logo logo
Donate
    • Membership
    • Donate
  • Social Justice
    • Racial Justice
    • Climate Justice
    • Disability Justice
    • Economic Justice
    • Health Justice
    • Immigration
    • LGBTQ+
  • Civic News
  • Nonprofit Leadership
    • Board Governance
    • Equity-Centered Management
    • Finances
    • Fundraising
    • Human Resources
    • Organizational Culture
    • Philanthropy
    • Power Dynamics
    • Strategic Planning
    • Technology
  • CONTENT TYPES
  • Leading Edge Membership
  • Newsletters
  • Webinars

Will the City of Brotherly Love Show the Love?

Steve Dubb
November 27, 2017
“City Hall–Philadelphia, PA,” Jason Murphy

November 25, 2017; Philadelphia

As Malcolm Burnley highlights in Philadelphia magazine, many Philadelphia nonprofits face perilous times, as 40 percent skirt close to the financial edge.

Burnley’s observation is based on a report commissioned by the Philadelphia Foundation and coauthored by GuideStar, Oliver Wyman, and SeaChange Capital Partners titled “The Financial Health of Philadelphia-Area Nonprofits.” We at NPQ say the report provides a “window into challenges that face nonprofits everywhere.” For that reason, we reprinted the report in full earlier this month. But while the report touches on universal themes—among them, the need for nonprofits to build reserves, the importance of contingency planning by nonprofit executives and boards, and the need for funders to support nonprofit overhead—its natural focus was on findings specific to Philadelphia nonprofits.

The report finds strength for Philadelphia nonprofits in some areas. For example, Form 990 filings show that area nonprofit assets exceeded $16 billion in 2014, $5 billion more than seven years before (a 27 percent increase, even after adjusting for inflation). Still, the financial data for many area nonprofits remain troubling. Two key findings:

  • More than 40 percent of Philadelphia nonprofits are running at a loss or producing no surplus funds at all.
  • Around seven percent of the region’s nonprofits are insolvent, which means their liabilities exceed their assets, and for health and human services organizations, that rate is 13 percent.

While the report is more upbeat about the sector overall, this optimism does not extend to the two fifths of Philadelphia nonprofits that are struggling. As report co-author John MacIntosh says to Burnley: “I would argue that most of these [40 percent] are so busy scrambling to keep the lights on, it’s hard enough for them to deliver good programming on a day-in, day-out basis, let alone survive the inevitable shock of what will come down the pike.”

Burnley adds,

To get ahead of the coming challenges, in 2015 a team of nine funders, including the region’s largest funder, the William Penn Foundation, launched the Greater Philadelphia Nonprofit Repositioning Fund. The fund’s mission is to support partnerships and collaborations among nonprofits to foster financial sustainability in the region. Getting there will necessitate difficult conversations, including the possibility of responsible mergers between organizations.

“It’s never been harder for nonprofits to fundraise,” says Nadya Shmavonian, director of the fund. “We hope to strengthen nonprofits’ ability to deliver their services through wise collaboration.”

Sign up for our free newsletters

Subscribe to NPQ's newsletters to have our top stories delivered directly to your inbox.

By signing up, you agree to our privacy policy and terms of use, and to receive messages from NPQ and our partners.

Last month, Albert Hong picked up on this theme in Generocity. As Hong summarized, “Sometimes the right answer to take that mission forward is to move the organizational boundaries, to consolidate with somebody else, even to dissolve in an orderly way while you still have the time and capacity to make wise choices rather than hitting a wall, leaving the people you serve, your employees and even your board members in the lurch.”

Much of Burnley’s article, however, focuses on how to escape the dilemma through fundraising. Or, as Don Kligerman, founder of Fairmount Ventures, a Philadelphia-based consulting firm, puts it, increasing supply. Burnley asks, “How is it that Philly—a city with deep Quaker roots and a nickname that practically drips with generosity—is home to a philanthropic sector that appears very much on the brink?”

As Burnley notes, Philadelphia “ranks remarkably low in dishing out tax-deductible donations.” An October 2017 report ranked Philadelphia at 43rd in percentage of donations out of America’s 50 biggest metros. Burnley faults the relocation of The Annenberg Foundation to Los Angeles and a shift in focus of the Pew Charitable Trusts to national issues for weakening local philanthropy. That said, Burnley acknowledges that “of greater long-term consequence has been the impact of white flight and concentrated poverty…As a general rule, rich enclaves invest less money in nonprofits and charities than rich individuals living within economically diverse areas.” For example, Burnley notes that suburban Bucks County has a giving rate of only 1.9 percent, compared to a state average of 2.6 percent.

