There are over 1.5 million nonprofits in the United States. Of those, three-quarters (almost 1.2 million) have annual budgets under $1 million, and most are even smaller. These "small" organizations respond to localized needs and are staffed by people with deep knowledge and caring for the communities where they live and work. They are small in budget size only; their impact and community engagement are crucial to building just and vibrant neighborhoods and cities. They provide after-school programs, community centers, creative outlets, job training, food pantries, and much more.
As a result of the 2008 recession and the ensuing economic fallout, increasing numbers of Americans have suffered serious financial woes. As unemployment rose, so did the number of people living in poverty and the need for social services. At the same time, credit became harder to obtain, and funding began to decline, especially from government sources. These conditions have persisted and are now particularly challenging for small "safety net" social service organizations that rely on government funding. These organizations, which always run lean, are now stretched even further and in danger of reducing services or even closing their doors.
The following report draws on Nonprofit Finance Fund's experience working with 22 nonprofits through the Capital and Capacity for Economic Recovery (CCER) program in Greater Philadelphia, as well as our 30 years of work with small social service organizations nationwide. It highlights these nonprofits' common financial challenges and offers suggestions for how they and their supporters can enact financially stabilizing practices in response. We draw on real-life lessons from nonprofits that used small capacity grants and financial training opportunities to create positive programmatic and infrastructure shifts for the benefit of their clients.