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Trends and Outlook 2023
Generously supported by
SobelCo team joined CLA
(CliftonLarsonAllen LLP) February 2023
1
New Jersey Nonprofits
Trends and Outlook 2023
Executive Summary
The New Jersey Center for Nonprofits conducted its annual survey of New Jersey nonprofits online
from February 1-24, 2023, to assess how nonprofits fared in 2022 and to gauge their outlook for the
coming year. This report is based on the 228 online responses from New Jersey 501(c)(3)
organizations submitted during the survey period.
Nonprofits overall have clearly experienced some key improvements since the worst of the
pandemic in 2020. However, a number of significant challenges and opportunities remain.
• Demands for services and rising expenses are still outpacing funding – a longstanding
problem with deep ramifications for delivery of programs and services in our communities.
• Nonprofits are struggling with significant workforce shortages that threaten their ability to
meet community needs.
• Advancing diversity, equity, inclusion and belonging as a permanent and intentional
priority of all aspects of nonprofit work remains critically important.
Increased demand for services More nonprofits expect demand
outpaced funding increases in for services and expenses to rise
2022 in 2023 than funding
84% 82%
78%
51% 52%
Demand increased Funding increased Demand will Expenses will Funding will
increase increase increase
More than half of respondents with employees reported
staff shortages, with an average vacancy rate of 19%.
These shortages pose significant challenges to program delivery.
2
Actions Taken
• Nonprofits continued to seek additional resources to support their work, whether through new
fundraising appeals, pursuing funding from alternative sources, adding special events, or
recruiting volunteers.
• Fifty-six percent are operating on a hybrid basis (part in-person, part virtual) – significantly
less than a year ago (70%) – and 40% are now completely in person.
• Creative collaborations to magnify impact and efficiencies were commonly reported.
• Many organizations reported altering their programming or delivery modes in response to
changing trends. Examples included utilizing paid transportation to make up for drops in
volunteers; exploring in-home childcare options; increased focus on food security, mental
health, and diversity and equity; and adjusting geographic service areas.
Challenges Faced by Individual Organizations
Asked to identify the issues presenting the greatest challenges to the viability of their own
organizations, nonprofits most frequently mentioned:
• Financial uncertainty (44%)
• Need for a stronger board (44%)
• Need for better branding or communications (37%)
• Need for strategic planning (33%)
• Cannot afford enough good staff (33%)
• Increased demand for program services (31%)
Nonprofit Sector Issues
Asked about the issues most important to maintaining and improving the viability of the
nonprofit sector in the coming decade, nonprofits most frequently selected:
• Nonprofit infrastructure/capacity building (51%)
• Foundation/corporate funding (49%)
• Attracting/retaining capable, committed board members (45%)
• Attracting/retaining qualified workers (41%)
• Giving and volunteering incentives (34%)
• Diversity/inclusion/equity within nonprofits (31%)
• Federal funding/federal budget (31%)
Overall Outlook
More than 60% said that their organizations’ overall circumstances were better than one year ago
while only 10% said that they were worse. These numbers are comparable to our 2022 survey, and
understandably much more positive than during the height of the pandemic. Looking ahead to
2023, 62% predicted their situation would be better one year from now. Only 2% felt their
circumstances would be worse and 11% predicted little change, and the remainder were uncertain
about their prospects.3 The Need to Invest in Nonprofits and Social Infrastructure This year’s survey findings underscore the importance of nonprofits to thriving communities for all New Jerseyans. As we continue to navigate pandemic recovery and murky economic waters, and combat longstanding racial injustices, people are relying on nonprofits in increasing numbers for care, relief, education, well-being, inspiration, societal solutions and catalysts for change. The importance of nonprofits as employers and economic drivers also cannot be overstated. In this climate, public policies and strengthened government/nonprofit/philanthropic partnerships to shore up nonprofits missions for the greater good are a clear imperative. Policies and practices that provide resources, incentivize charitable giving, recognize the expertise of nonprofits and communities, and involve them as full partners in decisionmaking will fuel equity and improve community impact.
