Results from the Latest LMI Organizational Funding and Organizational Capacity Indexes

June 23, 2017
By Kelly D. Edmiston, Senior Economist and Daniel Perez, Research Associate


This article discusses financial and non-financial capacity within community organizations derived from the Low- to Moderate-Income (LMI) Survey. To read about economic conditions in LMI communities, please see the latest issue of Tenth District LMI Economic Conditions.

Indicators of funding for community organizations continued to suggest deteriorating conditions, but respondents reported that non-financial capacity, such as the number of volunteers and in-kind donations, improved compared to the previous year. The indicators, represented as indexes, are derived from responses to the Federal Reserve Bank of Kansas City’s biannual LMI Survey. The survey asks respondents about conditions in the previous quarter and year, as well as projections for the following quarter.  

The LMI Survey measures responses through a rolling benchmark: readings above 100 indicate that more respondents reported an improvement than the number that reported worsening conditions, while readings below 100 indicate that more respondents reported worsening conditions than the number that reported improving conditions. A value of 100 is neutral. 

The organizational funding index compared to the previous quarter declined modestly from 83.0 to 80.7. The index that measures funding conditions over the previous year rose significantly from 81.6 to 92.1. The quarter-ahead index, which measures respondents’ expectations for the next quarter, rose moderately from 89.5 to 94.3. While there was some improvement, all indexes remained slightly below neutral. Overall, the LMI Organizational Funding Indexes trended up during the post-recession period, but began to retreat in late 2014. The January 2017 survey marks the first increase since late 2014.

A few comments indicated that funding from grants and the private sector increased community organizations’ budgets, but a majority of respondents indicated funding had not changed and they did not expect it to change over the next quarter. Funding assessments usually are higher in the end-of-year survey, which may reflect higher end-of-year donations, although the year-over-year assessment is relative to the end of 2015.

Chart 1: LMI Organizational Funding Index

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Notes: LMI Survey data were collected quarterly prior to 2014. Providers of services for the LMI population respond to each item by indicating whether current conditions were “better than,” “worse than” or “the same as” in the previous year and previous quarter, as well as what providers expect conditions to be next quarter. Index numbers are computed by subtracting the percent of service providers that responded “worse than” from the percent of service providers that responded “better than” and adding 100. (Source: Federal Reserve Bank of Kansas City LMI Survey.)

While funding may be less than desired, community organizations reported some improvement in meeting their communities’ demands. The year-over-year LMI Organizational Capacity Index, which measures the volunteer and infrastructure capacity of organizations to serve their clients compared to last year, rose from 95.3 to 110.2, indicating their non-financial capacity is improving. Comments by respondents suggested community organization partnerships assisted in expanding capacity. However, inadequate full-time staff and shifts in internal management kept some from working at full capacity. The LMI Organizational Capacity Index has trended near neutral since late 2012, and its recent reading was at the highest level since 2010.

Changes in the LMI Funding Index and LMI Organizational Capacity Index were similar to those from other results in the survey, which measure economic conditions. As seen in the LMI Economic Conditions report for March 2017, many LMI Survey indexes reversed course from their long-term trends. However, temporary deviations are common and more data is needed before identifying a longer-term trend.

Survey comments suggest private investment for community organizations has increased. The American Enterprise Institute discussed public and private-sector collaboration to meet the demands of LMI communities, specifically in education and infrastructure. These partnerships could help to offset decreases in local or state funding. Federal funding remains uncertain, especially for two large sources designated for communities: HOME and Community Development Block Grants. 

The next LMI Survey will be distributed in July. Organizations that work directly with LMI populations are encouraged to participate by signing up to receive the survey.

Chart 2: LMI Organizational Capacity Index

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Notes: LMI Survey data were collected quarterly prior to 2014. Providers of services for the LMI population respond to each item by indicating whether current conditions were “better than,” “worse than” or “the same as” in the previous year and previous quarter, as well as what providers expect conditions to be next quarter. Index numbers are computed by subtracting the percent of service providers that responded “worse than” from the percent of service providers that responded “better than” and adding 100. (Source: Federal Reserve Bank of Kansas City LMI Survey.)