serving all the

population.We continue to be go

on each and every d

take pride in

dollar

p

Further Exploration

nonprofit finance fund's 2011 nonprofit sector survey highlights

Documents