4 New Jersey Nonprofits Trends and Outlook 2023 Nonprofit landscape shows some improvement, but urgent need for vital services persists New Jersey’s nonprofits are a vital part of the state’s social, economic, and community fabric. Nonprofit organizations are important contributors to the economic well-being of the state. New Jersey’s 40,000+ 501(c)(3) organizations employ 330,000 people—nearly 10% of the state’s private workforce—spending about $50 billion annually, much of this in the Garden State, and enlisting the aid of 1.8 million volunteers. The programs, services, and economic benefits provided by nonprofits are critical factors in making New Jersey a state where all of our residents can thrive. Our survey findings show key improvements for many nonprofits since the worst of the pandemic in 2020. However, significant challenges and opportunities remain that threaten the ability of nonprofits to meet the growing demands being placed on them. Action is needed to ensure a strong and vibrant nonprofit community in service to the greater good. Demand for services continues to outpace resources In a continuation of a longstanding problem, our survey showed a clear gap between the demands for nonprofits’ programs and the resources needed to meet them, with clear implication for everyone who relies on nonprofits. Nearly four-fifths (78%) of surveyed nonprofits reported that demand for services rose in 2022, but only 51% said that their funding increased in the same period. The situation was most acute in human services and health organizations, but increased demand was widely reported by nonprofits in all fields. This situation is expected to continue in 2023. More than four-fifths (84%) of organizations expect demand for their services will rise in the coming year and a similar portion are projecting increased expenses, but only half (52%) expect that their funding will increase.
5
Labor Force Shortages
Workforce shortages continue to pose challenges for New Jersey’s nonprofit community, with
significant implications for program and service delivery. More than half (53%) of all survey
respondents with employees reported that they are experiencing staffing shortages, with an
average vacancy rate of 19%. The biggest obstacles to filling vacancies included difficulty
offering competitive compensation due to budget constraints or lack of funding; trouble
recruiting credentialed employees for positions that require them; and competition for
employment from other sectors.
Trends in Funding
Total Funding 2022 vs. 2021
Half (51%) of respondents reported that
Funding compared to prior year
overall funding had increased in 2022 60%
compared with the year before – a 51%
40%
marked improvement over the worst of
29%
the pandemic, but far short of the 78% of
20% 20%
organizations that experienced demand
for services (see chart on page 1). Twenty 0%
percent reported that funding had 2018 2019 2020 2021 2022
decreased in the past year, while 29% Increase of 5% or more
noted no significant change.
Decrease of 5% or more
Organizations with larger budgets were
No significant change (+/- 5% or less change)
generally more likely to report positive
funding outcomes than smaller or mid-
sized nonprofits.
Breaking down these trends by type of funding source, nonprofits most requently reported
funding increases from individual donations and special events. In both of these categories,
increases outpaced flat or reduced funding. For many other major sources, increases and flat
funding were reported with similar frequency, or level funding outweighed increases. (See chart
on next page.)6
Funding Changes 2022 vs 2021
Private foundations 30% 31% 19%
Corporate donations 24% 34% 25%
Donations from individuals 36% 29% 26%
Fees for service 25% 25% 5%
Membership dues 10% 19% 3%
Investment income 8% 18% 23%
Special events 35% 20% 18%
Planned giving 6% 27% 7%
Endowment 4% 14% 7%
United Way 5% 10% 2%
Federal government 19% 19% 6%
State government 28% 23% 8%
County government 19% 24% 6%
Local government 8% 24% 4%
Bus. ventures/commercial activity 7% 12% 2%
Other 7% 19% 5%
% responses reporting funding change per category (N=195)
Increase No significant change Decrease7
Funding Outlook for 2023 Funding outlook for 2023
Nonprofits’ funding predictions for 2023 were fairly
60%
consistent with last year and understandably
52%
more optimistic than two years ago. Half (52%)
40%
predicted that their overall funding would rise in
2023, while 29% projected steady funding and 9% 29%
predicted decreases. 20%
9%
Still, in a continuation of a concerning trend, these 0%
projections still significantly trail respondents’ 2019 2020 2021 2022 2023
predictions of increased demand for services Increase Decrease Remain the same
(84%) and increased expenses (82%).
