04/03/2013 02:57 pm ET | Updated Jun 03, 2013

The Need Is High and the Funds Are Low

The headlines all over are talking about the sequester and its impact on programs nationwide. Cuts are happening that will cause job loss, slowdowns, and bigger burdens for families. In tough times, nonprofits and faith-based organizations are tasked with providing help and relief for people who are in need of food, shelter, and other resources. Cuts in budgets and delays in government payments cause these safety nets to be on shaky ground.

The nonprofit I work for, Christian HELP, won the Bank of America Neighborhood builder award in 2011. As a result, we were asked to participate in the Nonprofit Finance Fund State of the Sector Survey. This survey shows the financial health of nonprofits across the United States.

Keeping in mind that these organizations are the places that help to lift people out of poverty and work to meet the emergency needs of the poor, unemployed, veterans, and those most in need of a hand up, the news from the sector is not warm and fuzzy.

The recession has taken a toll on the nonprofit sector. The continuous need to grow and expand programs costs more. Finding the dollars to keep afloat can be a challenge. The results of the report showed a few rather scary patterns.

Nonprofits need new funding sources and models:

  • 42 percent of survey respondents report that they do not have the right mix of financial resources to thrive and be effective in the next three years.
  • One in four nonprofits has 30 days or less cash-on-hand.
  • Over the next twelve months, 39 percent plan to change the main ways they raise and spend money.
  • 23 percent will seek funding other than grants or contracts, such as loans or investments.

Nonprofits that receive government funding face particular challenges:

  • Only 14 percent of nonprofits receiving state and local funding are paid for the full cost of services; just 17 percent of federal fund recipients receive full reimbursement. Partial reimbursements require additional funding to cover the growing gap as nonprofits serve more people.
  • Government is late to pay: Among those with state or local funding, just over 60 percent reported overdue government payments; over 50 percent reported late payments from the federal government.

Under these challenging conditions, many nonprofits are unable to meet growing need in their communities:

  • For the first time in the five years of the survey, more than half (52 percent) of respondents were unable to meet demand over the last year; 54 percent say they won't be able to meet demand this year.
  • • This represents a worrying trend; in 2009, 44 percent of nonprofits said they were unable to meet demand.
  • • Jobs (59 percent) and housing (51 percent) continue to be top concerns for those in low-income communities.
  • • 90 percent of respondents say financial conditions are as hard or harder than last year for their clients; this is actually a slight improvement from prior years' outlook.

Nonprofits are changing the way they do business to adapt to the new reality. In the past 12 months:

  • 49 percent have added or expanded programs or services; 17 percent reduced or eliminated programs or services
  • • 39 percent have collaborated with another organization to improve or increase services
  • • 39 percent have upgraded technology to improve organizational efficiency
  • • 36 percent engaged more closely with their board

For Christian HELP, it means thinking bigger and expanding to add new social entrepreneurial programs which will have both impact for our community and a resulting profit that will be put back into the nonprofit to fund operations and expand services. It means engaging our donors more fully in the impact of what their dollars are doing, and it means getting in front of more people to share our story.

Nonprofits have to think differently. We are working together with other agencies to have them write our services into their grant requests and vice versa. We are combining forces to create stronger programs with less overhead. We are spending wisely and avoiding waste.

The sequestration affects us directly through the AmeriCorps VISTA program. We have five full-time volunteers through the program helping to build capacity. The funding for next year is in question. While to some, this may feel like taxpayer dollars better spent somewhere else, the truth is, the impact of the program is far reaching. When we get someone a job and help them off of welfare and unemployment, we save the taxpayers money.


Client receiving job counseling at Christian HELP

I would love to hear from other nonprofits and people who have used the services of nonprofits about how the sequester is affecting you.