Half of U.S. Charities Are on Financial Brink

Title: “The Financial Health of the United States Nonprofit Sector”

Organizations: GuideStar, Oliver Wyman, and SeaChange Capital Partners

Summary: About half of America’s nonprofit organizations have less than one month of operating reserves, and nearly 8 percent have liabilities that exceed their assets, making them technically insolvent, according to a new analysis of data from Form 990 informational tax filings.

Thirteen percent of health and human-service charities are technically insolvent, according to the new report. The results echo those of a study released January 23, which found that one in eight human-service charities is insolvent.

Researchers for the newest study said eliminating red ink from that roughly 8 percent of charities could require as much as $50 billion.

Among the findings in the new report:

•  30 percent of nonprofits have lost money over the most recent three years covered by the tax filings.
•  30 percent have short-term assets that total less than their short-term liabilities.
•  Organizations with operating budgets of at least $50 million have roughly the same rate of insolvency as nonprofits over all, 7 percent.
• While health and human-service charities had the highest rate of insolvency, environmental and animal-related groups reported the lowest rate, at 3 percent.