Projected Funding from Specific Sources in 2023 vs. 2022
Nonprofits were more hopeful about donations from individuals and special events than they
were about funding from other funding sources, with 42% of respondents predicting that
funding from individuals and special events would rise in 2023. Respondents were more evenly
split in predicting increased vs. level funding from foundations and corporations. Organizations
with federal, county or local government funding were least optimistic about those sources in
2023, with flat funding outweighing projected increases. Many also expressed uncertainty about
their predictions. (See chart on next page.)8
Predicted Funding 2023 vs 2022
Private foundations 34% 29% 9%
Corporate donations 33% 32% 8%
Donations from individuals 42% 33% 8%
Fees for service 24% 22% 2%
Membership dues 12% 15% 2%
Investment Income 15% 18% 8%
Special Events 42% 28% 5%
Planned Giving 13% 20% 4%
Endowment 10% 13% 2%
United Way 3% 9% 3%
Federal government 16% 23% 6%
State government 26% 24% 5%
County government 17% 24% 5%
Local government 10% 21% 2%
Business venture/commercial activity 10% 9% 2%
Other 7% 6% 1%
% responses reporting funding change per category (N=185)
Increase No significant change Decrease9
Expenses
In 2022
Nearly three-quarters (71%) of respondents reported that expenses had increased in 2022 – a
sharp uptick from the 52% in our previous survey, and likely a reflection of increased staffing
costs and inflation generally. Only 2% reported that expenses had decreased in 2022, and 14%
reported no change.
Revenue vs. Expenses in 2022 Year-End Income vs.
Two-fifths (42%) of respondents reported that
Expenses, 2019-2022
revenues had exceeded expenses in their most
60%
recent fiscal year – a decline from the 51% who
reported surpluses in our last survey. Likely
40% 42%
causes include rising staffing costs, inflation, 35%
coupled with the discontinuation of key COVID-19
20% 23%
government relief programs and the expiration
of the federal charitable giving incentive for non-
itemizers at the end of 2021. 0%
2019 2020 2021 2022
Expense Predictions for 2023 Surplus Break-even Deficit
Four-fifths (82%) of respondents expected
expenses to rise in 2023. A much smaller percentage (52%) expected their total funding to rise
in 2023.
Cash Reserves/Lines of Credit
Cash reserves or lines of credit can help organizations stabilize cash flow fluctuations and meet
expenses when funding payments are late or when other unexpected shortages occur. Seventy
percent of survey respondents reported that they had a cash reserve (defined in the survey as
an unrestricted amount of funds set aside to provide a cushion against future unexpected cash
flow shortages, expenses or losses), and 26% reported a line of credit.
Among organizations with cash reserves, 20% reported having 1-3 months of operating funds;
31% had 3-6 months' worth; and 48% reported over six months of operating funds. Two-fifths
(39%) indicated that their cash reserve remained relatively constant over the past year, 31% said
that their reserve was larger, and 30% said it was smaller. This breakdown is somewhat worse
than our previous survey, when only 14% reported their reserves had decreased, and is one likely
indicator of the expense-to-funding gap identified by our respondents.10 On a more encouraging note, among organizations with lines of credit, 23% reported having to borrow against the line of credit in 2021 (down from 43% who reported borrowing in last year’s survey). Twenty-eight percent of respondents with a line of credit indicated that it was "essential" or "very important" to their organizations' continued ability to provide core programs and services. Organization Reactions to Emerging Trends As in prior years, seeking additional resources to support their work was again the most common action taken by organizations, whether through new fundraising appeals, pursuing funding from alternative sources, adding special events or recruiting volunteers. About one-third (34%) said that they had already added staff or definitely intended to do so in 2023. Although operating virtually is not feasible for a number of nonprofit programs and organizations, 56% of respondents reported that they are operating in some form of hybrid fashion, with some functions being conducted remotely and others in person. Two-fifths (40%) are now operating completely in person – almost twice as many as a year ago – and only 4% are fully remote. (See chart on next page for additional actions taken.)
