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May 18, 2022
 
Nonprofit Leaders Cite Staffing, Budgeting as Key Challenges
Challenges Ahead

March 29, 2022 — While many nonprofits made it through the brunt of the coronavirus pandemic by pivoting quickly in response to a host of operational challenges, many continue to deal with fallout from the crisis, citing staffing challenges as the biggest strategic challenge, followed by budget shortfalls and increasing expenses, a newly completed national survey has found.

According to the 2022 Nonprofit Industry Pulse Survey completed by CBIZ Marks Paneth, a national accounting firm, 69% of respondents said staffing challenges could inhibit strategic transformation, while 48% said budget shortfalls and increasing expenses pose the biggest threats.

About 25% of survey participants identified “COVID-related issues” as a significant ongoing threat.

Almost half of survey respondents—47.7%--plan to increase headcounts in the next three to six months, which, according to CBIZ Marks Paneth, “ may indicate these organizations are already operating at less than full staff or need additional staff to relieve fatigued, absent or exiting staff.”

At the beginning of 2021, about 21% of leaders planned to add staff and 21% planned to reduce staff. This year, about 29% of leaders plan to retain headcount in the next three to six months, and only 6% expect to reduce their headcount, according to the survey.

Intended to provide an overall snapshot, the survey, based on an aggregated sample of 69 executives in nonprofit organization, reflects conditions cited by Massachusetts nonprofit leaders three months ago and re-emphasized last week by a longtime leader.

As pandemic relief funding draws to an end, nonprofit leaders expect cash flow planning to be a growing concern, the survey found:

  • 42% are re-evaluating fundraising strategies
  • 32% are re-evaluating staffing structures
  • 32% are re-evaluating future program offerings
  • 13% are re-evaluating their real estate footprint

To improve liquidity, leaders are evaluating long-term investments to fund future operations. Seeking more unrestricted funding as well as modifying investment draw policies were among these considerations.

To improve operations, 24% of survey respondents said they plan to expand digital service delivery, while 18% will outsource some back office and departmental functions, and 18% will consider mergers, restructuring, or asset acquisitions.

On the volunteer front, 26% of survey respondents said the biggest role volunteers will play in the future for nonprofits is actively expanding fundraising efforts. Also, 21% said volunteers will support limited staffing capacity.

“A focus on programming and staffing will continue in the next year as organizations adapt to ongoing pandemic realities and seek to replace lost staffing in a safe work environment,” the survey report noted. ”Leaders are concerned about attracting audiences to return to in-person events and activities.”

  • 27% said they are maintaining “a laser focus” on mission-critical programming.
  • 25% said maintaining a safe and optimal work environment for staff and volunteers tops their list for contingency planning.

Despite the challenges, 46% of nonprofit leaders said they were “somewhat optimistic” and 35% said they were “very optimistic” about the first half of 2022.

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