Through it’s annual State of the Sector Survey, Nonprofit Finance Fund (NFF) has been asking nonprofits across the U.S. questions on the programmatic, financial, and operational issues they’ve been facing.

Now that the 2015 State of the Sector survey is complete, we are sharing with you data on the most important trends affecting Illinois nonprofits this year. 

Leaders from more than 5,000 nonprofits nationwide (444 in Illinois) participated in this seventh annual survey. Respondents collectively paint a picture of a sector that cannot keep up with high demand for its services, while struggling to find the balance between meeting short-term needs and long-term sustainability.

Demand for Programs/Services

The majority of nonprofits have reported increased demand for services every year since 2008, confirming that their communities are not necessarily seeing the benefits of an improved economy. Of Illinois respondents:

• 73% reported an increase in demand for services, for the seventh straight year. 
• 82% expect that demand will continue to increase through 2016.
• 47% were unable to meet demand in 2014 — compared to 52% last year.
• When nonprofits can’t meet demand, 75% of Illinois respondents report that clients’ needs remain unmet.

Illinois nonprofits say the most critical community needs are:

• Affordable housing (30%)
• Youth development (30%)
• Job availability (28%)
• Strong, well-performing schools (24%)

Government Funding

Government and nonprofits are often highly effective partners in providing a social safety net for those in need. At the same time, this partnership can present nonprofits with real challenges, including payment delays and low allowable indirect cost rates for programs and services.

• 76% of Illinois respondents receive some type of government funding.
• 63% of State of Illinois payments to nonprofits are reported as coming in late, with 31% marked as 90 days overdue (Illinois is labeled in the national survey report as “The Worst” in  government payment delays).
• In order to manage these delays in payment, nonprofits use reserves (39%), budget for delays in advance (31%), and/or use unrestricted funds or earned income (25%).
• Only about a quarter of Illinois respondents plan to replace government funding with alternate funding sources.

Challenges and Responses

Nonprofit managers struggle to implement long-term solutions while fulfilling short-term needs. Nonetheless, they’re improving efficiency, innovating, and saving where they can. Of Illinois survey respondents:

• 32% report that achieving long-term financial stability is a top challenge.
• 25% report that offering competitive pay and retaining staff is a concern.
• 60% added or expanded programming or services this past year, and 49% plan to do so in the next 12 months.
• 52% collaborated with another organization to improve or increase programs and services offered. 56% plan to collaborate in the next 12 months.
• 33% plan to advocate to government on behalf of their organization in the next 12 months.
• 41% plan to conduct long-term strategic or financial planning.
• 50% hired staff for new positions in 2014 and 44% plan to do so in the next 12 months.

Data and Impact

Measuring impact can help us understand what works. We must ensure that nonprofits are adequately resourced to capture metrics, especially as funding shifts towards outcomes-based models.

• 77% of Illinois nonprofits collect outcomes data on the impact of their services.
• Illinois survey respondents report that majority of their funders ask for impact metrics in reports; yet,
• 67% of Illinois respondents report that their funders rarely or never cover impact measurement costs.

Funder Practices

The more nonprofits and funders can have transparent conversations about aligning the right resources to meet financial needs, the closer the sector is to becoming well-capitalized and healthy. Of Illinois respondents:

• Half feel that they can have an honest conversation with their funders about expanding programs.
• 30% feel they can be open with their funders about general operating costs.
• Only 5% feel comfortable discussing developing reserves for operating needs (“rainy day fund”).
• 28% feel they can have an open dialogue with their funders about measuring program outcomes.

Explore the Data

Full survey results, along with an interactive survey analyzer and a look at trends over the past seven years, are available at the Nonprofit Finance Fund website. The Survey Analyzer features querying that make the data more usable for local areas. It includes more options to filter the data by sub-sectors, budget size, geography, and other dimensions; as well as the ability to compare any filters you select against the national results. You can download individual charts by clicking the ‘download’ button in the upper-right corner of any chart; you can then drop charts into PowerPoint presentations or reports.

New this year is a feature on arts and culture organizations. Nonprofits that identified their sector as “Arts/Culture/Humanities” received an additional set of questions regarding investments to develop visitors, sources of competitions, and more.

You can also share what you discover in the comments section below and on social media. If you are interested in additional slices of the survey data, email Nonprofit Finance Fund at [email protected].

— Kathleen Murphy