11
Organization Reactions to Current Trends
Initiated new fundraising appeals
Sought funds from alternative sources
Introduced/increased fees for service
Canceled a special event
Added a special event
Converted major event to virtual
Resumed a major event in person that was suspended…
Postponed fundraising appeals
Cut staff
Restored laid off positions
Added staff
Reduced staff hours (incl. short work weeks, furloughs)
Increased staff hours Might do in 2023
Froze/Reduced salaries
Definitely will do in 2023
Restored previous salary cuts
Have already done
Raised salaries (above any pre-cut levels)
Reduced employee benefits
Increased employee benefits
Curtailed programs
Added programs
Entered a partnership/collaboration
Ended a partnership/collaboration
Explored a merger
Completed a merger
Permanently closed the organization
Started new bus. venture or for-profit subsidiary
Ended a bus. venture or dissolved a for-profit subsidiary
Increased advocacy for org funding, field, or constituency
Recruited additional volunteers
Reduced number of volunteers
0% 10% 20% 30% 40% 50%
% Responses Indicating Type of Action (N=187)12 Partnerships/Collaborations Similar to prior surveys, respondents reported a wide variety of collaborations, such as partnerships to prevent eviction and foreclosure; shared purchasing; swim lessons for clients of other organizations; nonprofit/higher education partnerships to promote college readiness; public/private partnerships to promote food security; joint fundraising and events; advocacy coalitions; and many others. Two-fifths (41%) definitely planned to launch new collaborations in 2023 or had already done so, and an additional 39% were considering new partnerships. Sixteen percent said that they might, or definitely would, explore a merger in 2023. Changes in Program/Service Focus Many organizations reported altering their programming or delivery modes in response to changing trends. Examples included utilizing paid transportation to make up for drops in volunteers; exploring in-home childcare options; increased focus on food security; expanding delivery options; and adjusting geographic service areas. Others expanded their focus to increase mental health and trauma-informed services, and advance diversity and equity; and launched school-based programs to combat hate. Lack of resources, staffing or volunteers has taken its toll on some organizations, forcing the reduction or discontinuation of some programs. Issues Facing New Jersey’s Nonprofits Respondents were asked to identify which issues, aside from funding, presented the greatest challenges to the viability and effectiveness of their individual organizations, and to select the five issues that they felt were most important to improving the viability of the nonprofit sector in the coming decade. Individual Organizations Asked to identify the issues presenting the greatest challenges to the viability of their own organizations, nonprofits most frequently mentioned financial uncertainty and the need for a stronger board (44% each), followed by branding and communications (37%), strategic planning (33%), affording staff (33%), increased benefits/insurance costs (31%), and low organization visibility (30% each). (See chart on next page.) Nonprofit Sector Issues Nonprofit infrastructure/capacity building was cited by 51% as the most pressing nonprofit sector issue, followed closely by foundation and corporate funding (49%), attracting board members (45%) and qualified workers (41%); giving and volunteering incentives (34%), and diversity, inclusion and equity within nonprofits and federal funding (31% each). (See chart on page 14.)
13
Challenges to Organization Viability/Effectiveness
Financial uncertainty 44%
Need for stronger board 44%
Need for better branding/communications 37%
Need for strategic planning 33%
Cannot afford enough good staff 33%
Increased demand for program services 31%
Increased benefits/insurance costs 30%
Low organization visibility 30%
Cannot find enough good staff 28%
Need to increase advocacy/public policy
22%
involvement
Improve partnerships with other nonprofits 20%
Need for leadership development 20%
Need to improve diversity/equity/cultural
18%
competence
Need to evaluate organizational effectiveness 17%
Improve p'ships with for-profits or gov't 13%
High employee turnover 13%
Need for training other than technology 12%
Need for new technology/equipment 12%
Need for technology training 10%
COVID-19 recovery 6%
Other 5%
Decreased demand for program services 3%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
% responses per item (N=172)14
Most Important Issues in Maintaining and Improving the
NonProfit Sector in the Next Decade
Nonprofit infrastructure/capacity building
51%
Foundation/corporate funding
49%
Attracting/retaining capable, committed board members
45%
Attracting/retaining qualified workers
41%
Giving and volunteering incentives
34%
Diversity/inclusion/equity within nonprofits
31%
Federal funding/federal budget
31%
State fiscal policy/state budget
29%
Improving public understanding about nonprofits
25%
Reducing competition between nonprofits
23%
Civil society/civic engagement
19%
Paperwork reduction (reducing red tape)
19%
Nonprofit advocacy/lobbying rights
16%
Ensuring non-profit accountability/effectiveness
16%
Charitable registration/solicitation laws and regulations
13%
Access to technology
12%
Insurance and liability
12%
Restoring public trust in nonprofits
8%
COVID-19 recovery
8%
Taxation/tax reform
7%
Contracting
6%
Reducing competition from for-profits
5%
Other
4%
Privatization
0%
0% 10% 20% 30% 40% 50% 60%
% Responses per Item (N=172)15
Diversity & Equity
Any examination of the nonprofit landscape demands continued attention and action to
address deep-seated inequities and years of under-investment in critical systems and
historically excluded communities, particilarly communities of color.
