Top Nonprofit Trends of 2019: Nonprofit Sector Year in Review

Nonprofit financials continue to be in good shape, but not all types of nonprofits are growing equally, and employment isn't growing along with assets and income. By comparing nonprofit financials from 2018-2019 versus 2017-2018 for the same 5,000 most popular organizations, we found that revenues are still growing — and growing more than previously for most organizations — but investable assets are growing more slowly than previously. Interestingly, employment isn't growing much at all. Rather, nonprofits are spending much more money on outside vendors and service providers.

Trend 1: Nonprofits are still growing their revenues, and a little bit faster than before

Nonprofits are growing, and even faster than before. For 2018-2019, the 5,000 most popular nonprofits increased revenues 5.68% on median (i.e., 50% of these nonprofits grew more than 5.68% and 50% of these nonprofits grew less than 5.68%), compared to 4.77% for 2017-2018. Interestingly, the fastest-growing organizations are growing even faster, whereas the slower growing (or shrinking!) organizations have much slower growth rates. For example, the National Alliance on Mental Illness increased revenue by 11.5% for the 2017 fiscal year and 14.6% for the 2018 fiscal year.

Trend 2: Advocacy organizations are lagging behind the rest

Nonprofits engaging in advocacy activities — animal, environmental, and civil rights organizations, among others — are the only type of nonprofit that had a lower growth in revenue this past year compared to the year before. Advocacy nonprofits had a median revenue growth of 6.03% for 2018-2019, compared to 7.73% for 2017-2018. For example, Public Affairs Council grew revenues at 8.4% in 2018, but at a faster 10.1% in 2017. Still great growth for sure, but not growing as fast as before, whereas nonprofit trends 2019 show most organizations are growing faster than before.

Trend 3: Investable assets are increasing at a slower rate for nonprofits, although assets are still growing

While investable assets are still increasing at nonprofits, they aren't increasing like they used to. The most recent data for nonprofits show investable assets growing at 6.08% year over year, whereas the year before that they grew at a median of 9.13% year over year. This mostly holds true at the 25th and 75th percentile, too, meaning even nonprofits with the fastest-growing investable assets mostly saw a decreased growth rate. The only exceptions are arts and culture nonprofits, which saw the fastest-growing (i.e., 75th percentile) nonprofits grow their assets even faster, and religious nonprofits and churches, which saw the growth in investable assets increase overall.

Trend 4: Almost one third of nonprofits are drawing down their investable assets

30.45% of nonprofits had shrinking investable assets (negative growth rate) this past year, compared to the year before when 24.76% had shrinking investable assets. This is happening despite the 2019 nonprofit trend of increasing revenues at nonprofits. For example, Community Legal Aid Society saw a drop in cash and cash equivalents, causing overall investable asset growth to decrease from -7.5% to -16.0%. This trend is most pronounced in governmental / credit union (38.41% with decreasing investable assets), healthcare (36.92%), humanservices (35.68%), civic / social (34.38%), and advocacy (33.54%) nonprofits.

Trend 5: Employment is flattening out for many nonprofits

Most nonprofits are barely increasing their number of employees, with median employment growth at 0.81% for 2018-2019, compared to 1.01% for 2017-2018. This holds across all types of nonprofits, without much variable from type to type. Business-focused nonprofits like trade associations are most predictable, with 0.0% median employment growth for both 2017-2018 and 2018-2019.

Trend 6: Nonprofit employment doesn't grow proportionally with revenue or assets

This past year nonprofits increased revenues by a median of 5.68%, investable assets by 6.08%, and their staff sizes by 0.81%. The same trend holds for the previous year, when nonprofits increased revenues by a median of 4.77%, investable assets by 9.13%, and staff sizes by 1.01%. Nonprofits are cautious, and don't hire employees (part-time or full-time) just because revenues or assets are up.

Trend 7: Religious nonprofits march to the beat of their own drum

What holds true for other types of nonprofits often doesn't hold true for religious nonprofits, such as churches, seminaries, and other religious institutions. For example, growth in investable assets is decreasing for most nonprofits (from 9.13% to 6.08%), but is actually increasing for religious nonprofits (from 8.93% to 10.44%). The same thing for employment growth — growth rates are up for religious nonprofits (from 0.00% to 2.56%), but flat or decreasing for nonprofits overall (from 1.01% to 0.81%).

Trend 8: Nonprofits are spending more money on consultants, accountants, lawyers, etc.

Increasing more than revenue growth, investable asset growth, and (of course) employment growth is growth in nonprofits' use of external service providers. Nonprofits grew service provider use — consultants, lawyers, accountants, lobbyists, professional fundraisers, financial advisers, etc. — at a median of 4.02% for 2017-2018 and 6.46% for 2018-2019. This holds across all types of nonprofits, with the strange exception of governmental organizations and credit unions. Also interesting, civic organizations and social nonprofits went from almost not growing service provider expenses at all in 2017-2018 to growing service provider expenses at 8.86% in 2018-2019.

Trend 9: Nonprofits are outsourcing specialized help instead of hiring employees

Nonprofits often face the choice of hiring an employee or contractor to fulfill the same objective. Overwhelmingly, nonprofits are choosing the latter. For 2018-2019, nonprofits grew employees at a median of 0.81% compared to increasing service providers expenditures at a median of 6.46%. For 2017-2018, the figures are 1.01% and 4.02% comparatively. This holds true even when accounting for salary and benefit expenditures, whose growth rate slightly decreased from 4.85% to 4.77%. For example, Rocky Mountain Public Media last year increased revenues 26.95%, decreased employees by 4.13%, and increased service provider expenses by 6.68% (largely driven by an increase in professional fundraiser use).

Bonus Trend 10: Geography matters, with different metro areas having different growth rates in their nonprofit sectors

For the fun of it, we also analyzed revenue growth in the top 10 metro areas for nonprofit trends 2019, using the 500 most popular organizations from each city. Not all cities' leading nonprofits are equally healthy. While all cities are still growing their revenues, Chicago, San Francisco, and Pittsburgh saw a solid increase in revenue growth rates, whereas the Twin Cities' popular nonprofits saw a decrease in growth. See the list of the top 10 metros below for more details:

1. New York City metro — 2017-2018: 4.83%; 2018-2019: 5.25%
2. Los Angeles metro — 2017-2018: 6.92%; 2018-2019: 6.64%
3. Washington DC metro — 2017-2018: 4.26%; 2018-2019: 4.08%
4. Chicago metro — 2017-2018: 4.07%; 2018-2019: 5.81%
5. Boston metro — 2017-2018: 4.50%; 2018-2019: 4.73%
6. Philadelphia metro — 2017-2018: 4.69%; 2018-2019: 4.68%
7. San Francisco metro — 2017-2018: 5.81%; 2018-2019: 7.32%
8. Pittsburgh metro — 2017-2018: 4.83%; 2018-2019: 8.10%
9. Dallas metro — 2017-2018: 5.71%; 2018-2019: 5.44%
10. Minneapolis metro — 2017-2018: 4.69%; 2018-2019: 3.12%