Slow, reduced payments hurting nonprofits

• Published date: 01 March 2017
• DOI: http://doi.org/10.1002/nba.30291
• Date: 01 March 2017

6

MARCH 2017NONPROFIT BUSINESS ADVISOR

© 2017 Wiley Periodicals, Inc., A Wiley Company • All rights reserved

DOI: 10.1002/nba

(See PAYPA L on page 8)

Industry News

PayPal sees 11 percent growth

in donations for 2016

PayPal reported 11 percent growth in charitable

giving in 2016, processing $7.3 billion in contri-

butions over the year, including more than $971

million raised during the holiday season alone, the

company said. According to its nal tally, a total of

8 million PayPal users in 181 countries contributed

$971,213,604 to 282,053 charities, making 2016 the

biggest year yet for end-of-year donations with the

company’s payment service.

As it did the year before, PayPal monitored

giving behavior throughout the holiday season,

using an interactive tracker that collected data on

numerous fronts. An analysis of that data showed

the following:

• Donation amounts ranged widely. The aver-

age contribution for the holiday season was $93,

slightly above the yearlong average of $89. Dona-

tions ranged from the season’s largest gift—over

$230,000—down to the $1 or $5 variety, of which

there were hundreds of thousands, the company

said, resulting in millions of dollars raised. Ac-

cording to PayPal, using a digital giving platform

to make smaller gifts actually benets nonprots

due to lower processing costs. It cited a recent study

showing that digital donations in smaller amounts

like $50 are 14 percent cheaper than paper checks

for a charity to process.

Slow or reduced payments are impacting the

ability for the bulk of nonprots to fulll their mis-

sions, with many having to dip into cash reserves to

make ends meet, new research shows. What’s more,

the majority of charities say the situation is likely

to get worse as 2017 moves along, according to the

latest Nonprot Leadership Pulse, an annual survey

of nonprot executives conducted by accounting

and tax advisory rm Marks Paneth.

Per the report, almost three-quarters of non-

prots report having experienced reductions and/or

signicant delays in funding during the past year.

Such erratic and unpredictable cash ow makes it

challenging for nonprot organizations to cover

overhead costs, leaders say, with a third of surveyed

organizations indicating they had to draw on cash

reserves to pay their bills and more than 28 percent

ending 2016 with a decit.

Couple those unreliable payments with an uptick

in demand for services, and many nonprot orga-

nizations are struggling to serve their constituents.

According to the report, over half of surveyed or-

ganizations have experienced increased demand for

programs and services, and almost half (48 percent)

have expanded their services to meet that demand.

Further, many organizations are also offering more

services per client and expanding services to new

target populations. But funding has not kept up

with this increase, the report said. Nearly a third

of the organizations surveyed say they are unable

to meet the increased demand for services. Unfor-

tunately, 55 percent of nonprot leaders expect

conditions to become more difcult in 2017.

According to Michael McNee, partner-in-

charge of the Nonprot and Government Group

at Marks Paneth, the report shows that nonprots

understand the need to reach beyond traditional

sources of funding if they want nancial stability

in this environment.

“When asked to name their most signicant

challenge, more than one-in-four (28 percent) say

that achieving long-term nancial stability is the

greatest challenge facing their organizations,” Mc-

Nee said in a statement announcing the research.

“To address this challenge, 81 percent of nonprot

leaders surveyed agree that the identication of

programs that generate positive cash ows will be

very important.”

For more information on the research, visit http://

www.markspaneth.com. ■

Slow, reduced payments hurting nonprots