Despite continuing fiscal challenges, the percentage of nonprofits reporting severe fiscal stress fell between 2003 and 2006, according to a recent survey by the Johns Hopkins Nonprofit Listening Post Project.
Reflecting this, a substantial majority — 76 percent — of nonprofit organizations in all fields, and of all sizes, reported generally successful financial performance during 2006, the survey showed.
The nearly 750 organizations surveyed are involved in children and family services, elderly housing and services, community and economic development, and culture and the arts. The study followed up on similar surveys of nonprofit fiscal trends and challenges conducted in 2003.
"While a third of the organizations still reported 'severe fiscal stress' in 2006, this was down from the 51 percent of organizations reporting this level of stress three years earlier," said Lester M. Salamon, director of the Johns Hopkins Center for Civil Society Studies and of the Listening Post Project. "This is all the more surprising given that two-thirds of the organizations reported reductions or no growth in their major source of support — government — and that the 2006 survey included larger proportions of small organizations, which generally are financially more precarious."
The major source of replacement revenue reported by respondents appears to have been fees and charges. Despite this increased reliance on fees, however, more organizations reported increased services to the poor than reported reduced services (40 percent versus 8 percent).
"Persistent crisis has become a way of life for America's nonprofits," 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.
"What this survey shows, however, is that America's nonprofit executives have become skilled crisis managers."
"We view the report's findings as quite heartening," said Tangie Newborn, CEO of the Alliance for Nonprofit Management, a professional association devoted to improving the management and governance capacity of nonprofits. "They illustrate the ongoing development of nonprofit management as a field requiring sophisticated management techniques."
There was, however, evidence of fallout from ongoing fiscal stress:
Reflecting this, half or more of the organizations reported serious concerns about declining funding or increased costs, though in each case the concerns were less widespread than those expressed in the earlier survey. On the other hand, the current survey revealed growing concerns over a range of human resource issues, with board recruitment, staff recruitment and retention, and executive transition categorized as "very significant" challenges by 46, 38, and 28 percent of organizations, respectively — in each case higher than three years earlier.
Interestingly, despite significant media and government attention, accountability demands were identified as a "very significant challenge" by only a quarter of the organizations. "This suggests that the audiences nonprofits care most about — those that support them — actually have a good deal of confidence in the way these organizations manage themselves," noted Tom Lengyel, director of research at the Alliance for Children and Families. "Apparently, the high standards of transparency and accountability that most nonprofits have set for themselves are paying off and should be continued."
The full report, "Nonprofit Fiscal Trends and Challenges," is available at www.jhu.edu/listeningpost/news.
About the Listening Post Project
The Listening Post Project is a collaborative undertaking of the Center for Civil Society Studies at the Johns Hopkins University Institute for Policy Studies, the Alliance for Children and Families, the Alliance for Nonprofit Management, the American Association of Homes and Services for the Aging, the American Association of Museums, the National Council of Nonprofit Associations, 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, the Bill and Melinda Gates Foundation, the Ewing Marion Kauffman Foundation, the Rockefeller Brothers Fund and the Surdna Foundation.
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