The State of the Nonprofit Sector in New York City & New York State
The New York State and New York City economies have a long, rich history with the nonprofit sector. Of the ten largest private sector employers in the state, five are nonprofits, and in New York City (NYC) the number rises to seven (a mix of large universities and hospitals). It would be difficult to understate the importance of the sector, not only as a large employer, but also as the primary delivery mechanism of social services. During and following the recession, our sector took a profound hit—facing critical funding shortfalls from government, private philanthropy, and corporate partners. Much like the private sector, we must sometimes shed jobs to stay afloat while facing steep spikes in the need for services.
This year, as part of our annual 2015 State of the Nonprofit Sector Survey, we simultaneously saw encouraging signs of financial stabilization as well as persistent, and increasingly entrenched, concerns about long-term stability. NFF heard from 240 organizations in New York State (NYS), 142 of which are based in NYC. The following statewide and city-specific analysis assesses the state of demand for nonprofit services, community needs, and the organizational challenges nonprofits are facing in the era of this new normal—doing more with less.
The Demand for Services & Critical Community Needs
Since the Survey’s inception, the story of rising demand for services and a limited ability to meet said demand has dominated the organizational capacity narrative. This year was no different, as 77% of NYC-based and 71% of NYS-based organizations reported an increase in demand for services in 2014.
However, roughly half were generally in the position to absorb the increased demand. Nonprofits were also asked to identify their top community needs. The top three community needs for both regions included:
New York State (excluding NYC)
- Affordable housing (36%)
- Youth development programs (33%)
- Mental health services (27%)
New York City
- Affordable housing (34%)
- Youth Development programs (34%)
- Job availability (28%)
Matching the national results, affordable housing was the top community need of both city and statewide organizations. Over 65% of NYC- and NYS-based organizations reported that clients’ needs go unmet if they are unable to provide services.
Organizational Challenges
Many nonprofits are concerned about their long-term viability. They must manage the tension of providing critical services and programs, and getting ahead of the annual budget cycle to plan for the future. Both regions expressed apprehension about their future:
New York State (excluding NYC)
- Achieving long-term financial sustainability (34%)
- Cuts in government funding (28%)
- Ability to offer competitive staff pay & staff retention (26%)
New York City
- Achieving long-term financial sustainability (33%)
- Raising funding that covers full costs (23%)
- Ability to offer competitive staff pay & staff retention (22%)
While there is some overlap, organizations outside of NYC are struggling with cuts in government funding and NYC nonprofits need to raise funding that covers full costs. NYS organizations (54%) were more likely to receive state government funding than their NYC-based peers (44%). Both regions were receiving federal and local funding at comparable rates. NYS nonprofits reported declining government revenue sources across all three funding types and at higher rates than their NYC peers.
Conversely, NYC nonprofits reported increases across all three funding types at significantly higher rates than their statewide counterparts.
Where do we go from here?
Despite encouraging signs of recovery, nonprofits in New York are struggling. New York City organizations must secure funding that covers the full cost of running programs, while their statewide counterparts are affected by with decreased government funding. Both regions are similarly concerned with the impact of a volatile funding environment on their staff. An inability to adequately compensate and/or retain existing staff compounds existing financial and operational stressors. To surmount these challenges and create sustainable organizations in New York, nonprofits must work for systemic change. Strategic advice on how to get past these barriers can be found in our survey brochure. Only by working together and advocating for healthy systems can we help the nonprofit sector continue to provide critical services to the people of New York.