San Diego County’s nonprofit sector is a big industry, recording $14.9 billion in annual revenue and employing 8 percent of all workers, but many operate “hand to mouth.”
Those were among the conclusions of a study released last week by the Caster Family Center for Nonprofit and Philanthropic Research at the University of San Diego.
“The number of nonprofit organizations is rebounding to pre-recession levels, while revenues and nonprofit employment continue on an upward trend,” the authors noted.
San Diego has more than 10,000 non profits, double the number 20 years ago. Human services is the largest category, accounting for 34 percent of nonprofits, followed by 19 percent in health, 11 percent in education, 10 percent in religion and 7 percent in the arts.
Many of these nonprofits are hiring, with a 30 percent increase in job postings between 2014 and 2015.
The study noted a significant problem, however. On average, San Diego nonprofits have only 1.7 months of liquid operating funds on hand, limiting their ability to withstand an unexpected revenue shortfall.
“Nonprofits appear to operate ‘hand to mouth’ with enough liquidity to operate for less than two months if any disruption in revenue occurs,” the authors wrote.
Charity Navigator says a moderately healthy nonprofit should have three to six months of funds on hand.
There’s also a big divide between the many smaller, often all-volunteer nonprofits, and a limited number of large ones. Sixty-two percent of the non-profits in the county have annual revenue of $50,000 or less, while just 8 percent have revenue over $1 million.
The authors recommend greater collaboration among nonprofits to address the challenge of limited resources.
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