Insights Into The Kansas City Nonprofit Sector
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1 Insights Into The Kansas City Nonprofit Sector Research Conducted by the Midwest Center for Nonprofit Leadership Henry W. Bloch School of Management University of Missouri Kansas City Research Funded by the Ewing Marion Kauffman Foundation
2 2016 Research on the Size, Scope and Capacity of the Kansas City Nonprofit Sector Multi-faceted trend research initiative including Archival and governmental records analysis IRS and NCCS (Urban Institute) records Bureau of Labor Statistics Data Foundation Center records Online survey of nonprofit leaders Listening Sessions with KC Metro nonprofit organization Executives Board Leaders Consultants Funders
3 Kansas City Metro 11 counties Population of 1,982,242 Median household income: declined 11% from 2002 to 2012 As of 2013, KC economy remains about 2.5% below prerecession levels Poverty rate: 12.5% live in poverty (2013), up from 8.6% in 2000 There is major variation by county increasing in all Region is about 3% below national average
4 The Kansas City Nonprofit Sector 13,970 Nonprofit Organizations (2015 NCCS data) 7,846 Charities (501c3s) Including 512 Foundations Plus about 2,000 congregations Of these, 2,474 have annual budgets > $50,000 $13.51 billion in Total Revenue $23.98 billion in Total Assets About 10.9 % of KC GMP Nearly 8% of all revenue in region Source: Midwest Center for Nonprofit Leadership, drawn largely from National Center for Charitable Statistics
5 Foundations in Kansas City Metro 477 Independent Foundations Assets = $6.11 billion/2014 giving = $264 million 19 Corporate Foundations Assets = $145 million/2013 giving = $24 million 2 Community Foundations Assets = $2.4 billion/2013 giving = $268 million 14 Operating Foundations Assets =$43 million/2013 paid = $1.0 million
6
7 Kansas City Generosity Kansas City MO ranks 16 th in 2012 by Chronicle on Philanthropy 35 th in 2015 by WalletHub 12 th in 2016 by Charity Navigator Average of 3.1% of income donated average per person giving is $3,187 This is a decrease of about 1.6 % since 2006 (Chronicle) Compared to Milwaukee: 31 st in nation at 2.7% (down 4.9% from 2006) Indianapolis: 12 th in nation at 3.2% (up 5.2% since 2006)
8 Volunteering in Kansas City Kansas City ranks 9 th among US cities in percentage of adults who volunteer (3-year average: ) (For millennials, we were 5 th!) 513,587 adults volunteered in Kansas City (31.1% of the adult population down from 32.3% in 2014) 62.1 million hours of service 32.4 hours per capita 66.5% volunteered informally
9 12-Year Trend in Kansas City Volunteering
10 # of Organizations Number of Nonprofits in Kansas City ( ) Figure 1. # of Registered & Filing Nonprofits in Kansas City ( ) # of Registered 501(c)3's # of 501(c)3's Required to File
11 KC Sector: Compared to What? Nonprofit Organizations Revenue ( billions) Assets ( billions) Region Population Chicago 8,971 $85.22 $ ,551,031 Atlanta 4,934 $32.92 $ ,710,795 Minneapolis 4,784 $33.55 $ ,524,583 Denver 3,960 $20.54 $ ,814,330 Milwaukee 2,072 $16.83 $ ,575,747 St. Louis 2,624 $24.70 $ ,811,588 Kansas City 2,474 $13.51 $ ,087,471 Indianapolis 2,239 $18.57 $ ,988,817 Orlando 1,650 $12.87 $ ,387,138 Nonprofits per 1,000 Sector Share of GMP* % % % % % % % % %
12 Kansas City Nonprofits: Distribution by Size # of Orgs % of Total Orgs % of Total Revenue Missing/Unknown % 0.0% Under $250,000 1, % 0.8% $250,000 - $499, % 0.7% $500,000 - $999, % 1.4% $1,000,000 - $2,499, % 2.7% $2,500,000 - $4,999, % 3.0% 5,000,000 - $9,999, % 5.5% 10,000,000 - $24,999, % 8.9% More than $25,000, % 76.9% Total 2, % 100.0%
13 Too Many? KC Compared to Others ( ) 3.5 Figure 3. Number of Nonprofits Per 1,000 Inhabitants ( ) Kansas City Chicago Atlanta Minneapolis Denver Milwaukee St. Louis Indianapolis Orlando
14 $ billions Trends in Revenues and Assets ( ) Figure 4. Total Revenue & Total Assets (in $ Billions) Total Revenue Total Assets
15 Percent Revenues by Mission Category ( ) 55 Figure 5. Percent of Total Revenue by Mission Category ( ) No Code Arts, Culture & Humanities Education Environment & Animal Related Health Human Services International & Foreign Affairs Public Social Benefit Religion Related
16 Foundation Funding of KC Nonprofits ( )
17 Percent KC Foundation Giving ( ) 100 Figure 10: Percent of Total MO & KS Foundation Giving by Kansas City Foundations Independent Corporate Community Operating Total
18 Financial Distress: One Assessment Distress Measure: Percentage of nonprofits whose year-end assets for the year were at or below 80% of their three-year rolling average (of asset value) were designated as distressed Graphs: Compare KC with Milwaukee & Indianapolis
