Closing the Resource Gap – Organizational Challenges and Responses in the San Joaquin Valley & the Bay Area
With support from The James Irvine Foundation, Nonprofit Finance Fund (NFF) used its 2015 State of the Nonprofit Sector Survey to conduct a regional analysis on California nonprofits. Part of the research agenda included a comparative analysis of organizations in the San Joaquin Valley and the Bay Area. The Foundation asked NFF to look at the challenges facing organizations in these regions, their resource needs, and their overall financial health. Peruse some of our findings below, or read the full report, Closing the Resource Gap, here!
The Bay Area has long been the home of a vibrant arts & culture scene, and more recently, an ever-growing tech scene. In line with what we see in cities across the U.S., the Bay Area is flourishing—seeing a reinvestment in infrastructure, an influx of young and educated workers, a growing economy, and a booming, increasingly expensive, housing market. However, as the overall economy has recovered and strengthened many major metropolitan areas, smaller neighboring communities have not all felt the same positive effects.
Adjoining the Bay Area, the San Joaquin Valley covers a much larger geographic portion of the state and is a mix of a few mid-size cities and large swaths of rural and agricultural land. San Joaquin has struggled with high poverty rates and low educational attainment, and is primarily fueled by a low-wage economy (predominantly seasonal agriculture and service jobs).
Nonprofits can articulate their challenges...
As with respondents nationally, nonprofits in San Joaquin and the Bay Area are overwhelmingly concerned with long-term sustainability issues. The sustainability concerns take different forms but center around the financial (full cost funding), operational (marketing), and human capital* (staff pay & retention). When asked to identify their top three organizational challenges, nonprofits reported the following:
Both regions are grappling with insufficient resources to cover the true, full cost of doing business. Meanwhile, San Joaquin nonprofits identified connecting to their communities as an issue, perhaps due to the migrant labor workforce that cycles in and out for short-term intervals.
And are attempting to redress these issues...
In addition to running programs and managing daily operations, organizations must make strategic investments in their programs, operations, and staff if they wish to maintain stable organizations with strong mission work. As we see in San Joaquin and the Bay Area, many organizations prioritize program expansion when they have the opportunity to invest. San Joaquin nonprofits were expanding programs at higher rates than Bay Area nonprofits, but were less likely to hire staff (either for new positions or replacement hires). This raises important questions about “sweat equity”: is program expansion without commensurate staff expansion a sustainable formula? At what point does an organization risk staff burnout?
But need a roadmap to move beyond the predictable, cyclical ups and downs.
Organizational behavior can indicate regional trends. When looking at the actions organizations are taking in San Joaquin and the Bay Area, themes emerge. Given that San Joaquin nonprofits tend to be smaller than their Bay Area peers, their higher-than-average rates of collaboration imply they are aware of their restricted resources and are trying to keep down costs. Meanwhile, Bay Area nonprofits are seemingly better positioned to address their sustainability concerns by engaging in the requisite long-term financial planning.
The post-recession ‘new normal’ requires nonprofits to develop an adaptability muscle- the organizational capacity to weather the unexpected. Building that muscle can take the form of growing reserves, closing a fiscal year with a surplus, or having access to ample months of cash on hand. Read our 2015 Survey Brochure for our strategic advice on how nonprofits and our funders can best achieve this adaptability goal.