While the National Council of Nonprofits‘ article last month pointed to some pretty good news for funding in the nonprofit world, 2015 is not without its challenges for charitable organizations.
Overall efforts to change donors’ perspectives about overhead, and why having overhead costs is vital to an organization and why they’re worth funding, have improved public perception of the need for more unrestricted funding. Transparency about operating costs has followed suit, allowing philanthropists to see the true cost of maintaining programs and services.
But still, the uphill battle for funding remains steep for many organizations due to some significant hurdles. Here’s a summary of what the National Council of Nonprofits featured as their top “ups and downs” in funding.
General operating support: According to a survey by Grantmakers for Effective Organizations (GEO), 81% of grantmakers reported that their grants include general operating support - in fact, the median percentage of total grant dollars was 25% allocated toward general operations. But according to the National Council’s article, many grantmakers are still focused on the new initiatives – the more exciting programs and services, rather than funding existing programs or helping fund general ops.
Multiyear Support: According to the 2014 national study of philanthropic practice by GEO: “Multiyear support is making a comeback. Most funders now give multiyear grants.” And hopefully that will continue. It’s important to nonprofits to be able to plan and rely on funds to further their missions rather than spending all their time fundraising.
Capacity building: The same study said that over a quarter of the grantmakers who responded also have increased grants for capacity building, which they expanded upon to explain that: “Nonprofits need certain capacities in order to deliver results. These include things like strong leaders, financial management, technology and office space, as well as softer things like communications, adaptability and relationships.”
Government funding: Nearly half the nonprofits surveyed by the Nonprofit Finance Fund in its 2014 State of the Sector survey (NFF survey) with government-related contracts/grants reported a decline in funding over the past 5 years. Plus, late payments from governments continue to be a problem: 26 percent of those taking out a loan reported that they used the loan to fill a funding gap created by delays in payments from governments.
Donor loyalty: The national median retention rate for donors was only 42%, according to the 2014 Fundraising Effectiveness Project. In fact for every 100 donors gained in 2013, there were 102 lapsed donors, and new donors were the least likely to make a repeat gift.
Corporate giving: 2013 marked the smallest increase in corporate giving since 2011, and that the majority of the increase was from in-kind gifts, and bolstered by volunteers, not cold hard cash.