Just over half (55%) of responding organizations reported that they primarily serve communities
of color (at least 50% of constituency served identify as people of color). While the current
landscape is challenging for nonprofits generally, there are notable distinctions in the survey
responses from organizations that reported that they primarily serve communities of color
compared with those that don’t.
• Organizations that primarily serve people of color comprised a greater proportion of
“front-line” nonprofits such as those in human services, and were more likely to be
operating entirely in-person vs. hybrid or remote.
• They were more likely to report that demand for services had risen in the past year, and
more likely to predict that demand and expenses would rise in 2023.
• Although slightly more nonprofits serving people of color reported overall funding
increases in 2022, they were also more likely to report that expenses had exceeded
revenues in their most recent fiscal year, and less likely to report a year-end surplus.
• They were less likely to report a cash reserve, and months of cash on hand were smaller
overall among organizations that primarily serve communities of color than among those
that don’t.
A number of underlying factors contribute to
these trends, including the longstanding Fewer Respondents Selected
racial wealth gap; heightened human needs Diversity/Equity/Inclusion
and lingering, disparate impact of the as a "top-5" issue in 2023
pandemic and economic consequences on 60%
people of color; and the greater likelihood
50%
that human service and other front-line 40%
37%
organizations derive more of their revenues 40%
31% 31%
from government, where funding often fails to
30% 24%
cover the full costs of providing services,
among others. 20% 25% 26%
23%
10% 18%
14%
In a troubling development, fewer
0%
respondents selected diversity and equity as
2019 2020 2021 2022 2023
among their “top 5” concerns in 2023 than in
our past two surveys (see chart). There are For the NP Sector Overall For my Organization
several possible interpretations for this
finding, but the need to intentionally and urgently prioritize and integrate this work into all
aspects of mission, governance, operations and progamming has not changed.16
Overall Circumstances and Outlook
Comparison with One Year Ago
More than 60% said that their
organizations’ overall How nonprofits view their
circumstances were better than
circumstances vs. one year ago
one year ago while only 10% said
that they were worse. These 70%
numbers are comparable to our 63% 63%
60% 61%
last survey, and understandably
much more positive than during
50% 49%
the height of the pandemic.
40% 39%
38%
Outlook for 2023
30% 32%
Nonprofits’ outlook for the coming 28% 29%
27%
year was also hopeful, with 62% 24%
20%
predicting their situation would be
14% 13%
better one year from now. Only 2% 10% 11% 10%
felt their circumstances would be
worse and 11% predicted little 0%
change, and the remainder were 2018 2019 2020 2021 2022
uncertain about their prospects.
Actual - Better Actual - No Change Actual - Worse
The Need to Invest in Nonprofits and Social Infrastructure
This year’s survey findings underscore the importance of nonprofits to thriving communities for
all New Jerseyans. As we continue to navigate pandemic recovery and murky economic waters,
and combat longstanding racial injustices, people are relying on nonprofits in increasing
numbers for care, relief, education, well-being, inspiration, societal solutions and catalysts for
change. The importance of nonprofits as employers and economic drivers also cannot be
overstated.
In this climate, public policies and strengthened government/nonprofit/philanthropic
partnerships to shore up nonprofits missions for the greater good are a clear imperative.
Policies and practices that provide resources, incentivize charitable giving, recognize the
expertise of nonprofits and communities, and involve them as full partners in decisionmaking
will fuel equity and improve community impact.
