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Half of U.S. Charities Are on Financial Brink

By  Heather Joslyn
January 31, 2018
guidestar 50

Title: “The Financial Health of the United States Nonprofit Sector”

Organizations: GuideStar, Oliver Wyman, and SeaChange Capital Partners

Summary: About half of America’s nonprofit organizations have less than one month of operating reserves, and nearly 8 percent have liabilities that exceed their assets, making them technically insolvent, according to a new analysis of data from Form 990 informational tax filings.

Thirteen percent of health and human-service charities are technically insolvent, according to the new report. The results echo those of a study released January 23, which found that one in eight human-service charities is insolvent.

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Title: “The Financial Health of the United States Nonprofit Sector”

Organizations: GuideStar, Oliver Wyman, and SeaChange Capital Partners

Summary: About half of America’s nonprofit organizations have less than one month of operating reserves, and nearly 8 percent have liabilities that exceed their assets, making them technically insolvent, according to a new analysis of data from Form 990 informational tax filings.

Thirteen percent of health and human-service charities are technically insolvent, according to the new report. The results echo those of a study released January 23, which found that one in eight human-service charities is insolvent.

Researchers for the newest study said eliminating red ink from that roughly 8 percent of charities could require as much as $50 billion.

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Among the findings in the new report:

  •  30 percent of nonprofits have lost money over the most recent three years covered by the tax filings.
  •  30 percent have short-term assets that total less than their short-term liabilities.
  •  Organizations with operating budgets of at least $50 million have roughly the same rate of insolvency as nonprofits over all, 7 percent.
  • While health and human-service charities had the highest rate of insolvency, environmental and animal-related groups reported the lowest rate, at 3 percent.

We welcome your thoughts and questions about this article. Please email the editors or submit a letter for publication.
Executive LeadershipData & Research
Heather Joslyn
Heather Joslyn spent nearly two decades covering fundraising and other nonprofit issues at the Chronicle of Philanthropy, beginning in 2001.
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