What a difference a year can make.
This year’s United Way of the Capital Area survey found that three-fourths of local nonprofit organizations are optimistic for the upcoming year, thanks in no small part to increases in staffing and fund-raising.
The results are in sharp contrast to last year, when the survey revealed nonprofits faced shrinking budgets and stagnant or decreasing staffing levels.
“Optimism is one of those things that is subjective but you clearly see there is a trend building,” said Susan Dunn, president and CEO of the United Way of the Capital Area. “Anecdotally, as we are doing our own campaign, there is this sense that people are feeling good about what’s going on.”
The first survey, conducted in 2004, found 62 percent of nonprofits felt optimistic about their financial prospects. In 2007, that number has jumped to 79 percent.
A key reason for nonprofit organizations to be upbeat is that the economic news for Connecticut has not been as dire or harsh as it has been in other parts of the country.
Subprime Conditions
“The economy in Connecticut is not stellar, but there is guarded optimism that it’s not terrible,” Dunn said. “When you look at something like the subprime mortgage issues, the state has not been affected like others.”
The positivity from nonprofit organizations is a result a spike in fund raising.
A super-majority, 93 percent, said that donations from individuals will remain flat or increase in the current fiscal year. Of those, nearly half believed they would see an increase, compared to only 17 percent in 2006.
Similarly, 48 percent of those surveyed reported that corporate giving would jump this year, a dramatic jump from only 16 percent a year ago.
In the comments provided by survey respondents, many indicated that increases in fundraising were because of a broad campaign or event.
Dunn attributed much of the credit to efforts by the nonprofits to build their staffs and funding for their own operations.
This year’s survey found that almost half of these organizations increased their paid staffing levels, by far the highest percentage since the survey started in 2004.
“There is more of an emphasis on development and hiring people specifically to work on development, or fund raising,” Dunn said.
Whenever a nonprofit takes on a paid staff member, it obviously eats into the budget and could temporarily hurt the bottom line.
“It does have a cost attached to it but more and more nonprofits are looking at it as a cost-benefit,” said Dunn. “Eventually, nonprofits are seeing the extra staff paying off in increased fund raising down the line.”
There has been added pressure on nonprofits to raise more money, said Ron Cretaro, executive director of the Connecticut Association of Nonprofits.
“The one phenomenon I’ve seen is the pressure on development staff that leads to more turnover,” Cretaro said. “Organizations are looking to hire development staff that has been successful elsewhere and can produce.”
The need for staff is a direct correlation to the ever-increasing demand on nonprofits, a sentiment that echoes the results of a year ago.
“There is more of a demand on nonprofits for services and that means a demand to raise more money,” Cretaro said.
About 60 percent of nonprofits said projected demand for their service will increase this year with only a miniscule 5 percent anticipating a decrease. Many of the survey respondents expressed concern that they are still being pushed to their limits and the solution for them has been more staff, followed hopefully by more funding.
In particular, Cretaro pointed out the pressure of development staff to improve the amount of individual donations.
“Most nonprofits raise the most money from the individual donors,” he said. “The development staff is being asked to really go after that donor base and they have been successful recently.”
New Charities Spike
Fitting with the theme of increases, the total number of registered charities in the state also jumped by nearly 200 this year. There are now 6,567 in the state and 1,694 — one in four — are located in the United Way of the Capital Area’s 40-town service area.
“There is the issue of more organizations chasing the dollars,” Cretaro said. “The dollar pool has expanded a little bit but we’ll see.”
Cretaro added that corporate gifts have come back in recent years, following a decline in donations locally following Hurricane Katrina.
“There was a small impact on the Greater Hartford area during that time and it seems to have built back up in the past year or so,” he said. “It will also be interesting to see how foundations, like the Hartford Foundation, respond because they are another big piece in the puzzle.”
Despite all the optimism, and all the relatively good news about the economy, there is always the anticipation of the other shoe dropping.
“If things stay on this even keel, I think we’ll continue to see this good news,” Dunn said. “It’s kind of exciting to see these results but it could change in a year.”
In particular, nonprofits are still wary of factors that could potentially harm the economy, including the rising costs to do business, the lingering effects of housing foreclosures and the outcome of next year’s presidential election.
“It really depends on who you talk to,” Cretaro said. “There is that optimism right now but there is always caution.”
