The top three concerns among nonprofit organizations today are growing and scaling, insufficient funding for the sector as a whole, and donors’ reluctance to fund the full costs of operations, a report from accounting firm UHY finds.

Based on a survey of 116 nonprofit organizations, the inaugural Not-for-Profit Survey 2022 Trends Report (15 pages, PDF) found that nearly half of respondents identified challenges with growth and scaling as a top concern, while 37 percent cited continued reluctance among donors to contribute to critical operational expenses such as staff salaries, information technology, and evaluations. According to the report, while 75 percent of respondents said they received emergency funding during the COVID-19 pandemic, there is an apparent and abrupt deceleration in such funding. In addition, respondents cited challenges such as inadequate or unreliable evaluation of their organization’s impact and performance, weak fundraising and development efforts, and weak or ineffective management.

Conducted in the first quarter of 2022, the survey found that 40 percent of respondents reported “a notable increase” in funding levels over the past year, while 22 percent reported “a notable decrease” and 34 percent reported no change. Another 40 percent said their top priority over the next year was attracting and retaining qualified talent.

The survey also found that 52 percent of respondents said they had collaborated in recent months with other organizations to deliver programs and services, 60 percent created new programs and services in the past year, and 59 percent implemented new technology to improve efficiencies. Nearly 32 percent of respondents said they strongly agreed with the statement that their organization significantly leverages technology and the internet to deliver services more effectively. And 65 percent of respondents said technological limitations did not restrict their ability to pivot during the pandemic, while 7 percent said such limitations restricted their operations significantly.

“No sector of the economy was insulated from the impact of the pandemic, but not-for-profit organizations have been hit particularly hard,” said Brian Kearns, partner and a leader of UHY’s not-for-profit practice. “Not only have they had to scramble to shore up their balance sheets; they’ve had to grapple with a shrinking and increasingly competitive pool of funding. But as the proverb goes, necessity is the mother of invention—and we’re seeing not-for-profits double down on innovation and digital transformation to help them accomplish more with less, all while making themselves more attractive to choosier donors.”

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