Research Results:
Indiana Nonprofit Survey

INDIANA NONPROFITS:
MANAGING FINANCIAL AND HUMAN RESOURCES

Survey Report #4

Indiana University
School of Public and Environmental Affairs
Center on Philanthropy

Click here to read the press release for this study. Click here to access the full report Note: this is a large file (1,105 KB). You may wish to access separate sections of the report independently through links in the major sections below. Note, you will need a free copy of the Acrobat program to read any of these documents.

For information about the survey on which this report is based, please see Indiana Nonprofit Survey. For separate tables with data for selected Indiana regions, please see the Appendices at the bottom of this page (NOTE: The first four pages of Appendix B had incorrect row labels; these were corrected on September 13, 2004).

Top | Introduction | Exec Summary | Key Findings | Regional Tables Acknowledgements

INTRODUCTION

Click here to access the full introductory section of the report.

The volunteers and staff who run Indiana nonprofits face numerous challenges, most notably obtaining funding. In this report we explore how this and other management challenges impact nonprofits across the state. We also assess the extent to which they have key organizational features in place to help them address the challenges.

This report is the fourth in a series based on a major survey of 2,206 Indiana charities, congregations, advocacy, and mutual benefit nonprofits completed in 2002 as part of the Indiana Nonprofits: Scope and Community Dimensions project. No other study has examined such a variety of nonprofits or done so in such detail. The survey had a response rate of 29 percent. Details of how the sample was developed and the data collected are described in technical reports available upon request.

Chapter I reviews the financial conditions of Indiana nonprofits to provide a context for understanding the challenges they face and the capacities they have to address them. Chapter II examines management challenges and capacities related to financial operations. Chapter III explores the challenges Indiana nonprofits face in managing staff, volunteers, and board members and whether key structures are in place to address these challenges. Chapter IV considers challenges and capacities related to other important activities, such as planning and program development. Two appendices contain supplemental information on nonprofit fields of activity (Appendix A) and regional variations in management challenges and organizational capacities (Appendix B).

Top | Introduction | Exec Summary | Key Findings | Regional Tables Acknowledgements

EXECUTIVE SUMMMARY

1. Financial Conditions: We asked Indiana nonprofits to provide information about their revenues, expenses, assets and liabilities, as well as how these have changed over the past three years. Click here to access Chapter 1 of the report which details these findings.

• Most Indiana nonprofits have low revenues (half have less than $40,000 in annual revenues), but education and health nonprofits are quite large: respectively 15 and 14 percent have revenues of $10 million or more, compared to 3 percent overall. More health nonprofits (37 percent) have assets in excess of $1 million than those in other nonprofit fields (20 percent overall).
• Other than in the health field, a greater proportion of nonprofits report at least a moderate increase in expenses (65 percent) than report a moderate increase in their revenues (57 percent), indicating that a large number of Indiana nonprofits face a challenge in developing excess financial resources to meet unforeseen organizational and community needs.
• Larger nonprofits are more likely than smaller ones to report changes in the level of revenues they receive from government sources. Smaller nonprofits are more likely than larger ones to report changes in the level of revenues they receive from donations, dues/fees/sales, special events, and other sources of income.
• Nonprofits that depend upon a single type of revenue are the most likely to report a change in that revenue stream. Nonprofits that rely on a mix of funding are the second most likely group to report changes in each source of revenues, potentially allowing them to off-set decreases in one type of revenue with increases in a different type of revenue.
  

Top | Introduction | Exec Summary | Key Findings | Regional Tables Acknowledgements

2. Financial Challenges and Tools: We asked Indiana nonprofits to report on the level of challenges they face in managing their finances and the management tools they have to address these challenges. Click here to access Chapter 2 of the report which details these findings.

• Many Indiana nonprofits face major challenges in obtaining funding. Those in the health (78 percent) and the environment and animals (72 percent) fields are the most likely to say that ob-taining funding is a major challenge.
• Larger nonprofits are more likely than smaller ones to report facing financial management challenges. However, they are also more likely to have organizational tools to address these challenges.
• Nonprofits that rely on government sources for more than half of their revenues are more likely to report financial management challenges than nonprofits with other resource dependencies (83 percent say obtaining funding is a major chal-lenge vs. 43 percent overall; 20 percent say managing finances is a major challenge vs. 10 percent overall). At the same time, those that rely on dues/fees/sales for more than half of their resources appear to face the lowest level of financial management challenges, but they are also the least likely to report having financial management tools.
• Older nonprofits are more likely to have reserves dedicated to maintenance or capital needs than younger ones.
  

Top | Introduction | Exec Summary | Key Findings | Regional Tables Acknowledgements

3. Staff, Volunteer, and Board Resources, Challenges, and Tools: We asked Indiana nonprofits about how many volunteers and paid staff they have, as well as the challenges they face in managing them and the tools they have to address these challenges. Click here to access Chapter 3 of the report which details these findings.

• Volunteers are vital to Indiana nonprofits. Almost three-fourths report using volunteers over the past year. Of these, 74 percent report that volunteers are essential or very important to their organization. Volunteers tend to be more important to older nonprofits than to younger ones. However, few nonprofits have volunteer recruitment (22 percent) or volunteer training (27 percent) programs.
• Health (32 percent) and education (24 percent) nonprofits tend to have a larger number of paid staff members (greater than 50 FTEs) while mutual benefit (64 percent), public benefit (56 percent), and arts, culture, and humanities (35 per-cent) nonprofits tend to have a small number of paid staff members (0.5 to 2 FTEs). However, we find no statistically significant difference in the challenges related to managing human resources or recruiting/retaining qualified staff or in the tools associated with managing paid employees (written personnel policies or written job descriptions) by nonprofit field.
• Nonprofits that rely on government sources for more than half of their revenues have more employees (25 percent have over 50 FTEs), are more likely to have basic organizational structures in place to manage employees, and are also more likely to face challenges in managing employees than nonprofits with other funding profiles.
• Larger nonprofits, most likely because they tend to employ more of employees, are more likely than smaller ones to face challenges in managing employees, but also have the tools to manage their staff.

