Study: Significant Gap Between Availability of Grant Funding, Nonprofits' Financial Needs
BryteBridge, a service provider to the nonprofit community, released a new report that sheds light on the challenges facing small and emerging nonprofits. Knowing that approximately 30% of nonprofits fail within the first ten years of operation, according to the National Center on Charitable Statistics, BryteBridge set out to identify and understand the biggest threats to nonprofit sustainability.
The report, Growing Pains: Overcoming the Challenges that Keep Nonprofits from Achieving Sustainability and Growth, results from a quantitative survey of 261 nonprofit staff members and volunteers from organizations established between 2014 and 2024.
According to the survey:
- Donor contributions power nonprofits: More than half (54%) of a nonprofit's revenue comes from donors, including individual (28%), board (14%) and corporate (12%) donors. Additional sources of revenue are foundation and government grants (22%) and bequests, in-kind donations and program fees (23%).
- Competition for grants is fierce: 86% of nonprofits intend to pursue government and foundation grants, but few will be awarded an impactful amount.
- Grants are not a silver bullet for revenue: On average, it takes two years and four months before a nonprofit receives its first grant. Almost two-thirds of organizations secure between $5,000 and $15,000 in grants on average and receive two to four grants per year. Further, most nonprofits (41%) are not ready to apply for, receive, and manage grant funding.
The survey results underscore the significant hurdles nonprofits face in securing grant funding, highlighting why organizations must rely on a diverse mix of revenue streams to stay sustainable. While grant funding is an often-sought resource in the nonprofit sector, it cannot be the sole focus of nonprofit fundraising. In fact, nonprofits in their first three years of operation may be ineligible for most grants. Additionally, there is the administrative burden of applying for grants and limited resources to hire grant writers (either internally or externally) that detract from a nonprofit's ability to generate revenue from their primary fundraising source: individual donors.
"Nonprofits around the country fill critical gaps that exist within our social safety nets," said Brian Davis, President of BryteBridge. "While they face ongoing challenges like sustainable funding, legal and compliance complexities, and the demand for data-driven strategic planning, these hurdles are opportunities for growth and innovation. By addressing these issues, nonprofits can continue to enhance their impact and better serve the communities that rely on them."
The report uncovered three key areas where nonprofits seek the most help over the years:
- Fundraising: 51% of nonprofits reported receiving help with fundraising in their first year, with 37% of nonprofits reporting that it was the area in which they needed the most support. Further, 43% foresee needing fundraising support in subsequent years.
- Legal and Compliance: 54% of nonprofits received legal and compliance help in their first year, with 32% of nonprofits reporting that they could have used help during their first year. However, 42% report they foresee needing support in these areas in subsequent years.
- Strategy Support: 42% of nonprofits felt they could have used help with strategy in their first year, with only 38% receiving that help in the first year. That need ticks up slightly to 43% reporting that they foresee the need for strategy support in subsequent years.
BryteBridge last surveyed nonprofits in 2020, at the height of the COVID pandemic, which showed compliance, staffing, financial health, and fundraising as the four main challenges facing small and emerging nonprofits. The 2024 survey showed much of the same, with fundraising and compliance growing in importance.
- In 2020, 37% of nonprofits were concerned about fundraising moving forward, compared to 43% indicating they could use fundraising support in 2024.
- In 2020, 23% of nonprofits indicated that help was needed in legal and compliance matters during their first year, while 32% indicated they could have used support in legal and compliance matters in their first year in 2024.
- In 2020, 41% of nonprofits indicated that help was needed in their first year for strategy, with 42% indicating they could have used the same help in their first year in 2024.
"It is clear that nonprofits need additional support to thrive," added Davis. "At BryteBridge, we are committed to empowering nonprofit leaders and their teams by providing resources that help them maintain their focus on positively impacting their communities."
The preceding press release was provided by a company unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of the staff of NonProfit PRO.
