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New report assesses the financial health of Philadelphia nonprofits

Friday, October 27, 2017

Via Generocity | By Albert Hong / STAFF


Here’s the thing: When looked at broadly or in aggregate, the nonprofit sector in Philadelphia actually isn’t doing too bad financially, according to a recently published report examining the financial health of local nonprofits.

The report, funded by The Philadelphia Foundation and produced by management consulting firm Oliver Wyman, nonprofit merchant bank SeaChange Capital Partners and nonprofit database GuideStar, states almost $16 billion in local revenue with an 11 percent margin of net income. Nonprofits also have an average of 10 weeks of expenses via cash in the bank.

But John MacIntosh, a partner and board member at SeaChange and one of the report’s authors, warned nonprofit leaders, board members and funders present at an early morning presentation of the report this past Monday not to look at the sector as a whole. In reality, he said, “when someone tells you about ‘the sector,’ just leave the room.”

Because when you get to the nitty gritty details of the report that look at the individual organizational level — and the fact that there is such a wide range of nonprofits doing all kinds of good work — that’s where things start looking more grim.

A few of the more pertinent findings:

  • More than 40 percent of the nonprofits are running at a loss or producing no surplus funds at all.
  • Fewer than 40 percent of organizations have more than six months of cash or operating reserves, while a quarter of nonprofits have a month or less in cash reserves.
  • Around seven percent of the region’s nonprofits are insolvent, which means their liabilities exceed their assets, and for health and human services orgs, that rate is 13 percent.
  • Speaking of those health and human services orgs: Philanthropy for that industry is pretty low, with the median such nonprofit earning only 4.7 percent of its revenue from philanthropy. Compare that to the average environmental and arts, culture and humanities nonprofit earning 50 percent of revenue from donations.
  • Almost 70 percent of nonprofits have operating budgets of less than $1 million while only eight percent have budgets of $10 million or more. But when it comes to providing services, the smallest 50 percent of the orgs contributed less than five percent altogether, while the largest 10 percent provided almost 85 percent of all services.

Click here to sign up to download the full report, titled “The Financial Health of Philadelphia Area Nonprofits.”