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LA Nonprofits Play Vital Role, and Funders Need to Adapt

This week, the Nonprofit Finance Fund, in collaboration with the Committee for Greater LA and the Pat Brown Institute for Public Affairs at Cal State LA, released the 2022 State of the Nonprofit Sector Survey: Los Angeles Survey Results.

The findings and recommendations outlined in this new report resonate with one of the original principles laid out in our initial September 2020 report, No Going Back: Together for an Equitable and Inclusive Los Angeles: strengthen the non-profit sector as a key part of civil society. In the early part of the pandemic, we saw local philanthropy step in to provide emergency support for nonprofits, but they needed more than a one-time infusion.

As part of their ninth national State of the Nonprofit Sector Survey, NFF reached out to the Los Angeles community to gain a deeper understanding of local nonprofits’ experiences and challenges. They collected data, stories, and advice from over 200 nonprofit leaders in Los Angeles County about the impact of the past two years, from the COVID-19 pandemic to events that activated calls for racial justice. You can read the full report here.

Here’s what leaders shared about how their organizations fared and the investment they need to continue their vital role in local communities:

LA nonprofits play an integral role in the communities they serve, and they stepped up in new ways during the pandemic.

  • 86% of LA respondents saw service demand rise
  • 67% expanded programs or services
  • 89% developed new or different ways of working that led to positive outcomes; 49% think these could be permanent changes

Racial disparities persist in funding for LA BIPOC-led versus White-led nonprofits.

  • 65% of White-led respondents ended FY 2021 with a surplus, while only 55% of BIPOC-led respondents did so. Among BIPOC-led respondents, 45% of Black-led respondents reported having a surplus.
  • 59% of White-led respondents reported having reserves, while only 46% of BIPOC-led respondents did so. Among BIPOC-led respondents, 27% of Black-led respondents reported having reserves.

Here are survey recommendations of actions that philanthropic and government funders can take to better support the LA social sector:

  • Give unrestricted funding that covers the full costs of operations for community-centered nonprofits providing important services that respond to communities’ needs
  • Break down barriers that prevent BIPOC-led nonprofits from accessing equitable funding
    • Seek out organizations that have the most direct experience with communities you are serving
    • Simplify funding applications
    • Reduce reporting requirements

Here are actions that regional and local government funders can take:

  • Adopt accessible and equitable contracting practices so more nonprofits can take on and manage contracts:
    • Pay on time, and a portion upfront
    • Revise indirect/administrative rates to align with actual costs for nonprofits
    • Centralize applications and contracting processes
    • Give nonprofits a fair share of public funding

This new NFF report underscores one of our takeaways: there is an ongoing need for equitable, accessible, and consistent sources of funding for LA nonprofits. Read the report to take a closer look at the survey data, and see more details about actions that funders can take to better support LA County’s nonprofit sector.