September 20, 2017
 
Nonprofit Leaders Increasingly Pessimistic About the Next Year

September 4, 2017 — Pessimism among nonprofit leaders is growing, with nearly 60% expecting conditions in the nonprofit sector to be more difficult over the next 12 months, while an even greater share expects demand for their organization's services to increase over the same period, according to a recently completed survey.

Pessimism is driven by fears that government funding will dry up, especially among organizations that rely on federal, state, and local funding, according to the national Summer 2017 Nonprofit Pulse survey completed by Marks Paneth LLP, an accounting firm based in New York City.

Findings were based on a survey of nonprofit leaders across the United States working in a wide range of organizations in the nonprofit sector.

Thirty-seven percent of respondents said they expect to see their organization's fundraising revenues to drop over the next 12 months, with leaders at larger organizations, which tend to be more reliant on government funding, more pessimistic about funding availability.

Thirty-six percent of respondents said they thought fundraising revenues over the next 12 months would remain flat.

Nearly two-thirds (62%) of respondents said their organization would see somewhat higher demand for services over the next 12 months; 40% of those expecting an increase in demand said that increase would be moderate while 22% said they expect a large increase in demand.

While overall board turnover is low—half experienced less than 10% turnover during the last year—recruiting new board members is not easy for some organizations: 45% of nonprofit leaders said that finding board members whose skill sets fit the organization’s needs is difficult.

Respondents rated their boards highest in terms of mission alignment and lowest in terms of fundraising effectiveness. Boards were boards were rated on a five-point scale on the following dimensions:
  • Mission alignment (4.1)
  • Organization oversight (3.7)
  • Financial strategy (3.5)
  • Community relations (3.0)
  • Board diversity (2.7)
  • Fundraising effectiveness (2.7)
Using correlation analysis, the survey also found that organization oversight, financial strategy and fundraising effectiveness had the most significant impact on overall board performance ratings.

“With the majority of nonprofit leaders expecting industry conditions to deteriorate in the next 12 months, the role of board members has never been more vital,” said Hope Goldstein, co-partner at Marks Paneth. “The importance of oversight, financial strategies, and effective fundraising support cannot be emphasized enough.”

The survey noted that while more and more donors expect nonprofits to measure the social impact of their investment (SROI), 88% or survey respondents said the burden to meet donor SROI expectations was challenging, with one in four saying it was “very challenging.”

A large majority of nonprofit leaders said that their organizations are inadequately funded for measuring SROI and that few can afford extra help to get it done, which means the job falls on staff who are already stretched thin.

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