Financial vulnerability persists.
The Cambridge Nonprofit Coalition is a growing network of 80+ Cambridge-serving nonprofits.
The responses to our annual survey provide the foundation for much of our work on behalf of our mission — to advance equity and justice in the community by strengthening the Cambridge nonprofit sector, building collective voice, and promoting collaboration.
[1.] Financial vulnerability persists. At the start of 2023, we found that financial vulnerability remained for nonprofits in the third year since the pandemic began. Sixty percent of Cambridge nonprofits reported a breakeven or deficit budget.
[2.] Staff capacity remains a challenge. About half of nonprofits reported open positions. Worse, about half of those (nonprofits with open positions) said they didn’t have the funding to fill them.
[3.] Survey results make a strong case for increased funding for nonprofits. Beyond the financial picture that emerged, nonprofits also overwhelmingly described wanting to see more funding opportunities from the City of Cambridge with fewer bureaucratic hoops. In one such example, we’re hopeful that the recently closed Cambridge Nonprofit Recovery Fund will have a significant positive impact on the sector.
[4.] Nonprofit leadership is majority white, female. Over half of leaders have been in their roles 5 years or less.
About the 2022 Survey
- Time-line: Survey conducted in December 2022.
- N = 51 responding nonprofits. We estimate that there are currently roughly 250 active, Cambridge-serving nonprofits.
- About the respondents: They could respond anonymously. They had to serve Cambridge residents, but didn’t have to be CNC members.
Table of Contents:
- Services and Programs
- Sector Leadership
- Sector Health
- Relationship with the City
[1.] Services and Programs
Responding nonprofits cover a vast number of service areas.
The top three primary mission areas selected were Youth Development, Arts/Culture/Recreation, and Unhoused Services.
Note: We revised the categories from last year to be more clear and specific. For example, defining terms like “Youth Development” and “Safety” in parentheticals.
As an indication of just how varied the sector is, “Other” tied with “Food-Security” for the 4th-most popular category, with diverse answers:
Categorizing the Cambridge nonprofit sector’s work is complex.
This plethora of service areas likely stems from the fact that most Cambridge nonprofits are small- to medium-sized — almost 75% have a budget under $2M.
[2.] Sector Leadership
[a.] A majority of Executive Directors are relatively new.
Given the turnover in leadership reflected in the chart above, CNC will continue prioritizing support for Executive Directors.
Examples of professional development initiatives include our monthly ED lunches that provide mutual support, as well as recent free professional development courses that have been popular — offerings we plan to grow in future. We’re also exploring how to best support new Executive Directors, and how to provide opportunities to nonprofit professionals who are earlier in their careers.
[b.] Leadership is less racially diverse in Cambridge than in Massachusetts.
This lack of diversity is particularly troubling because most Cambridge organizations primarily serve people of color. Anecdotally, we know that many nonprofit EDs and staff feel there is a mismatch between who is running the organizations and who is served. In future surveys, we plan to ask more specific questions around these differences.
[3.] Sector Health
[a.] The sector ended 2022 highly vulnerable.
The sector absorbed a huge blow starting in early 2020 with the pandemic, and has not yet recovered. This is perhaps best illustrated by the fact that over 60% of nonprofits started 2023 with a breakeven or deficit budget (see purple column, below right).
These budgets appear to result from two factors: declining revenues (blue column, above left) and higher expenses as experienced by a whopping 82% of responding nonprofits (green column).
Alarmingly, these numbers leave our sector vulnerable to future disruptions. As shown below, only 16% of nonprofits (green) are where we’d like to see them: fully prepared for disruptions. The vast majority — 78% — are only somewhat prepared (blue).
Anecdotally, many nonprofits are worried about “falling over a COVID cliff” — that is, organizations receiving, for example, ARPA money for childcare programs, are concerned because they don’t know how long the funds will last and face major deficits if the funding ends.
[b.] Putting 2022 in historical context: The pandemic’s influence persists
For 3 years straight, most nonprofits have seen decreases or plateaus in revenues.
The first two columns are roughly what many might expect — revenues took a huge hit in 2020; there was marked (but limited) improvement in 2021. For 2022, however, those outside the sector might be surprised that there was essentially no improvement.
Note: The 43% of nonprofits that reported higher revenues in 2022 were largely from the arts & culture and youth development areas — they benefited tremendously from the re-opening of in-person activities, such as theaters, art spaces, and youth programs.
In a similar trend, for 2 years now, the majority of nonprofits have experienced increasing expenses. While 2022 was particularly acute, as we noted earlier, it was only the culmination of a pattern of rising expenses.