One can speculate as to what could increase Philadelphia giving. Perhaps it would be possible to tap into civic spirit in the City of Brotherly Love and increase local giving, as Burnley suggests. Yet, as Burnley himself notes, “Donations have held steady at two percent of America’s gross domestic product, wavering no more than a few tenths of a percent in boom time or recession.” For his part, MacIntosh contends that, “There’s absolutely no evidence over the last 50 years that philanthropy grows just because not-for-profits are better at asking. It just moves around.”

A more fundamental challenge is Burnley’s failure to consider non-donation sources of revenue. For the nonprofit sector as a whole, donations are 21 percent of revenues. Even when one looks solely at human service nonprofits, a 2008 survey found that “about 25 percent of total revenue…came from fees for service from private sources and 24 percent from government sources. Private contributions made up roughly 13 percent. Another seven percent of revenue came from government grants.” Of course, without program revenue, Philadelphia’s nonprofit sector would be a sliver of what exists today.

The importance of government revenue was not lost in the original report, however. Indeed, the report’s authors observed that “a five percent reduction in government funding could push close to 20 percent of nonprofits from earning a surplus to a deficit and turn an additional five percent to insolvency in less than five years.”

In short, while no one would deny the desirability of increased local giving, those seeking to revive civic spirit in Philadelphia might also want to include an enhanced public sector in their plans.—Steve Dubb

About the author
Steve Dubb

Steve Dubb is senior editor of economic justice at NPQ, where he writes articles (including NPQ’s Economy Remix column), moderates Remaking the Economy webinars, and works to cultivate voices from the field and help them reach a broader audience. Prior to coming to NPQ in 2017, Steve worked with cooperatives and nonprofits for over two decades, including twelve years at The Democracy Collaborative and three years as executive director of NASCO (North American Students of Cooperation). In his work, Steve has authored, co-authored, and edited numerous reports; participated in and facilitated learning cohorts; designed community building strategies; and helped build the field of community wealth building. Steve is the lead author of Building Wealth: The Asset-Based Approach to Solving Social and Economic Problems (Aspen 2005) and coauthor (with Rita Hodges) of The Road Half Traveled: University Engagement at a Crossroads, published by MSU Press in 2012. In 2016, Steve curated and authored Conversations on Community Wealth Building, a collection of interviews of community builders that Steve had conducted over the previous decade.

More about: Equity-Centered ManagementFundraisingNonprofit NewsPolicy

Our Voices Are Our Power.

Journalism, nonprofits, and multiracial democracy are under attack. At NPQ, we fight back by sharing stories and essential insights from nonprofit leaders and workers—and we pay every contributor.

Can you help us protect nonprofit voices?

Your support keeps truth alive when it matters most.
Every single dollar makes a difference.

Donate now
logo logo logo logo logo
See comments

You might also like
How to Transform Strategic Planning for Social Justice
Nick Takamine
Learning from a Near-Death Experience: How to Survive a Budget Crisis
Donnie Maclurcan
Merging Missions: Starting with Relationships and Shared Authority
Hoang Murphy
Trump Moves to Gut Low-Income Energy Assistance as Summer Heat Descends and Electricity Prices Rise
Conor Harrison, Elena Louder, Nikki Luke and Shelley Welton
Scaling Impact: How Mergers Can Advance Housing in Communities
Priya Jayachandran
“Advocacy Works”: Nonprofit Status-Stripping Measure Dropped from Republican Budget
Isaiah Thompson

Upcoming Webinars

Group Created with Sketch.
June 26th, 2:00 pm ET

From Performance Management to Mutual Commitment

Fostering a Culture of Joyful Accountability

Register
Group Created with Sketch.
July 24th, 2:00 pm ET

Organizing in Divided Times

The Relational Infrastructure We Need to Protect Democracy

Register

    
You might also like
A group of about two dozen students, many wearing blue shirts, walk in the rain in front of the US House of Representatives.
How Nonprofits and Activists Can Oppose Trump’s “Big...
Matthew Rozsa
Aurelio Diaz Tekpankalli’s allegorical “Liberation through Knowledge” shows people; two large, opened books; and animals.
How to Transform Strategic Planning for Social Justice
Nick Takamine
Conservatives Attack Nonprofits on Capitol Hill
Isaiah Thompson

Like what you see?

Subscribe to the NPQ newsletter to have our top stories delivered directly to your inbox.

See our newsletters

By signing up, you agree to our privacy policy and terms of use, and to receive messages from NPQ and our partners.

  • About
  • Advertise
  • Careers
  • Contact
  • Copyright
  • Donate
  • Editorial Policy
  • Funders
  • Submissions

We are using cookies to give you the best experience on our website.

 

Non Profit News | Nonprofit Quarterly
Powered by  GDPR Cookie Compliance
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.

Strictly Necessary Cookies

Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.

If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.