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State of the Sector the Financial Health of Ohio’s Nonprofits
Jennifer Alexander, Ph.D. College of Public Policy University of Texas San Antonio
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PURPOSE OF STUDY: QUESTION: How are Ohio nonprofits coping with financial stressors of Great Recession? Which orgs indicate financial instability? Which organizations continue to thrive? Which are managerial strategies chosen? Survey conducted 2011; 241 Ohio respondents Ohio benchmarked -Nonprofit Finance Fund
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Comparing current findings to 1998 Cuyahoga County Study
1998 RESEARCH QUESTIONS and RESULTS: What survival strategies do nonprofits employ to cope with changing federal policy? (Devolution and Welfare Reform) Do coping strategies differ based on organizational budget or administrative capacity? Completed surveys: 134 human service organizations FINDINGS: Smaller organizations/ community-based orgs least equipped to adapt to new administrative and accountability requirements. Lifeline organizations the most financially stressed Mission/market conflict emerging
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Ohio Survey Respondents BY Mission
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Respondents BY BUDGET SIZE
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Characteristics of Respondents
Organizational Category Organizational Characteristics Mean Annual Operating Expenses Large, Established 22 orgs AOE > $2 Million $12,056,662 Publicly Supported 41 orgs Govt funding > 70% AOE $8,024,170 Community Based 83 orgs AOE $300K- $2 Million $847,301 Grass Roots Orgs 81 orgs AOE under $300K $120,728
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Life-line and Non Lifeline
Organizational Category Mean Annual Operating Expenses End of 2010 Fiscal Year Lifeline Orgs (77 organizations) $4,399,358 Surplus 45% Broke Even 30% Deficit 25% (7%) Non Lifeline Orgs (150 organizations) $3,973,734 43% 25% 32% (8.2%)
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SERVICE, PERSONNEL and FINANCIAL INDICATORS
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2010 DEMAND FOR SERVICES
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Cash, Including Reserves, at end of 2010
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END OF 2010 FINANCIAL STATUS
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END OF 2010 FINANCIAL STATUS
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Financial Outlook for 2011
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MANAGEMENT STRATEGIES most frequently SELECTED
Engaged more closely with board OHIO NFF 60 % 51% Partnered with another organization to improve or increase services offered 59% 47% Increased the number of clients served 58% 49% Held conversations with funders to explain 50% 33% Added or expanded programs or services 55% Made replacement hires 43% 46% Reduced annual expenses 40% 39% Reduced or eliminated programs or services 34% 26%
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MANAGEMENT DECISIONS FOR Lifeline vs. Non-lifeline
Lifeline Orgs Held conversations with funders to explain 73 % 55% Partnered with other orgs 67 % Added/expanded programs 63 % 50% Reduced annual expenses 62 % 34% Relied more on volunteers 56 % 44% Reduced/eliminated staff training/conferences Reduced/eliminated programs or services Increased # clients 46 % 58% Reduced staff 35% 25%
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Financial stability ScoreS
80% of orgs with highest financial instability scores were Lifeline organizations. 70% of orgs with highest financial stability scores were Arts and Culture organizations with diversified revenue sources, including earned income.
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RESPONDENTS Wanted MOST from Funders
Provide longer term support OHIO NFF 57% 11% Fund what already works 56% Make the grant process easier, cheaper 54% 8% Listen, learn, communicate 47% 13% Fund small nonprofits 44% 1% Give more money 42% 4% Give capacity money 38% 50%
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TECHNICAL SUPPORT MOST REQUESTED by ORG TYpe
LIFE LINE HUMAN SERVICES ARTS & CULTURE Fundraising assistance 76% 78% 73% Assistance communicating financials with boards 20% 36% 42% Performance measurement support 30% 34% 33% Performance management/ developing outcomes 28% 25% Financial scenario planning 26% Assistance analyzing current financial situation 23%
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OHIO ORGANIZATIONS MORE StressED than national AVG
Have 90 days or less of cash, including reserves OHIO 62% NFF 49% Experienced increase in demand for services in 2010 79% 70% Expected 2011 to be harder than 2010 53% 41% Reduced staff in 2010 34% 27%
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OHIO LIFELINE ORGANIZATIONS MORE StressED than national AVG
Could not meet demand for services in 2010 OHIO 58% NFF 49% Orgs that anticipate unable to meet need in 2011 68% 54% Full cost of services not covered by state/local govt 69% 63% Have cash and reserves to cover 3 months or less 65% 60% Increased number of clients served
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