[c.] Over two thirds of nonprofits had open positions at the end of 2022
The great majority of Cambridge nonprofits had open positions (70%). More concerningly, over a third of nonprofits (36%) said they lacked the funding to hire for those open positions.
This issue is nationwide. According to the National Council of Nonprofits, almost 80% of nonprofits said salary competition made it hard to hire in a December 2021 survey. That finding closely matches our Cambridge results, with almost 70% of nonprofits pointing to salary competition as a factor making hiring difficult. Relatedly, many wrote in the “other” option that lack of funding was a major staffing concern.
The second-most cited cause for staff retention difficulties was burnout (35% of nonprofits). In the past, CNC has offered free professional development programming around burnout (with separate sessions for EDs and for staff). These numbers point to the continued need for such offerings.
[d.] Nonprofits are struggling to meet increasing demand
Over 70% of nonprofits said demand increased over the previous year (see pie chart, below left). High demand is a sector-wide phenomenon: only two nonprofits said they experienced declining demand (green slice, below left).
Unfortunately — but not surprisingly given the financial statistics explored above — nonprofits are struggling to meet this increased demand. Only 17% reported being able to “fully” meet demand, while almost half said they could “mostly” meet it, and a third said they could only “somewhat” meet it.
Left: Demand is high sector-wide. Right: Nonprofits are struggling to meet that demand.
[4.] Nonprofits’ Relationship with the City
[a.] Cambridge directly funds over half the nonprofits surveyed (57%) through contracts, but nonprofits would like to see turnaround times improve.
[b.] Nonprofits would like more funding with fewer hoops.
We asked, “Are there any ways that the City of Cambridge could better support your work and the Cambridge nonprofit sector?” Nonprofits could answer as they liked. We interpreted their answers to apply to these main categories:
Clearly, the biggest concern is that the City find more ways to fund nonprofit work and make accessing funds less bureaucratic, time-consuming, and slow. For example (emphasis added):
- “The City of Cambridge could fund our organization, which serves the most marginalized people in Cambridge and provides good jobs to Cambridge community members.”
- “We received a grant and after waiting around [for] months the city has still not responded to our calls and emails.”
Many nonprofits attributed understaffed City departments to some of the bureaucratic issues they experienced.
In addition, many nonprofits want to be able to collaborate to find more productive solutions on issues on which both parties are fully aligned:
- “more collaborative efforts to address city-wide issues like housing, childcare, mental health with non-profits given a seat at the table and funding to [pay] for the time, energy, and expertise invested in these collaborative efforts.”
- “More opportunities for nonprofits to meet with city officials and problem solve.”
Finally, a few nonprofits praised their relationship with the City, providing promising examples toward which we can work:
- “We are currently please[d] with our relationship with the City, but it did take a long time to get to this point. I can understand how organizations who haven’t yet developed the relationships with the right people in the City can feel neglected our unsupported by the City. We certainly felt that [way] for years until the City recognized us [as] a valuable resource that they needed to better support.”
Based on this data, CNC sees our most pressing needs as:
[a.] Working to strengthen and improve the sector’s relationship with City government.
- Contracts: The survey data has already helped us make inroads in our work to ensure that the City executes on and pays nonprofit contracts more timely. We’ve been delighted to see the City respond positively, and have already experienced a significant improvement.
- Funding: The data shows nonprofits want more (and simpler) funding opportunities. A big part of advocating for this goal will be not just raising awareness of the sector’s continued financial vulnerability, but also showing how valuable nonprofits are as government partners, given our shared goals of equity and opportunity for all residents. As we have been, we’ll continue to advocate for nonprofits to access funds faster and more flexibly, including work to better understand where the Anti-Aid Amendment must apply.
- Collaboration: Nonprofits asked for more collaborative and productive relationships with city government. Again, our work will be in showing the value of nonprofits as city partners, and raising awareness of particular challenges and potential solutions. We can create better synergies together.
[b.] Workforce Shortages: Advocating and presenting professional development on these issues
Staffing issues were a major theme in the data — both challenges to hiring as well creating and supporting a diverse team. We plan to convene nonprofit leaders to discuss this challenge and identify potential solutions. We also plan to target professional development and best practice-sharing around hiring.
[c.] Improved survey data
Related to our desire to build a stronger relationship with the City and the larger Cambridge community, we want to improve the sophistication of our surveys and data-gathering methods. At the end of this year, we plan to ensure only necessary questions are anonymous, so we can gather more granular, useful data about the people our sector serves and staffing models.
We’d love to hear your thoughts on this report. For questions, comments, or suggestions, please email Elena at firstname.lastname@example.org