Necessity, who is the mother of invention.
Today, I share with readers the last in the mini-series of data from The Giving Partner—made easier by Susie Bowie, Director of Nonprofit Strategy at the Community Foundation of Sarasota County. Susie penned a recent blog focusing on the economic impact of the nonprofit sector. There's no question about that.
But let’s look at the data coupled with the fact that the nonprofit business model is based on mission, not profit.
For the 248 organizations in the database, I have rounded up the annual revenue—$806 million—and annual expenses $781 million. We know from a prior blog post that 55% of the local nonprofits have annual budgets of $1 million or less.
Now let’s look at the yin and yang behavior during economic stagnation/downturn in these simplified economic models:
• The for-profit scenario: Consumers stop spending, demand lessens and revenues drop. Business owners respond by cutting costs and innovating.
• The nonprofit scenario: Consumers stop donating and perhaps seek help; demand rises, revenues decrease (or are flat); leaders respond with cost cutting and innovation.
With the substitution of a few words in each scenario, one could fit in any sector, but for demonstration purposes, let’s focus on the largest sector in The Giving Partner—Human Services.
Thirty percent (around 80) of organizations with profiles are categorized as human services and they represent 32% of the annual revenues—about $254 million.
There is substantial data evidence that the human services sector has been hit hard. Revenue is down and demand is up. A formula for chaos.
I can speculate that within the 80 or so organizations, there have been budget cuts in every area. But, I wonder what the agencies are doing in terms of innovation.
If anyone in the human services field has completed, is in the midst of; or is contemplating innovative strategies, please share. I would love to learn and I promise to respond!
Learn about these and other concepts used in TPF's approach to philanthropy.
SHARE THIS POST: