As CEO of the Center for Literacy, in Philadelphia, Michael Westover has been trying to reduce the charity’s dependence on government contracts since 2014. The proportion of revenue coming from contracts has dropped from 80 to 65 percent over that time, but Westover thinks it’s still too high.
Many of the contracts come with unrealistic expectations, he says. Instead of incentivizing the charity to make long-term progress with clients, he says, some federal contracts expect him to take an adult with a fourth-grade education to a GED and stable employment, all within the course of a fiscal year.
“There’s no tracking of folks over multiple years,” Westover says. “Instead there’s an artificial curtain on June 30, and that’s what you get judged on — to the detriment of the people we’re trying to help.”
The Center for Literacy is among nearly 3,400 nonprofits that participated in a new national survey by the Nonprofit Finance Fund. While charities are increasingly on firmer financial footing, they’re struggling to meet increasing demand and are often stymied in that effort by federal policies, the survey found.
The annual State of the Nonprofit Sector Survey found that more than 76 percent of organizations managed to achieve break-even results or better in 2017. More than half increased staff and salaries last year, and 63 percent plan to expand their programs in 2018.
But the need for nonprofit services may be increasing faster than organizations can respond. More than five out of six nonprofit leaders say demand for their services is rising, and 57 percent don’t think they can meet it. Among nonprofits that serve low-income communities, nearly two-thirds say they are unable to provide all of the services their clients are seeking.
Trump Effect
For the first time in the eight years the survey has been conducted, it found a widespread feeling among nonprofit leaders that the policies and rhetoric from Washington were having a negative impact on their clients. More than two-thirds of nonprofit leaders said the federal government’s policies and positions were making life harder for the people they aim to help.
“There’s deep concern among nonprofit leaders for the marginalized populations they serve, particularly about Washington’s impact on vulnerable people,” says Jennifer Talansky, a managing director at the Nonprofit Finance Fund.
Antony Bugg-Levine, the Nonprofit Finance Fund’s chief executive, says that in free-form answers, many nonprofit leaders expressed concern about the tone set in Washington by the president and others.
“We did not pick that up three years ago,” he says.
Even so, Bugg-Levine says the current climate hasn’t reduced leaders’ determination to improve the lives of their clients. “Many of the best nonprofit leaders bring the right balance of outrage and optimism,” he says. “They’re worried about the direction we’re going in as a society, but they’re not backing away from a sense of urgency and doggedness in turning this thing around.”
Fundraising Opportunity
At Philadelphia’s Center for Literacy, the proportion of students who are immigrants rose from 25 percent in 2015 to 47 percent in 2017.
“We’ve seen the effects of the talking and the tweeting,” Westover says, referring to President Trump’s stance against immigration.
Immigrants are pouring into the center to learn basic English so they can “blend in quickly,” Westover says. They also want to be able to understand the proceedings if they ultimately end up in deportation hearings, he adds.
While the administration’s policies have increased demand for the center’s services, the political climate has also provided a unique fundraising opportunity, Westover says. “I haven’t taken the tack of saying ‘Trump’s attacking poor people — give us money,’ but I’m not dumb, either,” Westover says. “I have a good development person, and we’ve crafted messages carefully so that folks will understand what’s going on without crossing the line.”
Lindsey Harris, co-executive director of the Tennessee Immigrant and Refugee Rights Coalition, in Nashville, says her charity is seeing increasing demand for services with “all immigrant communities under attack right now.”
Some foundations, she says, have backed away from supporting the charity as immigration becomes a politically divisive topic. But individuals are increasingly stepping up, and the charity has teamed up with country musicians, artists, and chefs to create new fundraising events. The fundraising successes have allowed the charity to stabilize its finances — and even build a surplus — after years of struggle following the Great Recession a decade ago.
“We’ve been able to scale up our staff to meet the need, and it’s allowed us to start to think long-term about how best to serve this community,” Harris says.
Achieving Surpluses
While less than a third of the organizations in the Nonprofit Finance Fund survey planned for a surplus, half achieved one.
The survey found that more than two thirds of respondents are collaborating with other nonprofits. The nonprofit leaders named affordable housing, youth programs, and mental and behavioral services as their clients’ three most pressing needs.
The survey expanded its focus on race this year. Nearly two-thirds of nonprofit leaders said their organization addresses racial inequity, and half said they increased their focus on the topic during 2017. Yet only 17 percent of the organizations said their CEO was a person of color.
The survey, conducted in January and February, is based on responses from 3,369 nonprofit leaders at organizations whose budgets range from $50,000 to $20 million.
The survey data is available at nff.org/surveydata at no charge and can be filtered by factors such as state, cause, or size of charity.
“In the nonprofit sector, we don’t have a lot of real-time collective data,” Talansky says. “This is a step in that direction, and it can be a way to open difficult conversations between funders and nonprofits.”
The survey has been supported by the Bank of America Charitable Foundation since 2010.
