News for Nonprofits Winter 2022

Survey finds mixed results on public trust

A new survey from Independent Sector reveals some worrisome trends regarding the public trust in nonprofit and philanthropic organizations. As the survey report highlights, trust is a necessary condition for many Americans’ support. Examples of nonprofits for purposes of the survey include churches and religious organizations, health and human services organizations, and environmental groups. Philanthropies include corporate philanthropy, private foundations and high net-worth individuals engaged in philanthropic efforts.

The net trust (the percentage of those with high trust less the percentage with low trust) in “philanthropy to do what’s right” decreased from 15% in 2020 to only 4% in 2021. Nonprofits saw a relatively minor decline, from 47% to 45%. But confidence in the ability of nonprofits (84%) and philanthropy (65%) to strengthen society remains high.

Statistical modeling, the report says, shows that the top factors contributing to trust in both nonprofits and philanthropy are an organization’s purpose and integrity. Ability and dependability are secondary contributors.

Clawing back nonprofit employment levels

Following strong growth in July 2021, the Johns Hopkins Center for Civil Society Studies (CCSS) has predicted that the nonprofit industry should fully recover its pandemic-related job losses around July 2022. Through August 2021, the nonprofit workforce was down about 565,000 jobs compared to February 2020.

Before the pandemic, nonprofits accounted for at least 12.5 million jobs in the United States. CCSS “conservatively” estimates that initial job losses (March through May 2020) due to the pandemic rang in at 1.64 million — a 13.2% reduction. The industry clawed back about 41% of the jobs in the summer of 2020, but the comeback slowed considerably in September 2020 through February 2021, recovering only 4.2%. Spring 2021 saw an acceleration, though, and summer 2021 continued the promising numbers. By the end of August 2021, nonprofits had recovered nearly 66% of the initial job losses.

Be wary of restricted gifts

Donor-imposed restrictions on gifts can handcuff a nonprofit, as many have learned during the COVID-19 pandemic. A new academic study of national arts and culture organizations, “Service Delivery Under Pressure: The Effect of Donor-Imposed Financial Restrictions,” published in the journal Public Performance & Management Review in 2021, suggests how well-intended restrictions could backfire when it comes to service delivery.

Donors often believe restrictions help service delivery, while nonprofits generally assert they hinder it. According to the study, researchers found a negative relationship between financial restrictions and program outputs. The adverse effects are greater when financial restrictions are mostly derived from permanently restricted donations. According to the authors, this could be due to the relative size of permanently restricted donations and the fact that they’re restricted in perpetuity, leaving nonprofits with little flexibility.

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