Survey respondents concerned about financial resources and ability to meet demand for services

Administrative support or program delivery? Both are necessary for a nonprofit organization to operate, but some nonprofits are facing hard decisions: cut administrative capacity and staff that keep the machine running smoothly or cut programs and program staff.

Bryan Seck, executive director of Lincoln Literacy, was recently faced with such a decision. The literacy and workforce development organization, based in Lincoln, Neb., provides English language learning, adult education, and career-based English language classes to immigrants and refugees. When a funding contract was cancelled, Seck chose to cut administrative staff and preserve services.

While this is one example of a challenge to organizational health, many organizations shared concerns about this topic in the most recent External LinkCommunity Perspectives Survey administered by the Federal Reserve. The survey is distributed twice a year. It asks nonprofits, government, and private entities who help low- and moderate-income populations to provide their perspectives on External Linkeconomic conditions in the communities they serve. It also asks participants about their own External Linkorganization’s health and financial conditions.

Just over half of organizations in the region reported at least some financial stress.

In the most recent survey, conducted in April, organizations in the Kansas City Fed’s District were mixed in how they were faring financially. Financial health has not appeared to affect their ability to serve, with nearly 80% reporting their current ability to serve their clients was good. But most organizations were experiencing having to do more with less as demand for services and expenses have increased while revenue has declined. This contributed to their mixed expectations on their ability to serve over the next year.

Organizations expressed concern over their ability to serve.

Funding from public sources makes up nearly half of Lincoln Literacy’s $2 million annual budget. In the next 18 months, those funds will no longer be available. This loss is on top of the reduction many organizations face as the deadline for expenditures of ARPA funds looms. For Lincoln Literacy, the funds affect refugee services and employer engagement programs, which support on-site English language classes hosted by a handful of local employers.

These challenges are true for other organizations responding to the Community Perspectives Survey.

Government funding decreased for nearly every organization that relies on it.

At the same time public funding is decreasing, Lincoln Literacy has seen an increase in students. In 2022, they served 1,100 students. In 2025, they are projected to serve nearly 2,500 students.

Organizations reported having to do more with fewer resources.

Responding organizations cited current economic conditions and funding as the key factors influencing their ability to currently meet the demand for their services. They are less optimistic in their ability to meet the demand for their services in the coming year.

Seck sees these challenges as opportunities to solve a problem. One of those opportunities is a shift in strategy. “The good news is this makes us much more local. We’re going to focus on local funders who have a local understanding of the work that we do.”