The Bottom Line
The Bottom Line is where Klatzkin’s advisors provide analysis and insight into key developments in taxation, accounting, and other issues and how they affect businesses and individual taxpayers.

Financial Uncertainty Top Issue Facing New Jersey Nonprofits

By MICHELLE S. MARTIN

December 16, 2019

The passion for serving others is what drives most New Jersey nonprofit boards, leaders, and team members. Whether delivering social services to at-risk youth, career transition education for the unemployed, or providing food and shelter to the homeless, almost every community has a need to be filled. While different, these programs help people to overcome life challenges, build skills and find new paths to success. Although the passion drives team members, there are many operational, staffing, and financial difficulties nonprofits need to manage. According to the 2019 New Jersey Non-Profit Trends and Outlook, issued by the Center for Nonprofits, 53% of participants revealed financial uncertainty as being the most significant challenge to their organization. There was also concern about the need for better branding and communications, the need for a stronger board, and concerns about the inability to afford increased staffing. The survey results provide insights into the top challenges, issues, and concerns facing organizations. To help clients, prospects, and others, Klatzkin has compiled a summary of the key findings below.

About the Survey
The survey was conducted online in the first quarter of 2019 to assess how nonprofits performed in 2018 and to assess the overall outlook for 2019. There were 220 responses, which included organizations with total budgets ranging from $100,000 to over $10M while location varied from 47% in northern, 36% in central, and 17% in southern New Jersey.

Key Survey Findings

  • Top Challenges – Nonprofits face a variety of challenges on the path to success. According to the survey, 53% of participants financial uncertainty is the greatest challenge, 48% better branding and communications, 46% the need for a stronger board, 34% cannot afford enough qualified staff, 33% the need for increased benefits (including insurance) and 25% indicated the increased demand for program services. The need for financial certainty remains a top concern for many area nonprofits as fundraising effectiveness continues to change.
  • Demand for Services –The demand for services can place strain on organizations that are working with limited human and financial resources. According to the survey, 66% of participants indicated an increased demand over last year, 5% a decrease, and the balance indicated no significant change. Concurrently, the survey wanted to uncover if there was an increase in the number of people served. According to participants, 61% reported an increase, 10% a decrease, and the balance indicated no significant change.
  • Expenses –The increased demand for services results in an increase in expenses. According to the survey, 59% of participants reported a 5% or greater increase in costs, 9% a decrease of five percent or more, and the balance indicated no significant change.
  • Overall Funding Changes– As the demand for services increase (and expenses also), nonprofits need to assess funding sources to ensure adequate income is generated to cover increasing costs. To uncover funding trends, the survey asked about funding changes over the past year. According to the study, 38% reported an increase of five percent or more in overall funding, 21% a decrease of five percent or more, and the balance reported no significant change in funding.
  • Funding Changes by Source – The survey also evaluated the changes in funding sources to determine the most successful methods of fundraising. According to participants, 32% reported an increase in funding from special events, 31% individual donations, and 17% from corporate contributions. At the same time, respondents reported an 18% decrease in funding from private foundations, 16% from state governments, and 12% from federal governments.
  • Other Issues – The survey also prompted participants to provide insights into other issues of importance, and it’s not surprising that funding and expense management were a common theme. According to the survey, continued uncertainty about tax reform and impact on giving, escalating administrative costs associated with government grants, need for increased funding to cover the projected costs of employment law changes in New Jersey, and the need to strengthen relationships with policymakers at all levels of government were indicated as top concerns.

Contact Us

While there are several issues on the minds of New Jersey nonprofits, it’s clear that funding and expense management is top of mind. To remain competitive, organizations need to maintain a focus on fundraising and expense management. If you have questions about the survey findings or would like assistance with a nonprofit-related tax or audit issue, Klatzkin can help. For additional information, call us at 609-890-9189 or click here to contact us. We look forward to speaking with you soon.

About the Author

Michelle is a Manager focused on providing compliance, reporting, and optimization services to not-for-profit organizations, professional services, and real estate companies. Her more than 16 years of experience have helped clients overcome some of the complex changes that face their organizations.    Michelle’s true passion is in helping not-for-profit organizations manage their filing and reporting...

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