New Evidence of Growing Funder Trust as Nonprofits Confront Continued Challenges

There is increasing evidence that the shifts in funder practices that began in 2020 are continuing in the years since. In a new CEP research study, released today, we have documented changes in the past year in how both individual and institutional donors work with nonprofit organizations they support, as experienced by the nonprofits themselves.

In a survey of our nationally representative panel, we saw that more than half of the 284 nonprofit leaders that responded perceived an increase in trust during the past year from their funders. Nonprofit leaders saw shifts in related funder practices including streamlined application and reporting processes, more unrestricted support, and, from some individual donors, increased giving levels. These changes build on shifts we documented in research in 2020 and 2021 and which have been advocated for by a range of leaders and organizations.

Still, there is plenty of room for improvement. Nonprofit CEOs see changes in grant characteristics as among the most helpful shifts they have seen, and they’re seeking more unrestricted and long-term support to help them with what emerges in this same survey as their most significant challenge: issues related to staff. These staff challenges pertain to a range of interconnected issues including burnout, filling positions, and retention.

Almost all nonprofit leaders surveyed indicated concern about burnout, with more than one third of them stating it was “very much” a concern — the highest level of concern referenced in the question we asked about this topic. While we can’t say for certain to what degree this is a reflection of a perennial pain point as opposed to a result of recent stresses, it’s hard to imagine that the successive and often concurrent challenges — a pandemic, a racial justice reckoning, polarization, attacks on democratic institutions, and a tight labor market — don’t play a role in this finding.

One leader described how expectations from funders can strain their staff: “It would be extremely helpful if grantors and funders would stop expecting us to embark on ‘new projects’ with each application.” This leader described the result of such burdensome expectations as “chaos, overload, and staff burnout.”

Despite all the challenges nonprofit leaders face, including an uncertain economic context and high inflation, the financial picture for the organizations on our panel was stronger than might have been expected. More than half of leaders reported a surplus in the most recently completed fiscal year and less than one fourth had a deficit last year, with a similar proportion anticipating a deficit for this year. Just 10 percent said they had a deficit last year and also project a deficit this year.

This is good news, of course, and likely speaks to the ability of leaders to make adjustments in response to changing circumstances — further evidence of the resilience nonprofits have shown in these past years.

We will ask many of the same questions of our panel in early 2024 to gauge change over time. In addition, we’ll zero in on some of the issues that have arisen from this high-level survey and go deeper in future Nonprofit Voice Project efforts.

Our hope is that this and other reports help both individual and institutional donors better understand the realities of the organizations they support — and upon whom they depend to pursue shared goals.

Authors Note: We are grateful to all the nonprofit leaders who have agreed to be a part of our panel and to the McKnight and Rita Allen Foundations for their support of this research effort.

Elisha Smith Arrillaga, Ph.D., is vice president, Research at CEP. Phil Buchanan is president of CEP and author of “Giving Done Right: Effective Philanthropy and Making Every Dollar Count.” Christina Im is an analyst on CEP’s research team.