19 % DISTRESS Distress Trend Compared to Similar Cities Percent of Total Nonprofits Distressed (Asset Calculation) by Year and City 14.00% KC Indy MIL 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% YEAR
20 % DISTRESS Distress Trend for Arts & Culture ( ) 18.00% Percent of Arts Nonprofits Distressed (Asset Calculation) by Year and City 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% YEAR KC Indy MIL
21 % DISTRESS Distress Trend for Education ( ) 16.00% Percent of Education (excluding Higher Ed.) Nonprofits Distressed (Asset Calculation) by Year and City 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% YEAR KC Indy MIL
22 % DISTRESS Distress Trend of Health Agencies ( ) 16.00% Percent of Health (non-hospital) Nonprofits Distressed (Asset Calculation) by Year and City 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% YEAR KC Indy MIL
23 % DISTRESS Distress Trend for Human Services ( ) 14.00% % of Human Services Nonprofits Distressed (Asset Calculation) by Year and City 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% YEAR KC Indy MIL
24 What Did We Learn From Our Listening Sessions?
25 Key Observations on the Health of the Sector Positive Perceptions NP economy is rebounding KC is philanthropic and charitable community Extensive number of strong and growing nonprofits Fewer nonprofits in trouble than five years ago Nonprofits work together well There is a significant transfer of wealth underway and many with wealth are motivated to help and invest in nonprofits Less Positive Perceptions Financial climate is growing less hospitable; with growing competition Donors and funders interested in programs; not admin ops or overhead Less giving for unrestricted purposes Political climate is threatening for many small nonprofits Too many nonprofits, duplicating services Volunteering is changing, more episodic Human services needs are growing beyond capacity of sector to respond
26 For the Longer Term (three to five years out) The significant inter-generational transfer of wealth: will change philanthropy and giving Will the economy experience another downturn? There will be a growing gap in the capacity of the sector to meet community needs. Related to this concern are the following: Who will fill gaps in community service that will be left by closing organizations? Nonprofits will not be able to keep up with growing demands for human services and related programs due to growing poverty in the region. Political and policy environment changes (in region and nation) becoming less supportive of the sector and threatening survival of small nonprofits? (Note: these sessions were held prior to the November 2016 elections.) There will be a transition of a significant share of the region s experienced community leaders out of their nonprofit and civic leadership roles, requiring many new leaders of younger generations to step into these roles. This concern was most overtly voiced by board leaders. Kansas City is, increasingly, a branch-office city rather than a headquarters city: this has major implications for corporate philanthropy and for civic leadership roles
27 Key Organizational Concerns Noted by All (1) Financing and funding: Funding organizations provide funds only for projects and for short-terms (e.g., one year at a time) Government funding is declining General lack of availability of unrestricted funding General lack of funding available to pay for general operations and overhead expenses is an issue, including that it is not of interest to most donors The need to become more creative in developing additional or different funding streams Cash flow is a critical and often unseen issue
28 Key Organizational Concerns Noted by All (2) Human resources: Succession planning and preparation for top executive roles is lacking, inadequate Compensation in sector is inadequate and falling further behind Volunteers needs and interests are changing (especially for Millenials, many say) Effective recruitment and use of volunteers is needed, including especially seniors Working well with Millenials poses many leadership, management and motivation challenges to agencies Board and governance issues: Boards are stretched too thin and are stressed to perform as needed Overall, younger community members show less interest in board service Board engagement overall, and individual board member engagement, are low Boards lack necessary diversity, and many find it difficult to find appropriate and qualified members
