The Center for Non-Profits has been conducting annual trend surveys of New Jersey’s non-profit community for the past 14 years. This survey is a central part of our ongoing work to track and report on the issues affecting New Jersey’s non-profits and to advocate for solutions and sound public policies. One benefit of doing this survey consistently on an annual basis is that it enables us to compare findings over time and identify any upward or downward trends.
Now nearly six years after the Great Recession was officially declared “over” by major economists, has the recovery reached New Jersey’s non-profit community? How are New Jersey’s non-profits doing?
In this year’s newly released survey results, we’re finding some hopeful signs and some cause for concern.
First, the good news:
- For the second straight year, at least half of respondents reported increases in total funding in the most recent calendar year, and more than half predicted increases for the year to come.
- Also for the second straight year, more organizations reported increases from individual gifts, foundations and special events than reported flat or decreased funding in these categories.
- Only a very small percentage indicated that they planned to cut staff during 2015.
- A lower percentage of respondents (15 percent) reported decreased total funding from the prior year than in the Center’s three previous surveys.
- Over half (57 percent) of organizations said that their overall circumstances were better now than one year ago, and nearly two-thirds (64 percent) expected their situations to improve over the coming year.
Compared to our surveys during the height (or depth) of the economic downturn, these findings are a significant improvement.
Unfortunately, the findings are not all favorable:
- Although 50 percent of our respondents said that their total funding had increased in 2014 vs. 2013, 64 percent said that expenses had risen during the same period, and 26 percent reported that expenses exceeded support and revenue during their most recently completed fiscal year.
- Consistent with prior years, 80 percent expected demand for their programs and services to rise during 2015 and nearly three-quarters (72 percent) expected expenses to increase, but only 57 percent expected total 2015 funding to increase.
- “Financial uncertainty” continues to rank as one of the most frequently cited concerns from respondents about the viability of their own organizations. Infrastructure issues and the need for strong boards were identified as pressing issues both for individual organizations and the collective non-profit community.
The persistent gap between demand for programs and resources to address these needs should be deep cause for concern for anyone who values or depends on the work non-profits do.
Simply put: Although the worst of the bleeding from the recession has stopped and the wounds are starting to heal, for many non-profits the lingering effect of the prolonged downturn are still very real.
Addressing the situation starts with all of us.
For non-profits, funders (government and private) and donors, it means an honest, respectful dialogue about the resources needed to do the work. For non-profits and their boards, it means presenting realistic budgets that don’t skimp on human resources, infrastructure, planning and technology. It means finding — and advocating for — the resources to fully fund these budgets.
Fortunately, there are some signs that the tide is shifting.
- Through the recently finalized OMB Uniform Guidance, which for the first time mandates that federal contracts (and state and local pass-throughs) include a reasonable amount for indirect costs, the federal government has sent a powerful signal that such costs are an essential and desirable for sound non-profit operations. We are working to encourage state and local governments to follow suit for non-federal grants and contracts.
- Some of the entities that have for years embraced the artificial measures of program expenses, management/general and fundraising as a percentage of total expenditures as the main criterion for judging charities, are now endorsing an end to the “overhead myth” and are calling on stakeholders to endorse more valid metrics.
- The National Council of Nonprofits, which has taken a leadership role in the OMB Uniform Guidance and other facets of this issue, has launched an #OwnYourOwnCosts initiative to encourage non-profits and their boards to model transparency about full costs.
- The Council of New Jersey Grantmakers and the Center for Non-Profits are engaged in a joint project to explore ways that grantmakers and grantseekers can partner to improve impact. Among the initiatives in the works is an exploration of non-profits’ real costs and how those costs might be supported. Our colleagues in Illinois and other states have made significant strides in advancing this issue.
- The Dodge Foundation has for years been a leader in strengthening organizations by providing general operating support and access to capacity building resources and professional development for boards and staffs of their grantees (including the Center for Non-Profits). New Jersey is fortunate to be home to many other funders that do the same.
Of course, many of these problems did not begin overnight or even with the recession, and widespread change will take a long time to come. But as we all know, non-profits have always been in it for the long haul. And our communities deserve nothing less.
Linda M. Czipo is executive director of the Center for Non-Profits, New Jersey’s statewide umbrella organization for the charitable community. Through advocacy, public education, technical assistance and cost-saving member services, the Center works to build the power of New Jersey’s non-profit community to improve the quality of life for the people of our state.