Top | Introduction | Exec Summary | Key Findings | Regional Tables Acknowledgements

4. Other Management Challenges and Capacities: We asked Indiana nonprofits about other challenges they face and the organizational tools they have to ad-dress other challenges. Click here to access Chapter 4 of the report which details these findings.

• Health nonprofits (70 percent vs. 30 percent on average) are more likely than any other group to report having a written conflict of interest policy, most likely reflecting special pressures associated with funding, accreditation, or profes-sional licensing requirements.
• Arts, culture, and humanities nonprofits (36 percent) are more likely than human services nonprofits (17 percent) to say they face a major challenge in evaluating their outcomes or impacts.

Top | Introduction | Exec Summary | Key Findings | Regional Tables Acknowledgements

KEY FINDINGS

Eight key findings stand out from our analysis.

1. Most Indiana nonprofits have basic organizational structures in place to manage financial resources. Almost two-thirds have computerized financial records (60 percent) to assist in managing their finances or have had a financial audit within the past two years (61 percent). About three-quarters of Indiana nonprofit organiza-tions have produced an annual report within the past year (73 percent) in an effort to present their organi-zation and its activities to key stakeholders and the general public.
2. Most also have basic management structures in place to manage their human resources. About three-fourths of the organizations with paid employees have written job descriptions (80 percent) or written personnel policies (71 percent). However, only one-fourth have a formal volunteer recruitment program (23 percent) or a formal volunteer training program (27 percent). Slightly more (30 percent) have a written conflict of interest policy that establishes the ground rules of good trustee behavior. Enhancing these capacities could strengthen the vital role that volunteers play in the management and governance of Indiana nonprofit organizations.
3. Volunteers are import to nonprofit organizations: Three-quarters of Indiana nonprofits report that volunteers are very important to their organizations. However, few nonprofits have formalized their volunteer recruitment/retention and training programs.
4. Challenges and tools related to managing paid staff are ubiquitous across nonprofit fields: We find no statistically significant difference among nonprofit fields in whether they face any challenges related to managing human resources, recruiting and retaining qualified staff, or the presence of written personnel policies or written job descriptions.
5. However, major challenges are field and size dependent: When restricting our analysis on only major challenges, nonprofits in the arts, culture, and humanities and mutual benefit fields are less likely than those in human services to report facing major challenges in managing their organizations. Larger nonprofits are more likely than median sized nonprofits to report facing major management challenges. Larger nonprofits are more likely than smaller ones to report having tools to assist in managing their organizations.
6. Government funding is related to more formalized structures: Nonprofits that rely on government sources for more than half of their revenues employ more employees, are more likely to have organizational tools to manage these employees, but also face the greatest levels of challenges associated with managing employees.
7. Reserves for Maintenance and Capital Needs: We find that larger nonprofits (those with $500,000 or more in annual revenues) are more likely than smaller ones to have financial reserves dedicated to meet maintenance and equipment needs, thus providing these nonprofits with a buffer to meet potentially unexpected operational needs. Religion non-profits are the most likely to have reserves dedicated to capital needs. Nonprofits founded prior to1930 are the most likely to have financial reserves dedicated to maintenance or capital needs.
8. Size and age are related to the presence of organizational tools: Older nonprofits are more likely than younger ones to have financial management tools as wells as reserves dedicated to maintenance and capital reserves.
   

Top | Introduction | Exec Summary | Key Findings | Regional Tables Acknowledgements

APPENDICES

Our report includes several appendices with supplementary information. Click here to access the full set of appendix tables (NOTE: The first four pages of Appendix B had incorrect row labels; these were corrected on September 13, 2004). These appendices include:

• Appendix A: Major nonprofit fields as defined by the National Taxonomy of Exempt Entities (NTEE).
• Appendix B: Tables reporting on regional patterns in survey responses for selected Indiana communities: seven metropolitan regions (Indianapolis, Gary/Northwest, Fort Wayne, Evansville, South Bend, Bloomington, and Muncie) and five nonmetropolitan counties (Bartholomew, Cass, Dubois, Miami, and Scott). (NOTE: The first four pages of Appendix B had incorrect row labels; these were corrected on September 13, 2004)
• List of project publications.

ACKNOWLEDGEMENTS

We express our deep-felt gratitude to the many Indiana nonprofits that completed our survey. Without their cooperation, we would have nothing to report. This report was prepared as part of an ongoing project on the Indiana Nonprofit Sector: Scope and Community Dimensions made possible by a grant from the Aspen Institute's Nonprofit Sector Research Fund and by support for the Efroymson Chair in Philanthropy by the Indianapolis Foundation at the Central Indiana Community Foundation and the Indiana University Center on Philanthropy's Indiana Research Fund, supported in part by Lilly Endowment Inc. Additional funding and in-kind support has been provided by Indiana University Foundation; the Chancellor's Office at Indiana University Bloomington; The Center for Urban Policy and the Environment at I.U.P.U.I.; WBH Evansville, Inc.; the School of Public and Environmental Affairs at Indiana University on the Bloomington, Indianapolis, South Bend, Northwest, and Fort Wayne campuses; Ball State University; and the University of Southern Indiana.

Top | Introduction | Exec Summary | Key Findings | Regional Tables Acknowledgement

Home | Back to Top | Citing and Terms of Use | Restricted Access