What is Giving Compass?
We connect donors to learning resources and ways to support community-led solutions. Learn more about us.
Search our Guide to Good
Start searching for your way to change the world.
State and local governments across the country partner with nonprofits to deliver a bevy of social services — from health care to housing to early childhood education. But many of those nonprofits are struggling financially.
According to a first-of-its-kind report from the largest national associations representing government agencies and nonprofits in human services, governments underpay nonprofits and burden them with costly or time-consuming regulations. Meanwhile, a large share of nonprofits fail to manage their budgets wisely.
The report includes findings from a survey of executives at 40 government agencies and 177 nonprofits, plus a review of three years of tax filings from more than 40,000 nonprofits. Among the key findings:
- On average, government contracts cover only about 70 percent of nonprofits' direct program expenses and less than half of indirect expenses.
- Nearly one in eight human service nonprofits are technically insolvent, meaning that their liabilities exceed their assets.
- Three in 10 nonprofits have cash reserves that cover less than one month of expenses.
- Nearly half have a negative operating margin over a three-year period.
- About one-third also have no plans in place to deal with financial challenges.
Read the full article about money problems facing nonprofits at Governing magazine.