CEP’s Latest Report on Nonprofits Reveals “A Wild World” of Burnout, Raising Questions for Funders

The Center for Effective Philanthropy (CEP) has released its second annual report on the nonprofit sector, “State of Nonprofits 2024: What Funders Need to Know.” A survey of mostly direct service nonprofit leaders, the report finds that the crisis-level burnout and staffing issues that first became apparent during the height of the COVID-19 pandemic are an ongoing problem.

Ninety-five percent of surveyed leaders expressed some concern about staff burnout, with more than a third saying that burnout was “very much” a concern to them in the past year. Fifty-seven percent of the surveyed nonprofit leaders reported staffing issues, “including but not limited to losing staff to organizations with more competitive compensation and benefits, general lack of staff capacity and burnout, and internal/cultural issues” as among their organizations’ biggest challenges.

Roughly three-quarters of respondents said that staff burnout “is at least slightly” impacting their ability to work toward their mission, and a quarter reported that burnout is “moderately or significantly impacting” their work. This is happening despite the fact that the majority of those surveyed reported having a balanced budget or even a surplus in the last fiscal year. These issues taken together may explain why half the nonprofit leaders felt more concerned about their own burnout than they were at the same time last year.

Nonprofits have always struggled to a greater or lesser degree with a lack of funding, but the new staffing normal of the past four years is both unprecedented and enduring. As one survey respondent quoted in the report said, “I have been a nonprofit leader for 20 years and I’ve not experienced a reality like the one I am in currently. It seems everything changed after COVID. There are no trailblazers that have faced this path before us, to guide and advise, [for] wisdom. It is a wild world right now.”

“How are nonprofits potentially burning out to achieve these finances?”

CEP’s latest revelations are hardly a surprise. Funders have been aware of their role in the nonprofit starvation cycle since at least the 1980s, and numerous foundations have worked to address the financial health of nonprofits since that time. Virtually all of those efforts, however, have ignored the most essential ingredient of any organization’s success: the employees who make missions possible.

Funders’ emphasis on healthy nonprofit balance sheets may explain one of the new report’s findings that at first glance might make a reader wonder just why staffing is such an issue: Most respondents said that they either had a balanced budget or a budget surplus in the last fiscal year. They also said they expect to be able to say the same thing this year.

One of the report’s authors, CEP Senior Research Analyst Christina Im, said that a lot of people have come to her team to ask why burnout remains so high despite the financial health of many of the organizations they work for. The question, she said, isn’t “how are these finances producing this burnout?” Instead, the real question is “how are nonprofits potentially burning out in order to achieve these finances?”

After all, as Im said, it’s not uncommon for institutional funders to require a nonprofit to show a balanced balance sheet to be considered for a new or renewed grant. Meanwhile, nearly a quarter of surveyed nonprofit leaders reported that they had lost more staff than typical during the year. “Organizational inability to provide competitive pay or lost funding; organizational inability to provide competitive benefits, such as remote work or flexible hours (29%); and staff stress and burnout (29%)” were the main reasons why.

Leaders quoted in the report demonstrate the difficult juggling act that they’re performing to keep their books balanced at the expense of themselves and their workers. One leader said, “We won’t replace unfunded/reimbursed positions that become vacant; we will continue to keep caseloads too high,” while another explained that their organization has cut staff “which has addressed budget issues but not burnout.”

“Burnout” isn’t just about money. It’s only mostly about money

Funders’ tight-fistedness hasn’t been the only cause of nonprofit worker burnout, particularly within the direct-service organizations that comprise the strong majority of respondents to CEP’s latest survey. Many of these workers were hit doubly hard by COVID, with the disease impacting them directly and also the populations they serve. The level of shock to society as a whole has been broadly disruptive and also caused many to rethink their lives in a way that cannot be countered by simply earning a living wage, having health insurance, and getting two weeks vacation a year.

Meanwhile, many nonprofits are unable to provide staff with even these basics. “We aren’t able to pay our staff a livable wage, [which is] the exact goal we are aiming to reach for the clients we serve,” said one nonprofit leader quoted in the report. “With that, we see higher turnover in our case management team, in addition to each member being responsible for a larger caseload than is sustainable.” Another reported: “[We have] limited access to professional fundraising, marketing, tech, and financial management personnel. Our administrative team is stretched too thinly to be able to function at a high level in any one domain.”

To put it simply: Substandard wages lead to understaffing, which leads to more burnout, which leads to even more people leaving. Those wages also make it difficult to attract new staff: Roughly half of the leaders reported that they had anywhere from “some” to “a lot of” difficulty filling vacancies in the past year.

While reporting and writing this piece, I came across a LinkedIn post from a nonprofit fundraising professional that really spoke to the heart of this issue. The post detailed the tens of hours this person once spent courting a single donor. Their work for this donor included a site visit, a campaign video and materials, and hours on the phone. In the end, the donor made a gift — but the contribution was project-restricted because the donor didn’t want any of their money spent on “overhead,” presumably including the salary of the person whose time the donor had made such liberal use of.

That’s just one story about a single major donor, from someone admittedly closer to the top of the nonprofit salary food chain than the direct-service workers whose struggles are detailed in CEP’s report. But this tale shows the entitled attitudes that too many donors, including institutional funders, seem to demonstrate with regard to the staff of the nonprofits doing the work and serving the people that these very funders care about.

Elisha Smith Arrillaga, Ph.D., another of the report’s authors and CEP’s vice president of research, said that some of the problem may be due to what she called a “dichotomy” where funders want to address social problems like poverty or homelessness, but see those issues as “separate from actual staffing” at the organizations carrying out these tasks.

“We all know you can't achieve those big goals if you aren't able to actually have healthy staff” to carry them out, she said. Having reported about homeless service workers who are themselves housing insecure due to substandard wages, I know exactly what Arrillaga was talking about: In a piece last year, I told the story of Michael Centeno. Centano, who was once homeless but became an intensive case manager at Housing Works in Los Angeles, was sharing a three-bedroom apartment with six other men. He was just one of the many front-line service workers in L.A. being paid less than they need to earn to allow them to rent a one-bedroom apartment – in his case, preventing him from inviting his daughter to visit.

Throughout my reporting on the nonprofit worker crisis, there has been a constant, befuddling conflict between what funders say they want and their actions. One would think that a funder whose mission is to combat any aspect of poverty, including racial injustice, would also want to ensure that the people doing the work aren’t living in, or on the precipice of, poverty themselves. And yet, despite more than 30 years’ of studying and talking around the problem and the worker crisis crippling many nonprofits, too many funders have yet to act on their values in this sphere.

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