Survey: Local nonprofits struggling with financial, staffing woes

A RECENT SURVEY conducted by the Grantmakers Council of Rhode Island and the United Way of Rhode Island show that the surveyed nonprofits are struggling financially, particularly with inflation. Many are also experiencing a staffing crisis. / PBN FILE PHOTO/KATE WHITNEY LUCEY
A RECENT SURVEY conducted by the Grantmakers Council of Rhode Island and the United Way of Rhode Island show that the surveyed nonprofits are struggling financially, particularly with inflation. Many are also experiencing a staffing crisis. / PBN FILE PHOTO/KATE WHITNEY LUCEY

PROVIDENCE – A survey conducted by the United Way of Rhode Island and the Grantmakers Council of Rhode Island paints a bleak picture for the state’s nonprofit sector, stating the Ocean State’s economic recovery will be hampered if local nonprofits do not receive significant investments.

The United Way and Grantmakers Council surveyed close to 300 nonprofits to better understand the status of the nonprofit sector, which comprises 17% of Rhode Island’s workforce. The findings show that the surveyed nonprofits are struggling financially, particularly with inflation. Staffing issues are also causing problems.

Grantmakers Council Executive Director Nancy Wolanski told Providence Business News on Tuesday that nonprofits have been shouldering significant burdens in aiding the community, particularly during the COVID-19 pandemic. Wolanski said the sector is facing increased needs from the community while dealing with increased costs, decreased donations and a staffing crisis.

“Unless significant investment is made, then we may be heading to a place where important services are not available,” Wolanski said.

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According to the survey, 60% of nonprofits reported community demand for programs and services remains higher than levels seen before the pandemic. About 55% of the surveyed nonprofits have five or fewer paid staff working for the organizations – and about 1 in 4 operate with no paid staff.

Also, 46% of the surveyed nonprofits have seen staff workers leave the sector and 59% have staff workers who are considering leaving. Burnout and exhaustion are the main reasons for staff departures, the survey said. Wolanski said the sector will see a “significant loss of institutional experience.”

Both Wolanski and United Way CEO and President Cortney Nicolato said they’re advocating for looking at developing a pipeline to bring new workers into the nonprofit sector. Wolanski said the state has historically not looked at the nonprofit sector as being a major workforce.

“When you hear about workforce issues, you hear it about retail and hear it about tourism,” Wolanski said. “You don’t hear the same things [with nonprofits] except for health care. If a small business shuts down, you have three people lose their jobs and it affects their families. If a small nonprofit shuts down, you have a whole community affected where they can’t get access to a food pantry. The implications go beyond the workforce loss.”

Nicolato told PBN she recalled while working in Dallas seeing the nonprofit sector in Texas have such a pipeline where it worked with local colleges and universities. Nicolato said that is something she would like to see more here in the Ocean State.

“I’ve started to have conversations with many of our universities to say, ‘We have to build a pipeline and we need your help in us being able to do so,’ ” Nicolato said. “We are more than manufacturing.”

Financially, nonprofits are seeing decreased margins with little cushion to fall on. The number of organizations that are operating with a surplus decreased from 39.7% in 2021 to 31% this year, per the survey, as COVID-19 support resources diminish. It’s anticipated that only 25.8% of local nonprofits will have a surplus in 2023.

Additionally, only 39.7% of nonprofits have less than three months of cash operating reserves and only 25.9% have more than six months of reserves, the survey states.

Inflation is not helping, either. A little more than 80% of the surveyed nonprofits said they have seen increased expenses and 27.3% have seen decreased giving this year. Plus, 20.3% of the surveyed organizations have decreased purchases in order to cut costs and 15% delayed hiring new people. Twelve percent of the surveyed organizations have canceled or reduced programs and services due to budget cuts, the survey said.

Both the Grantmakers Council and United Way said that nonprofit advocates are pointing to the need to have more long-term planning and investments aimed at sustaining community organizations across Rhode Island.

Nicolato said the United Way soon will issue to local nonprofits a request for proposals offering $3 million in multiyear grants to financially support local organizations.

Additionally, the United Way is having conversations with fellow nonprofit Skills for Rhode Island’s Future about how to provide nonprofits with technical assistance and operational support, such as cost containment, grant writing improvements and revenue generation initiatives, Nicolato said.

Dr. Anne S. De Groot, founder, CEO and chief scientific officer for EpiVax Inc. who also serves as volunteer executive director for Providence-based nonprofit Clinica Esperanza, said in a statement that while the pandemic is no longer front and center, many organizations had to expand programs or begin new services to meet the increased community needs. “It is essential that there is support for Rhode Island’s most marginalized and vulnerable communities. But right now, resources are simply stretched as far as they can go,” she said.

James Bessette is the PBN special projects editor, and also covers the nonprofit and education sectors. You may reach him at Bessette@PBN.com. You may also follow him on Twitter at @James_Bessette.

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