How operating reserves have fallen

The number of nonprofit executives whose organizations had four months or more of operating reserves in 2022 fell more than 10% from the previous year, according to “Nonprofit Standards: A Benchmarking Survey.” The discrepancy came even as 76% of respondents saw revenue rise in the most recent fiscal year.

According to the survey, your nonprofit should have at least six months of reserves available to help ensure it can survive economic volatility. The problems associated with inadequate reserves are only compounded by inflation-driven increases in operating costs and employee compensation.

To mitigate the effects of inflation, 65% of the survey’s respondents are increasing salaries and wages. Just over half are pursuing operational efficiencies, and about the same number are increasing fundraising. To increase liquidity, nonprofits might consider cutting variable costs and negotiating with suppliers to stretch out payment horizons.

MacKenzie Scott’s gifts don’t dissuade donors

As of December 2022, MacKenzie Scott has given an estimated $14 billion to more than 1,600 organizations. When she first announced her intention to donate her fortune, fears arose that her gifts would cause other donors to pull back and that smaller organizations wouldn’t be able to handle such large, unrestricted gifts.

A new report from the Center for Effective Philanthropy (CEP) goes a long way toward dispelling these concerns. CEP has conducted a three-year study of the impact of Scott’s large, unrestricted gifts on recipients. The organization is focusing on the nonprofits that received a gift from summer 2020 to summer 2021 and recently released its first of three expected reports.

Among key findings, CEP says few recipients have encountered organizational challenges or faced disruptions, such as declines in other funding, as a result of the grants. Rather, they were able to address long-standing needs and experienced increased confidence and credibility for their organizations.

CEO compensation climbs while gender pay gap persists

Candid’s 2022 nonprofit compensation study found that, though median compensation for CEOs increased by 4.7% overall, it dropped by 5.2% for organizations with budgets greater than $50 million. About 30% of incumbent CEOs at those organizations saw either a compensation cut or no change. The biggest increase was 7.3% in nonprofits with budgets between $250,000 and $500,000.

The pay gap between male and female CEOs is slowly declining, but female CEOs still are paid only $0.73 on average for each dollar paid male CEOs. Median compensation for female CEOs trails the median compensation for male CEOs in all budget groups, with the disparity increasing as the size of the budget grows. The difference is nearly $100,000 in pay in organizations where the budget is $50 million or more.

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