Demand Jumps for 75% of N.J. Nonprofits

Rising demand for organizational support and budgetary needs outpacing funding have created challenges for leaders of New Jersey-based organizations. Three-quarters (75 percent) of nonprofit leaders in the state reported greater demand for services during the past year as compared to the previous one. Even more (76 percent) expect additional increases in demand in the year to come.

Though 40 percent of organizations received funding increases of 5 percent or more, the percentage is a four-year low and is met by 51 percent of organizational leaders reporting budgetary increases of at least 5 percent, also a four-year low.

Similarly, 24 percent of organizations saw funding decrease by at least 5 percent while only 8 percent saw budgets decrease by that much. About one-third (34 percent) or organizational leaders reported a surplus in the past fiscal year while 29 percent faced a deficit and 37 percent broke even.

The data comes from “New Jersey Non-Profits 2017,” a report conducted by the Center for Non-Profits. The report is based on responses from 301 organizational representatives who responded to an online survey conducted in mid-March.

Overall, 48 percent of organizations reported being better off in the past year than in the previous one and 53 percent anticipate being in a better position next year, both representing four-year lows. One in 10 respondents (10 percent) expect to be worse off next year, the highest reported since 2011.

Financial uncertainty (59 percent) was the primary concern voiced by the organizational representatives, followed by a need for better branding and communications (50 percent) and a stronger board (44 percent). On the fundraising front, more than two out of five (43 percent) of respondents reported that a previous fundraising source had informed them that they would either cease giving or give less during 2016. Foundations (62 percent), corporations (36 percent), and individual donors (32 percent) were the most likely to express such intentions. Shifting priorities (55 percent) and general cutbacks (30 percent) were cited most often as reason.

In response, increases to programming and staff were being considered by 40 percent and 33 percent of respondents, respectively, while cuts to programming and staff were under consideration in 27 percent and 22 percent of organizations. More than half of respondents (51 percent) reported launching new partnerships and collaborations in 2016, predominantly with other organizations. Examples included partnerships with parks and school-based programs addressing behavior needs and collaborations with arts and health groups.

Those surveyed also provided examples of changes in programming aimed at addressing trends they have seen. Such initiatives include increasing investment in diversity and cultural competence training, expansion of mental-health services, and the launching of mission-based revenue-generating ventures.

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U.S. Fundraising Up And Down At Same Time

Three out of five (60 percent) American nonprofits saw an increase in receipts in 2016. While constituting a majority, the figure was down from 2015’s 65 percent and represented the lowest percentage of organizations since 2010.

More than one- quarter (27 percent) of organizational representatives reported decreases to receipts as compared to 23 percent in 2015. About two-thirds (66 percent) of representatives are optimistic about a better 2017, but concerns remain over economic and political change (46 percent), internal leadership, staffing, and marketing (34 percent), and fundraising capacity such as building major-gifts capacity and utilizing online tools (20 percent).

The data comes from the Nonprofit Research Collaborative’s (NRC) Winter 2017 Nonprofit Fundraising Study, based on survey responses from representatives of 941 organizations. The decrease among organizations with improved receipts was a little surprising, according to Aggie Sweeney, CFRE, senior counsel at Campbell & Company and chair of Giving USA Foundation – a NRC partner. Still, she pointed out that a solid majority of organizations still saw increases and that giving to nonprofits continues a slow, steady growth.

Macro-economic factors that correlate with giving, such as stock values, were strong, particularly at the end of 2016, according to Sweeney, but the benefits to charitable organizations often takes a while to manifest.

Sweeney attributed some of the concerns about the future to many organizations looking both at giving and other forms of revenue that might be influenced by political actions. Such concerns include individuals’ capacity to pay fees such as tuition, domestic federal funding, and the distribution of Medicare dollars.

The 2016 campaign season was cited by more than one- third of organizational representatives as being factors in giving. In the lead-up to the election, 39 percent (24 percent with a decrease, 15 percent with an increase) of representatives cited the campaign as attributable to shifts in receipts. In November and December, 37 percent of representatives (20 percent with a decrease and 17 percent with an increase) noted election-related shifts.

Fluctuations near an election are common, Sweeney said. Similar changes were present in the lead-up and aftermath of the 2008 administration change with perceptions that adjustments to the tax code were forthcoming. Sweeney attributed such fluctuation to indecision among donors, particularly those making personally significant gifts, until after an election. Many nonprofits will level off in 2017, according to Sweeney, with exceptions among organizations seen as part of the “liberal resistance” such as Planned Parenthood, which might see even greater changes in 2017.

Perhaps the largest surprise in the report, according to both Sweeney and Melissa Brown, who manages NRC, was the consistency in results across regions, sizes, and subsectors. Fluctuation based on organizations with increased receipts remained relatively consistent across sizes (64 percent of organizations with revenues between $500,000 and $999,999 was the high, 58 percent among organizations with revenues of $50 million or more was the low), region (65 percent among Western organizations was the high, the South, at 60 percent, was the low), and subsectors (67 percent of human services organizations was the high, the low was public society benefit at 29 percent, but the second lowest was higher education at 52 percent).

Sweeney said that there is not enough information to explain public society benefit organization’s bottom-out.

Sweeney was particularly surprised by the regional similarities, as previous years have shown greater geographic differences, creating the perception that east- and west-coast organizations perform better than those in the Heartland based on the fact that wages, housing values, and overall wealth have grown faster in some parts of the country as compared to others. Sweeney found the similarities to be a positive.

Brown, too, noted the consistencies across not only American subsectors, but also with Canada. Just more than half (54) percent of representatives of Canadian organizations reported growth in 2016, but 70 percent reported that they met fundraising goals as compared to 68 percent of American organizations. Canadian organizations tend be slightly less robust in growth in their American counterparts, Brown said, adding that both the U.S. with its election and Canada with its struggling economy had busy years in 2016.

“They wanted to give to charity,” Brown, speaking from personal belief, about Canadian and American donors. “But they were distracted by the things that were going on.” The U.S. and Canada also shared similarities in successes across giving methods, according to Brown, the lone exception being direct mail where 52 percent of U.S. organizations saw an increase as compared to 38 percent of Canadian organizations.

Targeting specific types of donors was a key to success among organizations from both countries. Representatives from one out of six (16 percent) of organizations in the U.S. and Canada reported receipt increases of 15 percent or more. Some 54 percent attributed their organizations’ success to fundraising efforts with specific donor types, including 37 percent of the whole focusing on individuals, including major gifts.

Sweeney said that many organizations, particularly those with newer development programs, tend to start off by building relationships with foundations and corporations before building programs for individuals. At the same time, the average gift received by nonprofits has increased in value during the past decade while the numbers of donors have not – reflective of America’s growing income inequality, Sweeney said.

Successfully built major gifts programs thus often lead to successful development programs, with major gifts programs both being more efficient and, because they are often built on relationships, accompanied by greater donor loyalty than annual programs.

“What I’ve been following, and this doesn’t come through in this particular report, is that other studies have shown that a smaller percentage of Americans are giving on an annual basis,” Sweeney said. “While total giving is increasing, the total percentage of giving is decreasing –which I find as a troubling trend.”

Sweeney said that she hopes increased public confidence in charity will increase the percentage of individuals who give. She added that, while major gifts is a strong indicator of success, a diverse set of fundraising programs tends to bear out the best results.

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