More than 1.5 million nonprofits are registered in the United States. How will they respond to the challenges ahead? And how will their revenue streams and sustainability be affected?
According to Giving USA's recent report, charitable giving in the United States climbed to almost $450 billion in 2019. In fact, giving in the past three years has shown the highest growth ever. Economic factors, such as the increase in the S&P 500 and growth in the GDP, spurred growth in corporate donations by over 13% and in individual giving by almost 5% in 2019. Giving from foundations also grew but at a slightly lower rate—by 2.5%. Bequests have stayed about the same. The current outpouring of funds to coronavirus relief will be reflected in next year’s statistics.
What will these numbers look like for 2020? The current coronavirus pandemic, economic downturn, upcoming election, and mass protests have contributed to great uncertainty. However, clear trends in philanthropy—some worrisome and some holding great potential—are unfolding:
Less than half of nonprofits have one month of operating reserves, which has contributed to the loss of 1.6 million nonprofit jobs since March;
Individual giving continues to provide the vast majority of all philanthropy; however, fewer donors are giving more;
Advocacy for social justice issues (e.g., racism, immigrants, indigenous populations, criminal justice) is driving giving, especially that of younger donors;
Creative use of technological tools is becoming increasingly important for fundraising success; and
Foundations and corporations are providing more philanthropic support, but there is also greater competition for these resources.
We believe that an analysis of these trends with respect to an organization's mission, size, sector, location, funding mix, and fund development culture can go a long way in identifying opportunities and threats to future fund development and risk management efforts. As a nonprofit leader, understanding where your organization fits in the midst of these trends is paramount to its sustainability.
In the table below, we have provided elements that can be used to evaluate how vulnerable an organization may be to the 2020 recession and possible opportunities to alleviate its impact.
After reviewing each factor in the table, create a pro forma budget for the upcoming year by first reducing the expected revenue by 10%. Could the organization handle a reduction of that size? Next, go through individual budget line items and adjust them up or down based on the answers to your questions below and any relevant context that you may have.
Want our help walking through it? Reach out for your free 30-minute consultation.
2020 SUSTAINABILITY ASSESSMENT TOOL
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