Inflation Is Easing, but Nonprofits Still Feel a Crunch

Despite early indications inflation is easing, not-for-profits are struggling to bounce back from higher costs and employee turnover. Compounded by fewer reported donations, 70% of organization leaders have placed funding as their top concern, according UHY’s 2023 not-for-profit trends report.

According to Partner Brian Kearns, a leader of UHY’s not-for-profit practice, nonprofits will need work to strengthen relationships with donors to make sure they’ll still be there if the economy sours. “Do not take your donors and your funding sources for granted,” he said.

This data comes at a time when pandemic-era federal relief is expiring. Partner Alex Zhang, another leader of UHY’s not-for-profit practice, said not-for-profits should be using this time to “diversify their funding sources.” Not-for-profits that became reliant upon grant programs during the pandemic will be especially vulnerable to future changes. “They cannot fully rely on a grant or a federal or state program,” he said, because “when the grant money dries up, they might have to let people go. They might have to cut services.”

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