The charitable sector faces a number of challenges that could dampen its future if not addressed, according to a report released Monday.
Public trust and donor participation are declining, workers are financially stressed and burnt out, and nonprofits are less involved in lobbying and advocacy than they were a generation ago.
The report from Independent Sector, a membership organization of nonprofits and grant makers, brings together a variety of sources of survey data and key metrics of the nonprofit economy to offer a snapshot of the sector’s health.
“The sector is surviving, but it’s not thriving,” said Akilah Watkins, president of Independent Sector.
Nonprofits need to pay attention to what these indicators reveal, she says. “This sector has always prided itself on being responsive to the needs of the American public, so it’s important for us to always keep our finger on the pulse.”
Among the report’s key findings:
- A majority of Americans report a high level of trust in nonprofits. But trust in charities has been on the decline in recent years — down 7 percentage points from 2020. Only small business received a higher degree of public trust, according to the survey from Edelman Data & Intelligence and Independent Sector. Still, declining trust in nonprofits outpaced that of any other institution, including the federal government.
- In 2022, nonprofits contributed $1.4 trillion to the economy, comprising 5.6 percent of the U.S. Gross Domestic Product. According to data from the Do Good Institute, nearly half of nonprofits reported increasing staff workloads to meet rising demands for services. “Nonprofits will likely face staff burnout or service delivery issues if this continues,” the researchers concluded.
- Nonprofits employ 6.5 percent of the overall workforce, a proportion that grew by 3.9 percent between the second quarters of 2022 and 2023. But many workers at tax-exempt organizations face financial stress. In 2021, the latest year for which data was available, around 20 percent of nonprofit workers said they were struggling to afford basic necessities. That may be contributing to high rates of burnout and workforce shortages, the report concludes.
- Donor participation continues to decline. The number of individuals who donated to charity dipped 10 percent in 2022, marking the second-consecutive year with a significant decrease in participation. The bulk of that decrease came from donors who give less than $500 annually. Declining participation from larger donors led to a 1.7 percent decrease in overall charitable giving.
- Tax-exempt organizations are lobbying less than they used to. Only 31 percent of nonprofits reported that they were engaged in advocacy, lobbying, or both in 2022, a significantly smaller percentage than 20 years ago. Knowledge about what kind of advocacy campaigns and lobbying nonprofits are permitted to do has also declined between 2020 and 2022. These gaps in knowledge and activity hold the sector back from addressing the most critical issues facing nonprofits and the communities they serve, the report says.
These factors and more will require collective solutions from policy makers and sector leaders to improve the health of the nonprofit world, Watkins said.
At the most basic level, nonprofits need to understand the full power and breadth of their influence, she said. “We want to make sure that nonprofits have the rules, the tools, and the resources that they need in order to show up and advocate for the systemic reforms that are so important in solving America’s most intractable issues.”
