National Survey Shows Need for New Approach

 

Recently, a survey of more than 1100 nonprofit organizations across the state of California by the Nonprofit Finance Fund revealed that the number one challenge nonprofits are facing is achieving long term financial sustainability.

And when asked if their funding covered the full cost of achieving outcomes, the overwhelming answer was “No.” They reported that:

  • 52% of government funders provide 9% or less for indirect expenses; and that
  • 48% of individual and foundation funders rarely or never cover the full cost.

The consequences?

Most nonprofits in the state are operating with little or no safety net – 55% of nonprofits report having three months or less of cash of hand and 24% report having one month of cash or less. Lack of liquidity means scrambling to manage payroll, cutting or reducing programs, and reducing staff hours or eliminating staff positions.  These organizations do not have the financial capital to withstand risk and adapt to changes in the communities they serve.

While nearly 80% of nonprofit organizations have reported an increase in demand, only 44% said they could meet that demand. And for organizations serving low-income communities, only 35% of nonprofits said they could meet the demand for often critical safety net services. That means everyday people in our communities are being denied access to critical services from healthcare to workforce development to child care.

The Real Cost Project hopes to change this. Created by funders, this statewide initiative aims to support grantmakers across California as they examine their practices and look to develop new approaches in order to increase impact in the communities they serve.

Throughout the month of June, we will be holding conversations across the state to explore an approach to grantmaking based on real cost funding – that is all of the necessary investments for a nonprofit organization to deliver on mission and to be sustainable over the long term. Visit of Events page for information on a session near you.

This is a crucial time for our sector and I looking forward to having you with us for these vital conversations.