A recent Cicero Group report showed that nearly 80 percent of nonprofits across Salt Lake City show an acute need for more funding, while only 3 percent feel they are meeting their fundraising goals. With an increase in demand for nonprofit services but a lack of donors to meet the demand, the report says Salt Lake nonprofits have been forced to “focus almost exclusively on the now, and not on the future.” 

There are many factors at play, but Cicero Group highlights the consequences of the pandemic, supply chain shortages, and high inflation as top contributors to the urgent funding needs of impactful organizations. 

“There is kind of a hangover, if you will, from Covid,” says Jacob Allen, senior partner and managing director of social impact at Cicero Group. “For a while, lots of people rallied and gained extra funding … toward the tail end of Covid. “ Nonprofits often see a rise in donors and volunteers in times of emergency, Allen says. 

Along with Covid, various other social and environmental issues were brought to the public’s attention that prompted donations from more than the average number of donors. That has since tailed off. 

“It is exacerbated by other things. One is recession potential,” Allen says. “People are now holding onto their own personal funds, as individuals or corporations, because they are not sure what the future holds and want to be careful. At the same time all of that is happening, the needs in our communities have increased. 

Usually, businesses see demand as a good thing, Allen says. But for nonprofits, more demand is not a good thing. “It requires more funds, more donations, and more generosity from the community in order to be able to support those needs,” he continues.

The Cicero Group report states that, because of decreased donations, organizations are focused less on growing, expanding, and developing in 2023. With only 13 percent seeking a growth strategy to expand, more nonprofits are finding partnerships to obtain essential resources and donations to fund their staff. 

Allen describes nonprofit funding as a three-bucket system. Funds are generally acquired through individual or business donors making recurring or one-time donations, grant funding, and government funding. While grants and government funding have not taken a drastic hit, donations have. “Every nonprofit has needs for funding every year. That’s how they provide the services they provide,” Allen says. “What we have found is that the need is acute. It is more difficult this year than in most years.” While economic factors contribute to an ebb and flow in funding for most nonprofits all the time, the current lack of donations is affecting nonprofits to a heightened severity. 

Even if a nonprofit organization isn’t forced to shut down, the impact it can make might be lessened by decreased funding. Allen uses two scenarios to put the effects into perspective. A well-established nonprofit that provides daily meals to children in schools can provide a meal every school day with a payment under $20 for the whole year from the family in need. But without the proper funding, the nonprofit may have to cut a day or two of meals or limit the number of students who qualify for the program. They can still operate, but not to the degree to which they are most impactful. 

The second scenario Allen shares highlights the importance of nonprofits being able to pay their employees. Consider a nonprofit that provides mental health services for free to those who can’t afford them. The individual providing mental health services is expected to be professional, experienced, and educated. Along with that, a nonprofit would need the employee to have a different degree of training in complex issues because those who need the service are dealing with complex circumstances. Along with needing a highly-skilled employee, the nonprofit needs to be able to pay that employee as close to market value as they can get. 

While volunteers are helpful and often needed, many nonprofit organizations can’t operate properly without paid employees. “On average, I would say it is more beneficial to have highly qualified and fully dedicated individuals than to rely primarily on volunteers,” Allen says. 

Though the Cicero Group data is exclusive to Salt Lake, Allen believes the problem is not. Organizations across the country are struggling with an increase in needs. If the funding crisis doesn’t improve, the consequences will be hard to miss.

“Nonprofits address challenges and concerns that could worsen if nonprofits don’t step in and help those individuals in our communities. They also go a long way to make our communities a better place through arts and education, resources, and other kinds of opportunities,” Allen says. “[Nonprofits] enhance the quality of life that all of us share.”

Individual and business donors can help the situation. “Different donors can and should be attentive to the ethics and the value of the impact the non-profit provides,” Allen says. “That is something we emphasize ourselves: trying to maximize the impact they have. Most of the nonprofits I am aware of care about that as well, but the fact of the matter is, none of that can happen if they don’t have the funding they need to provide those kinds of programs and services.”

There are ways to ensure your donation is the most effective it can be, Allen says. Learning about an organization’s mission and how they achieve it should be a first step when considering donating funds. “Just because you are growing funds or donors doesn’t always mean you are a high-impact, highly effective organization making a profound difference in the community,” he warns. 

When trying to find organizations that are well-positioned and effective in their reach, it may not be the ones calling out the loudest that have the largest impact, Allen says. Sometimes it comes down to how well they are able to execute their mission and what systems they already have in place. When finding an organization to support a cause you are passionate about, Allen suggests donating through avenues with payment infrastructure to ensure your funds are going to the cause. Donating directly to a researched organization or through a business fundraiser is often safe because businesses and nonprofit organizations are required to report where their funds are going. 

While $20 may not feel like a lot to give, one $20 donation could feed a child for a year, according to Allen’s example. And while nonprofits are struggling in 2023, giving will make even more of a difference.