Nonprofits’ ability to meet central Iowans’ growing needs for services such as housing, food and education are being hindered by their limited financial resources, a new study shows.
These sentiments are summed up in a survey released this fall that took a temperature check on how nonprofits in Polk, Dallas and Warren counties view their funding conundrum. It found nonprofits are facing higher demand, often without the money and resources to support it.
The Central Iowa Nonprofit Sector study, conducted in the spring by the United Way of Central Iowa, the Community Foundation of Greater Des Moines and Bravo Greater Des Moines, anonymously surveyed 110 nonprofit organizations. The agencies ranged from volunteer-run to those with more than 700 employees. They serve from 20 to 700,000 people annually.
United Way president Mary Sellers told the Des Moines Register the agency decided to do the survey when it began hearing concerns from nonprofits across Iowa about financial stability. The results, she said, underscore what her organization has been hearing anecdotally from nonprofit leaders all along: large gaps between funding and resources, challenges in hiring and retaining staff, and worries about long-term sustainability.
It also shows that nonprofits facing the highest demand amid lack of funding are those that provide health and human services, which can include provide homelessness services, food, early childhood education, and health and well-being.
But Sellers said the survey results paint a broader picture than a dismal funding landscape. They underscore the crucial role nonprofits play in the community ― serving as heroes to those in need. But to save and sustain nonprofits, it’s going to take a community-wide effort to address root issues such as poverty.
“These are working people that are not able to afford the basic needs that they need, and if you look at whether it is food insecurity, whether it’s homelessness, whether it’s youth violence, whether it’s child care,” Sellers said, “the systemic level issues are all present in that.”
With the data in hand, Sellers said the organization will continue to work with nonprofits but other stakeholders including business and community leaders, as well as people who seek the help of nonprofits, will need to come to the table to help determine what’s next.
Homeless, health services in demand but struggle to ‘bridge the gap’
Youth and Shelter Services president and CEO Andrew Allen said its downtown center, which offers emergency beds for homeless youth, meals, counseling and education resources, is operating at a loss while trying to meet the needs of their clients.
At one point, the Youth Opportunity Center at 612 Locust St. opened at noon for meals, but Allen said they saw teens and young adults crowding near the entrance much earlier. So they began opening at 11 a.m.
To make the budget work, Allen said the center should be cutting back its hours of operation. But its services are so critical he and other board members are “willing to run in the red for a period of time while we pursue other funding sources.”
Allen’s experience echoed the majority of survey respondents who said they have seen an increased demand for nonprofit services and programs while facing financial hurdles. Seventy-eight percent of those surveyed said they had fewer than six months of cash on hand to cover operating expenses, while about half (46%) said they have a mere three months or less.
“This precarious financial footing means that any unexpected expenses or reductions in funding could have immediate and severe impacts on their operations,” the report stated.
Nonprofits focused on health and human services are most in demand but “struggling to bridge the gap between demand and capacity,” the study found. “The inability to meet demands can lead to reduced service availability, increased strain on existing resources, and potentially worsening conditions for those relying on these services.”
Impact Community Action Partnership CEO Anne Bacon said meeting the needs of thousands of central Iowa families with varying funds is a “juggling act.”
Bacon’s organization helps families with housing, food and utilities through financial assistance programs. Many are looking for help with rent or mortgage payments but limited funding has forced Impact staff to deny more than 200 requests a month, Bacon said.
“We turn people away every single day that ask for rental assistance,” she said. “It’s pretty intense, the amount of people that need it.”
COVID-19 pandemic exacerbates volatility for some nonprofits
Bacon said funding fluctuates based on what’s happening in the world.
Before the COVID-19 pandemic, the organization typically served 80 to 120 families providing about $275,000 per year in rental and mortgage assistance.
Like many organizations, Impact took in “jaw-dropping” funding amounts during COVID-19, including close to $120 million in about three years through the Emergency Rental Assistance Program, an American Rescue Plan Act program, Bacon said.
With the help of that funding, the nonprofit was able to administer about $113 million in rental assistance, saving 15,000 Polk County households from eviction in fiscal years 2021 through 2023. The remainder was used to pay for staffing.
In 2025, if there are no additional funds, the organization expects to serve approximately 100 families and provide around $400,000 in rental assistance.