The New Jersey Center for Nonprofits looks forward to continuing to share information,
advocate, and work with partners to foster connections and promote constructive public
policies and solutions.17
Background and Methodology
The New Jersey Nonprofit Trends and Outlook Survey is conducted annually by the New Jersey Center
for Nonprofits in order to gauge trends, experiences and views of our state’s nonprofit community.
The Center conducted this year’s survey online in February 2023 to assess how nonprofits fared in 2022
and to determine their outlook for the coming year. An email announcement with a link to the survey
was sent to approximately 4,800 subscribers of the Center’s email list plus viral redistribution, and
additional outreach was made via social media (Facebook, Twitter, LinkedIn and Instagram), nonprofit
listservs, and to funders or other membership organizations serving nonprofits in the state. All
communications encouraged recipients to share the survey notice/instrument broadly within their own
networks. The 228 responses from New Jersey 501(c)(3) organizations that were submitted as of
February 24, 2023, were included in this analysis.
Who participated in the survey?
This report is drawn from responses of the 228 New Jersey 501(c)(3) organizations that completed the
survey from February 1- 24, 2023. The graphs below show the distribution of the nonprofits’ mission
focus, geographical location, and budget size.
Annual Operating Budget Primary Service Focus Public,
(N=228)
(N=228) Societal
$50,000 to $200,000 to Benefit, 13%
199,999, 10% Education,
499,999, 11%
12%
$500,000 to Arts,
Under
$999,999, Culture, Health, 9%
$50,000, 18%
11% Humanities,
12%
Over $20
Environment Human
million, 6% $1 million to
Animals, 5% Services,
$2.499
million, 21% Religion- 47%
$10 million
related, 2%
to $20
million, 8% $5 million to $2.5 million Other, 1%
9.9 million, to $4.99
4% million, 11%
Geographic Location
Respondents’ Primary Office Location by County
of Organizations
Atlantic 1.3% Gloucester 1.3% Ocean 7.0%
North 46%
Bergen 4.8% Hudson 4.8% Passaic 2.2%
Central 34%
Burlington 3.9% Hunterdon 1.3% Salem 0.9%
South 20%
Camden 4.4% Mercer 8.8% Somerset 6.1%
Cape May 0.9% Middlesex 5.7% Sussex 0.9%
Cumberland 0.4% Monmouth 12.3% Union 7.0%
Essex 14.9% Morris 10.1% Warren 0.9%New Jersey’s nonprofits are a vital force for advancing a just, thriving, and equitable society.
New Jersey Center for Nonprofits, the only statewide network for all charities in the state, is your
backbone. For more than 40 years, our network has come together to share knowledge, amplify a
collective voice, get expert advice, and advocate for a strong nonprofit community that protects the
greater good in the Garden State.
Championing and Advocating for the nonprofit community as an indispensable part of the social,
economic and equitable well-being of New Jersey and its residents.
• Comprehensive information about New Jersey nonprofits
• Advocating for nonprofits in Trenton and Washington
• Communicating the value of nonprofits through public education
• Documenting nonprofit trends through surveys and research reports
• Uniting our state’s nonprofits around common goals
Advancing Knowledge and promoting learning to foster effective, equitable and ethical
organizations for the public good.
• High quality management and compliance information
• Expert phone and email consultation – priority access for members
• Timely online and email news and articles
• Affordable professional development training and recorded webinars on timely topics
• Customized training
Convening and Fostering Connections between and among nonprofit organizations and their
champions, as well as partners in government and for-profit business, to enhance collective strength.
• Our “don’t miss” annual New Jersey Nonprofit Conference
• Issue briefings/town halls/local or regional strategic convenings around common issues
• Issue-specific task forces
• Amplifying the learnings, programs and educational offerings of others
• Member Mondays – Informal discussion, networking and strategy sessions for members
Helping Nonprofits Stretch Scarce Resources
• Cost-saving programs: D&O insurance, unemployment trust, payroll, and more
• High-traffic nonprofit jobs board – free postings for members
• Discounts on Center events, workshops and publications for members
• Leveraging nonprofits’ dollars by serving as the first-stop resource for nonprofit expertise,
information, services and referrals
To find out more or to get involved, visit njnonprofits.org, or email us at center@njnonprofits.org.
New Jersey Center for Nonprofits
3635 Quakerbridge Road, Suite 35 | Mercerville, NJ 08619
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