California Nonprofits Caught in Revenue Squeeze

The California Association of Nonprofits (CAN) recently completed a study of the impact on nonprofits of funding cutbacks in California. In the report "Holes in the Safety-net: Study of Funding Cutbacks and Safety-net Nonprofits in California," CAN found that a wide range of nonprofits in the state are squeezed between revenue reductions and increased demand for services.

The California Association of Nonprofits (CAN) recently completed a study of the impact on nonprofits of funding cutbacks in California. In the report "Holes in the Safety-net: Study of Funding Cutbacks and Safety-net Nonprofits in California," CAN found that a wide range of nonprofits in the state are squeezed between revenue reductions and increased demand for services.

In their survey, over 40 percent of organizations responded that revenues were down over the previous year, compared with 32 percent that reported increases. Of those that saw decreases, funds were reduced by 22.5 percent on average.

The reductions led most commonly to hiring and salary freezes, and layoffs. In addition, service delivery was also hampered: half of respondents have reduced or eliminated aspects of programs, and 46 percent had slowed program innovation.

In addition to revenue reductions, nonprofits reported an increase in the number of people who need their services. There were increases in the number of people needing shelter, greater demand for food air, increases in elderly unable to afford medications, and increases in many other areas.

Nonprofits are struggling to cope with the squeeze. The report finds that 70 percent of nonprofits are increasing fund-raising efforts to raise funds from individuals and foundations. These efforts undoubtedly place additional strains on the philanthropic and local communities.

The report contains several recommendations in the areas of improving nonprofit operations and structure, improving capacity (including advocacy capacity), and addressing public policy and values. In the later category, the report recommends that "as a community we must develop policies and strategies that attack the structural deficits that underlie the serious safety-net issues facing our state," and that "government must not abandon its safety-net role."

The experience in California is unlikely to be unique; many other nonprofits throughout the country continue to struggle for the very same reasons as in California.

The full report is posted on the CAN website at:

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