Candid published a nice analysis of the freely available Form 990 data, showing that the median nonprofit would, by business definitions, be in “bad shape” (that’s a technical term!). With 6 months or less of cash on hand, the median nonprofit is ill-prepared for pandemics or other social strife that interrupts fundraising.
Further results shared common themes, such as: there’s a Pareto Principle (the 80/20 rule) for nonprofits, as expected: the top 500 nonprofits hold as much assets as the rest of the 300k+, and that fragility correlates both with maturity of nonprofit (not surprising) and dependence on program revenue (didn’t expect that to be true!). Candid found that nonprofits relying heavily on donations had more months of cash, and speculated that this is due to program revenue being more related to offline giving (e.g. events-based revenue).
Want to reproduce or extend the results? You can likely use the freely available tax extract, the “snack size” datasets from Open990, or wait for us to share 990 data via our upcoming hosted services. Sign up here to be notified when this project is launched.
Key findings (quoted from Candid):
- The median nonprofit has about 6 months of cash
- The 500 largest nonprofits have as much “wealth” as the remaining 315,198 organizations
- Organizational age and size are modestly correlated with financial resilience
- Organizations that rely on program service revenue may face additional financially fragility
- [There are] significant variation among issue categories