June 2017


The majority (70 percent) of organizations surveyed experienced a revenue increase in their last fiscal year. While 63 percent of public charities experienced revenue increases, 26 percent report their revenue remained the same. Only 11 percent of HHS organizations’ revenue remained static, while the majority (68 percent) report an increase. 


Funding Sources 

Funding operations is crucial to all nonprofit organizations, but funding typically comes from a variety of sources. 

Of the respondents who selected “other” on the survey, additional funding sources include: rental income, interest income, in-kind donations, lending revenue and manufacturing.


Funding Sources by Subsector

Public charities unsurprisingly rely heavily on individual contributions, which account for 32.7 percent of funding, compared to 18.9 percent for all organizations surveyed. Meanwhile, individual contributions account for just 4.6 percent of HHS organizations’ total funding. 

Funding sources for HHS organizations are more concentrated, with funding heavily sourced from fees for service and government grants (49.3 and 30.6 percent, respectively). This variance likely represents HHS organizations’ reliance on insurance payouts, as well as on Medicare and Medicaid. However, with the nationwide transition toward value-based care models, this funding mix could shift significantly over the course of the next several years. 


Funding Sources by Revenue Size

Organizations with less than $25 million in revenue get an average of 8.9 percent of annual funding from investments versus 3 percent for those with revenue more than $25 million. For smaller organizations, investment returns may make up a greater proportion of their revenue because their annual funding is smaller. However, a bigger percentage of annual funding from investments may not be indicative of better yields and/or management of investments. Organizations with less than $25 million in revenue receive more of their funding from corporate contributions (7.3 percent compared to 5.3 percent for organizations with revenue above $25 million).



The clear majority of organizations surveyed (83 percent) have an investment policy. Only 8 percent of organizations with annual revenue more than $25 million do not have an investment policy, compared to 17 percent of organizations with annual revenue less than $25 million.
When it comes to making investments, equity/mutual funds are the most common choice for nonprofits across the board, making up an average of 42.4 percent of total investments. Nonprofits with less than $25 million in revenue allocate, on average, more of their investments to equity/mutual funds—likely because they do not want to expose their organizations to less liquid investments.




Public charities have a higher percentage of investments allocated to alternative investments than the average of all other organizations (12.4 percent compared to 7.7 percent). They hold less of their investments in cash and cash equivalents than the average (13.6 percent compared to an average of 18 percent of all organizations).

HHS organizations allocate a much lower than average percentage to alternative investments (2.4 percent). They allocate slightly more than the average percentage to equities (47 percent) and cash and cash equivalents (21.7 percent). 

Overall, the largest proportion of those surveyed (38 percent) report having no operating budget funded via investment income. Across all organizations, the average percentage of operating budget funded by investment income is 7 percent. Almost one‑quarter (24 percent) of public charities report funding 10 percent or more of their operating budget through investment income, compared to just 8 percent of HHS organizations.


Spending Policy

The majority of organizations (70 percent) have an official spending policy. The highest proportion of those surveyed (32 percent) make a judgment call each year. This option may be popular because it gives organizations the opportunity to remain flexible if investment returns don’t meet expectations. Percentage models are the next highest, cited by 31 percent overall. 

Of the respondents who cite a percentage-based spending policy, the majority (65 percent) spend a percent of moving average. While the average is 5.3 percent, the median is 4.5 percent. This difference suggests that many organizations have already lowered their spending rates, given recent concerns around investment returns.