Inside Philanthropy

A blog on philanthropy and nonprofit news and issues. A publication of Philanthropy Journal.

May 29, 2007

Foundations must invest in change

Foundations need to stop preaching about nonprofit capacity and start investing in it.

Quick to tell nonprofits to be more innovative and improve their internal operations, foundations are slow to invest the critical operating dollars nonprofits need.

Nonprofits are adapting themselves to a growing crisis in their capacity to survive: They are cutting costs and developing new sources of income in the face of growing competition and demand for critical services.

The good news is that a smaller share of nonprofits reported severe fiscal stress last year than three years earlier, according to a new survey by the Johns Hopkins Nonprofit Listening Post Project.

And while two-thirds of nonprofits reported reductions or no growth in their major source of support -- government – the survey says fees and charges generated most of nonprofits’ replacement revenue, and more nonprofits reported increased services to the poor than reported reduced services.

The grim news is that one in three nonprofits still reported severe fiscal stress, one in three had to hike working hours, one in four reported longer wait times, one in four reported higher staff turnover, and one in four reported staff-training cuts.

Half or more of nonprofits also reported serious concerns about declining funding or increased costs, although the concerns were less widespread than three years earlier.

Nonprofits also reported growing concerns over human-resource issues, particularly board recruitment, staff recruitment and retention, and executive transition.

Scarcity should not be the mindset of the charitable marketplace.

Already fighting to fix immediate social problems and attack them at their roots, nonprofits now must fight to survive.

Foundations should be major partners in both fights, investing heavily to help nonprofits retool and strengthen their operations so they can be more effective in the larger fight to heal and repair our communities.


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