Nonprofits Report Less Fiscal Stress in 2006, Despite
Concerns
By Mimi Bilzor
Institute for Policy
Studies
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 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 sources of replacement revenue reported by
respondents were fees and
charges. Despite this increased reliance on fees, however,
more organizations reported
increased services to the poor than reported reduced
services (40 percent vs. 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. Examples reported
by respondents included the following:
A third had to increase staff working hours.
Wait times increased at a quarter.
Staff turnover increased at a quarter.
Staff training was cut at a quarter.
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," said 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.
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