5/19/14 — Nonprofits Report Funding Cuts, Government Contract Problems in 2012

Philanthropy News Digest

Nearly half of U.S. nonprofit organizations saw their revenue from federal agencies decline in 2012, while one in five said they had more problems with government contracting than in previous years, a study from the Urban Institute finds.

Based on a survey of public charities with budgets of at least $100,000, the National Study of Nonprofit-Government Contracts and Grants 2013: State Profiles (192 pages, PDF) examined state-level data on the fiscal health of nonprofits, the size and type of government contracts they hold, and the problems they had with government contracts. According to the report, 47 percent of respondents saw a decline in revenue from federal agencies in 2012, while 43 percent received less from state agencies and 39 percent from local agencies. With 38 percent of nonprofits reporting that they ended 2012 in the red, the report, which was funded by the Bill & Melinda Gates Foundation, found that more than half (53 percent) froze or cut employee salaries, while slightly less than half (42 percent) drew on reserves to make ends meet.

The report also found that 21 percent of the nonprofits surveyed said their experience with government contracts and grants was worse in 2012 than in previous years, with 44 percent of nonprofits in Georgia experiencing problems, followed by Utah (40 percent), Illinois (34 percent), Connecticut (30 percent), and Rhode Island (29 percent).

According to the report, 54 percent of nonprofits nationwide said government payments do not cover the full cost of contracted services; 72 percent said that government application and reporting processes are too complex; 44 percent reported that agencies change the terms of their contracts mid-stream; and 45 percent said late contract payments posed a serious problem for their organization. Rhode Island ranked among the worst states in all four areas.