Nonprofits are facing pressing needs for investment
capital but report widespread obstacles to accessing that
capital, according to a new report from Johns Hopkins'
"We have long been accustomed to thinking of
nonprofits as labor-intensive institutions. But their need
for investment capital to finance technology, facilities
and program development has grown massively in recent
years. Unfortunately, however, we know very little about
the challenges nonprofits face in generating this
investment capital," said Lester Salamon, director of the
Center for Civil Society Studies at
the Johns Hopkins Institute for Policy
Studies, which oversees the Listening Post Project.
To help fill this gap, Johns Hopkins researchers
surveyed a nationwide sample of nonprofit organizations in
five broad fields of nonprofit action (children and family
services, community and economic development, elderly
housing and services, museums, and theaters) to learn about
the capital needs of these organizations and the ease or
difficulty they face in meeting these needs.
The survey found that:
computers and software) led the list of investment capital
needs of responding organizations with more than 90 percent
reporting a need for investment capital for this purpose.
However, only 37 percent of these organizations reported
success in raising the needed capital.
Eighty percent of organizations
reported capital investment needs for "program
development," while just 25 percent reported success in
raising the needed capital.
When asked about accessing major
pools of investment capital in the United States, such as
insurance companies and pension funds, overwhelming
proportions of respondents (94-99 percent) reported either
a complete lack of knowledge about or significant degree of
difficulty in securing investment capital from these
Although other sources, such as
commercial banks, government, foundations and individual
donors, are more familiar to nonprofits, some (e.g.,
government) are quite difficult to access for investment
capital purposes, and others (e.g., commercial banks,
foundations and individual donors) are limited in their
areas of interest.
Although there were some
variations, the findings were quite similar among the
different types of nonprofit organizations surveyed.
"These findings may help to explain the recent
troubling loss of market share for some of these
organizations," said Peter Goldberg, chair of the Listening
Post Project steering committee and president and CEO of
the Alliance for Children and Families, the largest
national association of private nonprofit child- and
family-serving agencies and organizations in the United
States. "We need to give increased attention to the
investment capital needs of nonprofit organizations and
consider ways to help level the playing field for nonprofit
access to capital."
Mario Morino, chairman of the board of Venture
Philanthropy Partners, said, "This report documents the
critical gap that nonprofits face in securing access to
capital for the strategic planning and program development
activities so crucial for organizational survival."
Based on the results of this survey, the report
recommends creating a tax credit to stimulate the flow of
private capital to nonprofits and financial intermediaries
to help nonprofits access this capital.
The Listening Post Project surveyed 600 nonprofit
organizations, of which 49 percent responded. Most
respondents were affiliates of intermediary organizations
in the project's five focus fields, but a randomly selected
control sample of unaffiliated organizations was also
Copies of the Nonprofit Investment Capital Needs
report, as well as other reports from the Listening Post
Project, are available at
The Listening Post Project is a collaborative
undertaking of the Center for Civil Society Studies at IPS,
Alliance for Children and Families, Alliance for Nonprofit
Management, American Association of Homes and Services for
the Aging, American Association of Museums, National
Council of Nonprofit Associations, National Congress for
Community Economic Development and Theatre Communications
Group. Its goal is to monitor the health of the nation's
nonprofit organizations and assess how nonprofits are
responding to important economic and policy changes.
Support for the project has been provided by the
Carnegie Corporation of New York, Ewing Marion Kauffman
Foundation, Rockefeller Brothers Fund and Surdna