Nonprofit Revenue
Where does our funding come from? Why does government funding matter?
Image description: A graphic of a dollar bill divided into slices showing the breakdown of nonprofit revenue nationally. The breakdown is: 49% fees for services, 31.8% government grants/contracts, 8.7% donated by individuals, 2.9% donated by foundations, 1.5% donated by bequests, .9% donated by corporations, 5.2% other. Source: Nonprofit Impact Matters report by National Council of Nonprofits.
Time for a reminder of where the nonprofit sector gets its funding. We typically exaggerate the importance of philanthropic contributions and underestimate how tied our fate is with government. In fact, we are the low-cost provider of so many public services that would have been delivered by government in the past (affordable housing, education, hospitals, etc). There is much to say about this topic and the need to renegotiate the relationship between government and nonprofits, but I am highlighting this today to remind us all that reductions in federal investment will reverberate quickly in the nonprofit sector.
A great deal is at stake, even for nonprofits that do not receive government funding, as limited philanthropic funds will be spread much thinner. Nonprofits that receive state or local funding are thankful that their funding is not federal right now, but in fact state and local governments are highly dependent on federal funding as well, and whether that funding is at risk is a big unknown.
It is not partisan to speak out to preserve the amazing network of nonprofit services that we currently enjoy. I’m here to tell you that we can’t assume that our friends, neighbors, and elected officials understand all that nonprofits do in our communities. I’ll be writing more in the coming weeks about the challenge that we face to communicate basic facts about the value and importance of nonprofits, and messaging that we can use to educate and persuade people to prioritize nonprofits.