Fragility and resilience: the landscape of nonprofit financial health in the U.S.

The media is full of the economic consequences of the coronavirus. Here in the United States, 40 million people have lost jobs. Prominent businesses—from Hertz to J. Crew—have declared bankruptcy. But thus far there is an eerie silence as to the consequences for nonprofits: will we see mass casualties among the organizations devoted to a better society?

It is, of course, too early to say with any certainty what will happen. What we can do is take a rigorous look at the landscape of nonprofit health going into this crisis.

In a recent analysis, we looked at the finances of the American nonprofit sector as a whole. When you add up every organization together, the picture is relatively healthy: Over the last twenty years, nonprofits have collectively grown their net assets by more than $1 trillion. In part, this is a consequence of a period of overall economic growth, but it also reflects increasingly sophisticated nonprofit management and governance.

Those aggregate numbers are important; they help us think about our sector as a whole. But this “big picture” obscures a vast diversity of individual experiences. The social sector is large, it contains multitudes: from billion-dollar hospitals to volunteer-run clinics. The wealthiest institutions are likely to survive this crisis. But the same may not be true for many of the smaller organizations that form the sinews of community across the nation.

How might we understand the financial health of nonprofit organizations? My colleagues Carol Brouwer and Anna Koob did an analysis of 315,698 tax-exempt nonprofits which casts some light on the situation. (The set excludes foundations, inactive organizations, and most nonprofits with under $50,000 in annual revenue. In the methodology section you’ll find additional detail.)

This analysis reveals a complex picture. Most American nonprofit organizations are positioned to survive a short financial recession. But even the financial dislocation we’ve already seen is likely to claim thousands of nonprofits. A longer one could be devastating.

Click here to read the full blog post.

Source: Candid.