Dec 9, 2016 By Lowman Henry 4 min read

‘Tis the season when many Americans donate to their favorite charity. While leaders in the nonprofit sector remain firm in their conviction that they are best suited to deal with Pennsylvania’s social and economic challenges they are concerned that public trust in charities is not as high as it should be.

Those are among the findings of the 2016 Pennsylvania Charitable Organizations Survey conducted during the month of November by the Lincoln Institute of Public Opinion Research, Inc. in cooperation with the Pennsylvania Association of Nonprofit Organizations (PANO).

Among the participating nonprofits just ten percent said that public trust in charities is “high,” while 77 percent rated public trust as “medium.” Nine percent felt public trust in charities currently is “low.” Twenty-two percent of the nonprofit executives said the level of public trust in charities has gotten better over the past few years, but 31 percent said it has gotten worse.

Having said that, the nonprofit leaders feel their sector is best positioned to address Pennsylvania’s social and economic challenges. Forty-five percent identified their own sector as best suited to address those needs; 22 percent think state government is most effective; while 6 percent cite the for-profit sector. Just three percent said the federal or municipal governments can best handle those challenges.

“Public trust,” said Anne Gingerich, executive director of PANO, “is critical to the sustainability of any business – nonprofit, for-profit or government. When one nonprofit fails to live up to the highest standards it can damage the reputation of all.” She continued: “Unfortunately these stories overshadow the hundreds of nonprofits who give selflessly to ensure that lives are changed, not just during the holidays, but all year long.”

Like their counterparts in the for-profit world, leaders in Pennsylvania’s nonprofit sector say business conditions in the state have gotten worse over the past year rather than better. Concerns over potential new federal regulations and the growing likelihood of another extended state budget stalemate feed concerns that the commonwealth’s business climate will continue to deteriorate during the year ahead.

The survey found 15 percent of the nonprofit executives view business conditions in Penn’s Woods over the past year as having improved, 22 percenet say business conditions have gotten worse. The majority – 63 percent – say the state’s economy has remained about the same. But “about the same” is not good as business confidence, whether for-profit or nonprofit, has been low for the past two years.

By comparison, a September 2016 survey of owners/chief executive officers of for-profit businesses found only five percent saying the state’s economy has improved in recent months while 50 percent said it had gotten worse.

Looking ahead, a third of the nonprofit leaders expect the state’s business climate to get worse while 22 percent predict it will get better. Forty-four percent say the Pennsylvania business climate will remain about the same during 2017.

Despite their overall pessimism about the direction of the commonwealth’s economy, employment was up at a quarter of the nonprofits, and down at 16 percent. That could be explained in part by some nonprofits stepping up hiring after having cut back staff during the budget stalemate of two years ago. However, looking ahead 22 percent say they expect to add employees while 14 percent predict staffing cuts.

Hanging over all sectors of the economy including nonprofits are U.S. Department of Labor (DOL) regulations that would increase the minimum salary requirements for “white collar” workers from $23,600 to $47,476 per year. The effect would be a significant increase in overtime costs. This is perhaps more significant for the nonprofit sector in that employees at many smaller nonprofits view their jobs as being community service as much as employment and often put in hours well in excess of those for which there are paid.

The 2016 Pennsylvania Charitable Organizations Survey found that the new regulations would increase payroll costs at 43 percent of the responding organizations as well as increase the amount of time spent tracking employee hours. The regulations are now on hold due to a federal court ruling, but should they go into effect 30 percent of the nonprofits surveyed said they would have to cut staff to pay for the increased costs of complying with the regulations; 11 percent would have to cut services and another 16 percent would respond by seeking additional volunteer help.

The 2016 Pennsylvania Charitable Organizations Survey was electronically conducted during the month of November 2016. A total of 177 nonprofit organizations responded to the survey invitation. Complete numeric results are available at www.lincolninstitute.org.