Many U.S. nonprofit organizations saw an increase in trust from funders in the past year but also faced high rates of staff burnout, a report from the Center for Effective Philanthropy finds.

Funded by the McKnight and Rita Allen foundations and based on a survey of 284 nonprofit leaders, the report, State of Nonprofits 2023: What Funders Need to Know (24 pages, PDF), found that more than half of respondents perceived an increase in trust from funders. Many also saw improvements in foundation grantmaking practices, including streamlining applications (62 percent), reducing reporting requirements (52 percent), reducing or removing restrictions (48 percent), increasing multiyear funding (40 percent), enhancing or adding nonmonetary support (38 percent), raising grant amounts (36 percent), and increasing giving in response to inflation (18 percent). Fifty-eight percent said the provision of increased unrestricted and/or multiyear grants was the most helpful change. As for individual donors, 67 percent of respondents said at least some of their donors made larger gifts, 42 percent said they reduced or removed restrictions, and 37 percent received more nonmonetary support.

At the same time, 68 percent of nonprofit leaders said they were worried about staff burnout “somewhat” (32 percent) or “very much” (36 percent), 46 percent reported experiencing “some” to “a lot of” difficulty filling staff positions, and a quarter said more staff left in the past year than is typical. The report quotes one leader citing the difficulty of “hiring and retaining engaged and future-oriented employees when the applicant pool is limited, and our pay scales cannot compete with the private or public wage scale.”

Still, nonprofit leaders indicated a more positive financial outlook than expected, given the recent challenging economic context. According to the survey, for the previous fiscal year 22 percent of respondents reported a budget deficit, 22 percent had a balanced budget, and 55 percent had a surplus; for this fiscal year, 23 percent project a deficit, 46 percent expect a balanced budget, and 23 percent anticipate a surplus. Those projecting deficits this fiscal year cited higher costs (62 percent) and lower individual giving (57 percent) and foundation revenue (49 percent).

“Just 10 percent said they had a deficit last year and also project a deficit this year,” two of the report’s co-authors, Phil Buchanan and Christina Im, as well as vice president for research Elisha Smith Arrillaga wrote in a blog post. “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.”

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