As I read the recent Center for Effective Philanthropy (CEP) report on the state of nonprofits, a familiar feeling settled in. The invisible lines between the findings began to form, and a picture not explicitly told in the data emerged.

On the surface, the CEP report describes a nonprofit sector that on the one hand is experiencing increased burnout — something that I hope no funder is surprised to learn, and that all are disheartened by — and on the other hand, finds that nonprofits are experiencing balanced budgets and committed funding. It might seem odd that organizations report both of these things at the same time: burnout, and balanced budgets.

If we stop there, funders may pat ourselves on the back for the parts that seem to be working and commit to tackling burnout. This is a worthy cause, and one that funders must take up. But from talking to nonprofits leaders, there is a deeper story that I invite my fellow funders to explore.

Funder Demands Have Fueled Nonprofit Burnout — and Balanced Budgets

Nonprofit leaders know that they must balance their annual budgets. The report’s finding that two-thirds of nonprofits expect to have a balanced budget or a surplus tracks. But let’s not mistake this as an indication that funders are doing a good job resourcing the sector appropriately. What this data tells me is that nonprofits are doing what they must in order to keep the lights on and ensure that their work continues.

These are the conditions I’m hearing from our grantee partners at the Walter & Elise Haas Fund. They share that across the sector, funders are stepping away, re-prioritizing funding strategies in a post-2020 world, decreasing funding, or not renewing support; this is particularly the case for organizations that have an explicit racial equity focus. As a result, nonprofits are being forced to freeze salaries, lay off staff, not hire for open positions, and strip things like professional development and staff retreats from their budgets. Meanwhile, they continue to deliver on their programmatic mandates with fewer staff, less training, and less time for rest and reflection.

Four Steps Funders Can Take

We must move into better alignment with nonprofits if we want to see our collective visions for change realized. Here is my advice for funders who believe that philanthropy can do better in supporting nonprofit and community ambitions, without sacrificing well-being.

  1. Invest directly in the well-being of BIPOC leaders.
  2. Create the conditions for better nonprofit job quality for the entire grantee organization.
  3. Talk to your grantees about their compensation and benefits philosophy.
  4. When exiting, be transparent — and generous.

Read the full article about not making nonprofits choose between balanced budgets and burnout by Jamie Allison at The Center for Effective Philanthropy.