Nonprofit leaders are nearly universally concerned about the impact of employee burnout and the challenges caused as inflation drives up wages and other expenses, according to a recent survey that found that only 5 percent of nonprofits said they weren’t at all worried about employee exhaustion.
“One of the things that really stood out was the burnout issue and what it might mean for future turnover,” said Phil Buchanan, president of the Center for Effective Philanthropy, a group that researches giving trends.
Despite huge employee churn and difficulty filling open staff positions because of increases in wages, more than three-quarters of foundation-supported nonprofits reported either a balanced budget or a surplus last year, according to the survey, which Buchanan described as a “high-level pulse check” of 284 charities that have received a grant from at least one foundation that gives at least $5 million annually.
But relatively stable finances belie big challenges charities face attracting and keeping enough workers in an inflationary environment.
While most nonprofits still think they’ll have at least enough money to cover their expenses this year, the proportion of those reporting such optimism dropped to about two-thirds, according to the survey.
High Inflation
For charities with healthy budgets, foundation support played a key role.
Nearly half of nonprofits that reported a surplus identified higher than expected foundation revenue as a reason they didn’t go into the red, and 18 percent reported that they received an increase in foundation grants, specifically in response to higher inflation.
Historically high levels of inflation ate away gains foundations made in grant making, according to “Giving USA,” an annual report on philanthropic giving. Over all, giving was down an inflation-adjusted 10.5 percent, led by a steep decline in individual giving. Foundation grants also declined, but by about half the rate of donations from individuals.
Sixty-percent of nonprofits that reported a deficit tagged inflation as a key culprit. Nearly half said declines in giving from individuals played a role, a finding that reflects some of the broader trends identified in the “Giving USA” report.
Easier Applications
Foundations continued to respond to nonprofits’ needs differently last year, continuing trends that started during the early days of the pandemic. More than half of nonprofits, for instance, said foundations had made the grant application process easier and reduced how much grantees have to report on their progress after receiving money. And more than 40 percent reduced or removed grant restrictions or provided multi-year grants.
If more foundations made some of those changes, Buchanan said, nonprofits would have less concern about the state of their budgets and employee morale in the future.
“Multi-year, unrestricted support is key to the ability to plan, to hire with confidence, and to be able to pay at the level needed to retain workers,” he said.
The survey also found:
- More than one-third of nonprofits said individual donors gave them more money, with the donors citing rising inflation as a reason for their increased contribution.
- One-quarter of nonprofit leaders had more staff leave last year than normal. Nearly a quarter said filling open roles was difficult because it was hard to meet applicants’ pay and benefits expectations.
- Of the nonprofits predicting a deficit this year, more than half said declining donations from individuals and high inflation were to blame. Decreased foundation grants were also a major factor for nearly half of those predicting a deficit.