More than three quarters of nonprofits have reported stagnant or declining financial support in 2023 and identify a “belief in an impending recession” as the main reason for declining contributions, a report from global accounting firm UHY LLP finds.

The 2023 Not-for-Profit Trends Report (16 pages, PDF), includes polling data collected from 225 executives from across the nonprofit sector and found that 41.3 percent of organizations reported no change in total contributions over the last 12 months, while 34.9 percent saw declines and 23.8 percent saw increases.

Among groups in the arts and culture sector—considered to be highly vulnerable to the effects of economic turbulence—44.4 percent reported a decline in funding, while 38.9 percent reported no change and only 16.7 percent reported an increase. By contrast, only 16 percent of healthcare organizations reported declines, while 40 percent saw no change and 44 percent saw increases. For most organizations seeing a decrease in funding, the decline came principally from individual contributors, while healthcare organizations were the only subsector to report declines in grants.

The report, sharing data from a National Nonprofit Council survey, also noted that 60 percent of nonprofits indicate greater challenges in recruiting talent and 44 percent indicate that staff turnover has increased during the economic downturn of the past year.

“Not-for-profit organizations have been battling the same unusual business landscape as for-profit businesses over the last few years,” wrote the authors of the UHY report. “With smaller budgets and less resources, leadership teams have juggled fluctuations in demand for their services, staffing shortages due to the Great Resignation, emerging technologies, and more. The uncertainty continues as we move through 2023 with thoughts of a looming recession, vacancies across multiple departments, new accounting standards, and an even greater push toward technology.”

(Photo credit: Getty Images/Adam-Smigielski)