29 In Addition, Board Leaders Note Financing and funding issues: Revenue adequacy and appropriate diversity of revenue sources is lacking Effective fundraising and grant writing are a major challenge We need to become more creative in developing additional or different funding streams Human resources challenges: Succession planning and preparation or development of successors for all leadership roles Need to invest in next-generation leadership and professional development, yet little funding Need more fully-developed professional development and support system for CEOs Board and governance issues: Relationships between CEOs and their boards often not healthy Productive relationships among those in board and staff roles are lacking General management issues: Long term and strategic plans are not being made or not being used CEOs are too often in the weeds and focus on day-to-day, not strategic needs Agency- and program-quality and performance management systems are inadequate; there is little funding to develop them
30 In Addition, Executives Note Financing and funding issues: Agencies need to engage in advocacy to address issues associated with government funding Achieving financial stability is a greater challenge all the time, including management of day to day cash flow demands Donors are not motivated to engage in smart funding Human resources challenges: It is difficult to provide professional growth and development opportunities for subordinates due to lack of funds Many agencies have no place to place strong emerging leaders to provide motivating and developmental opportunities; it is difficult to retain the best Brain fatigue is spreading: operations pace faster and more intensive, growing problem with staff experiencing burnout (often diminishing performance and increasing cycles of turnover)
31 And Board and governance issues: Too many board members do not understand their roles, too many not on task Boards perform poorly on fundraising Board members do not understand accurately the similarities and differences of nonprofit versus for-profit management (especially finances) Boards lack the appropriate degree of diversity and cultural competence General management issues: Technology inadequate, falling further behind (especially in marketing, communication, and fundraising) There is a greater need for collaboration and cross-organization work There are pressures for agencies to merge but often not well thought out
32 In Addition, Consultants Note Donor attrition is a significant issue for most nonprofits fundraising Staff members are spread very thin; expectations on staff are unrealistic Most nonprofits lack staff depth, in addition to the other challenges noted above Board and governance issues: Board chairs often do not understand their roles well Boards and their leaders lack understanding of nonprofit finance Boards do not think or plan strategically Boards tend to be unwilling to candidly assess their own performance General management issues: Lack of investment in technology puts nonprofit success at risk Marketing and communications are critical needs that are not addressed well Many nonprofits have hidden assets they don t recognize or use Nonprofits and their leaders are overly risk-averse There is a general lack of creativity across much of the sector
33 In Addition, Funders Note Financing and funding issues: Nonprofits are overly dependent on government and foundation funding and these organizations priorities are shifting Funders themselves do not understand appropriate nonprofit business models and good revenue mix Returns from investments are very low, resulting in little revenue from investments Human resources challenges: Too much is expected of CEOs, and they do not receive essential support Staff health and wellness is an increasingly significant issue Board and governance issues: Boards often do not know what they don t know Boards are not used very well by most nonprofits
34 And General management issues: Nonprofits need help with effective strategizing and long-term planning Most nonprofits lack the capacity and motivation to appropriately and effectively evaluate program results and outcomes Technology use is inadequate, there is a lack of appreciation for the need for stronger technological capacity, and there is an unwillingness to invest in technology Marketing and communications are critical needs that are not addressed well, and most nonprofits perceive these as luxuries they cannot afford (yet they are essential) Nonprofits are not being strategic about marketing and communications
35 Contact Information Midwest Center for Nonprofit Leadership Henry W. Bloch School of Management University of Missouri Kansas City Kansas City, Missouri Phone: ( ) On the web:
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