What’s more, during the pandemic, Impact received about $154,000 from federal Community Development Block Grant funds to cover operating expenses like staff ― what Bacon calls the “lifeblood” of a nonprofit or business.
But because of the influx in COVID-era assistance, the agency in 2021 underspent its grant, knocking down the allocation the following year to $135,000. Bacon said the organization is trying to restore the CDBG grant funding to what it was pre-Covid.
Another way to look at the volatility: Impact typically operates on a roughly $12 million budget. But during Covid, that amount skyrocketed to about $50 million. Bacon projects it’ll be back to $12 million in 2025.
Shelby Ridley, who leads Primary Health Care’s homeless support services, said the organization received a federal grant to fund a rapid re-housing program but scrambled to meet grant requirements and find match dollars. Ridley said she and staff also found the program offering six months of rental assistance ineffective, with more landlords seeking tenants who can commit to at least a year and overall lack of affordable housing available in the metro.
With COVID dollars and other funding streams shifting, Ridley said she and other nonprofits will continue to face a harsh reality: “People are still struggling with stability.”
This month, 148 families are on the waitlist for emergency shelter ― the highest the organization has seen, Ridley said.
“We’ve seen the price of housing increase, and we’ve seen the barriers to entry increase especially if you have a recent eviction,” she told the Register. “And we’ve seen the number of landlords decrease. So all of that makes for this perfect storm.”
Hiring, retaining staff is a challenge for nonprofits
The study also found a significant drop in corporate gifts awarded to nonprofits, with 38% reporting a decrease and just 15% experiencing an increase. The decline suggests businesses “may be narrowing their philanthropic scope” and giving larger gifts to fewer organizations, the report said.
“Changes in corporate giving can have a disproportionate effect on the sustainability of nonprofits and programs, as longer-term planning is more challenging when funding is uncertain,” the report said.
The study also noted that 22% of nonprofits have experienced a decrease in individual donations while 29% saw an increase. Those findings suggest “some nonprofits are struggling to attract individual donors,” while “others are successfully engaging them.”
Ivette Muhammad, director of operations at Creative Visions, said small nonprofits like theirs struggle to find funders who want to invest in long-term programs or services. Creative Visions programs range from a daily food pantry to services for victims of crimes. They also work to resolve community violence.
Muhammad said she comes across donors more eager to back one-time projects or pilot programs, impacting their organization’s ability to continue new services and hire and retain staff once funding ends. Apart from supporting programs, Muhammad and Bacon said their budgets must consider overhead costs, including administrative expenses, mortgage and routine building maintenance.
In 2024, Impact cut its staff nearly in half, from 73 to 26, because of funding.
“It doesn’t matter if we have $5 million to pay rent if we can’t pay the staff and the computer costs and the heat bills,” Bacon said.
Hours, low pay, limited benefits and lack of qualified applicants are other issues nonprofit organizations said are barriers to recruiting and keeping staff. Employees also value flexibility, a perk many health and human services organizations cannot offer, Sellers said.
Survey shows some optimism from nonprofits. Sellers says the burden can’t fall entirely on organization leaders.
The survey shows some optimism from nonprofit leaders. Nearly half ― 47% ― anticipate improving their financial stability over the next three years. The optimism “could be driven by expectations of increased funding, successful fundraising campaigns, diversified revenue streams, or improved economic conditions,” the survey said.
Meanwhile, 42% expect their financial situation to stay the same and another 11% expect it to get worse.
Despite the strain, nonprofits remain committed.
“What we have heard from our funded partners is they’re going to go to the edge of the Earth for the people that need what they need. So I think that the sector will continue doing that to the degree that they’re able,” Sellers said.
Still, Sellers believes it’s not on nonprofit organizations to change their funding model or carry the burden alone.
“The more that we get the community to come together around some of these issues, we’ll be better off, and it doesn’t necessarily mean dollars,” she said. “It means raising your hand to volunteer. It means lending your voice to something you’re passionate about.
“It takes all of us to make the change we want to see in our community.”
F. Amanda Tugade covers social justice issues for the Des Moines Register. Email her at ftugade@dmreg.com or follow her on Twitter @writefelissa.
Virginia Barreda is the Des Moines city government reporter for the Register. She can be reached at vbarreda@dmreg.com. Follow her on X, formerly Twitter, at @vbarreda2.
