Santa Barbara enjoys a healthy nonprofit sector, providing vital services that impact every segment of our community: arts and culture, environment, animals, health care, and a wide range of human services. The demand for these services continues to expand as nonprofits step up to provide services that government and private business no longer supply.
Like many communities, we have come to depend on the nonprofit sector for our comfort, health, safety, enjoyment and well-being. All of us — government, business, public, nonprofit and individuals — play a critical role on the team to keep our community vibrant.
Even though Santa Barbarans pride themselves on a healthy nonprofit sector, understanding how nonprofits operate can be confusing. For some people, the term “nonprofit” conjures an image of a small, all-volunteer organization run by do-gooders who, despite the best intentions and their best efforts, don’t seem to muster the power their missions deserve. Many philanthropists and community leaders lament the sheer number of nonprofits and despair of their long-term sustainability.
The reality, however, is very different than many of these perceptions. Digging a little deeper into the data reveals some fascinating insights into the role nonprofits play in our local economy. Some implications of this rich, diverse sector might surprise you.
Santa Barbara nonprofits produce $1.13 billion in revenue, including $430 million in contributions, and have $2.07 billion in assets. Our nonprofits generate 8.4 percent of Santa Barbara County’s GDP, representing the highest rate in Southern California. These organizations spend $992 million, including $342 million in personnel expenses, making the nonprofit sector one of the largest employers in the county. Santa Barbara has twice the number of nonprofits per capita compared with the average for California, second only to Marin County. Clearly, we have good reason to highly value our vibrant nonprofit sector.
Distribution of nonprofit budget size reveals another interesting piece of the story. Most of these 2,000 organizations (82 percent) have budgets of less than $1 million, 12 percent come in between $1 million and $5 million, leaving only 6 percent at $5 million and above. Not surprisingly, many of the smaller and mid-sized organizations struggle with cost efficiencies relative to their economy of scale.
Composition of mission focus areas gives us another view of the sector. According to the Southern California Nonprofit Sector Report, the relative percentage of arts and culture organizations (14 percent) is higher in Santa Barbara than other California counties, as is the percentage of nonprofits providing Environmental and animal services (6 percent). By contrast, Santa Barbara claims the smallest proportion of Religious organizations in the state at 3 percent. In keeping with the state average, about 33 percent of our nonprofits serve the human services arena while the Education category is at 18 percent and health at 3 percent.
Increased public and governmental scrutiny is demanding more and more of this vital sector. Out of necessity, nonprofits are becoming more professional and paying closer attention to such key operational components as strategic planning, outcomes measurement, cost effective practices and board member training. Nonprofit leaders and funders alike are demanding a higher bar of excellence in terms of sustainability and leadership.
Leading a nonprofit organization is usually more complex than running a business due to multiple constituencies and the double bottom line. Today’s nonprofit executives and board members must balance the bottom lines of mission and margin while meeting the demands of a wide variety of stakeholders, including service recipients, volunteers, government, vendors, regulators, donors, funders, business, staff, board members and committee members. Included within many of these stakeholder groups are sub-groups with specific requirements.
Because of this high level of complexity, boards and executives are looking for improved ways to fulfill their mission. Some organizations are finding that collaboration and strategic alliances provide a platform for services of higher quality and broader scope. Others choose the path of merger to achieve higher cost efficiency. Many nonprofit executives looking for ways to enhance their effectiveness are embracing some of the newly minted certificate programs for nonprofit management such as Fielding Graduate University or Antioch University or local leadership programs such as Courage to Lead for nonprofit leaders.
All in all, the nonprofit sector is more vital to our community than ever before. People are beginning to understand the powerful contribution nonprofits make in terms of services, employment, leadership and economic impact. If the future belongs to those who persevere and adapt to a rapidly changing environment, Santa Barbara’s nonprofit sector is poised for greatness.
— Cynder Sinclair, Ph.D., is a local consultant to nonprofits and founder and CEO of Nonprofit Kinect. She can be contacted at 805.689.2137, or cynder@nonprofitkinect.org. The opinions expressed are her own.