(image from pexels.com)
By Richard H. Levey
Nonprofits within the City of Angels faced a devil of a time during their fiscal years 2024. Just less than half (48%) of Los Angeles-based nonprofits generated either a “significant” or “slight” operating surplus during their fiscal year 2024, compared with 45% of nonprofits nationwide, once Los Angeles organizations were excluded.
One third of organizations had two or fewer months of cash on hand, roughly equal to the 32% of other nonprofits across the country. But the similarities end there, with a whopping 58% of Los Angeles organizations surveyed indicating achieving long-term sustainability had been an issue during fiscal year 2024, compared with 24% of nonprofits within the rest of the United States.
The financial challenges disparity Los Angeles nonprofits face goes beyond that concern. Nearly six in 10 (56%) surveyed indicated raising unrestricted revenue was a challenge, compared with 21% of non-Los Angeles nonprofits. Another 55% reported difficulties raising funds that cover full costs, in contrast with the 26% from the rest of the country, according to “Essential, Enduring, and Under Strain: Los Angeles’ Nonprofit Sector in 2025,” a report from the Nonprofit Finance Fund.
These headwinds come at a time when demand for Los Angeles nonprofits’ missions has grown during the past year and is expected to continue growing. Between their fiscal years 2023 and 2024, just under half (49%) of respondents said service demand had increased “significantly” (more than 10%), while another 35% indicated demand had increased “slightly (between one and 10%). Only 1% said it had either slightly or significantly decreased.
Demand will likely be exacerbated during the current fiscal year. Nearly six in 10 (58%) expect the need for their service to increase by at least 10%, with another 32% saying it will increase by between one and 10%. But the number of respondents indicating demand might drop increased to 4.
The missions of nonprofits within Los Angeles skew toward addressing community financial concerns. Nearly two-thirds (64%) include building community wealth and well-being among their missions, followed by addressing economic inequality (61%), advancing racial equity (53%), helping people maintain quality jobs (36%), advancing gender equity (30%) and advancing environmental justice (26%).
The impact of certain policy and regional events set Los Angeles nonprofits apart from their national brethren. Nearly three-quarters (73%) of nonprofit leaders in Los Angeles said their organizations were affected by extreme weather-related events such as wildfires, compared with 44% among all non-Los Angeles nonprofits. Changes to immigration laws and policies also loomed larger in Los Angeles, with 63% of respondents saying these had either “a great deal” or somewhat” of an impact on their operations, compared with 54% among all other nonprofits.
Funding sources for Los Angeles nonprofits varied moderately from those at the aggregated national nonprofits once the data from Los Angeles was backed out. The top five revenue sources for Los Angeles nonprofits included individual donors (80%), foundations (73%), county or local government (58%), corporate donations (55%) and state government (48%). Nationally, the top five funding sources were individual donors (89%), foundations (81%), corporate donations (63%), state government (54%) and county or local governments (51%). In all, 71% of Los Angeles nonprofits reported some sort of government funding, a tick under the 72% reported by all other nonprofits across the country.
There is some good news within the Los Angeles nonprofit funding sphere. More than half of Los Angeles nonprofits (54%) said funding from foundations had become less restrictive since late 2022, while only 15% indicated it had become more restrictive. Furthermore, one-third of nonprofits said foundations were making more multi-year grants, thereby cutting down on the effort and uncertainty that accompanies single-year grants, while only 20% indicated foundations were making fewer multi-year grants.
These positive trends were offset by the 45% of nonprofit leaders who said average grants were smaller, compared with the 18% who indicated their size had increased. And nearly one-third (32%) said they had to wait longer to hear whether they would receive the grant, against 16% who said wait times had decreased. The issue of delayed payments is more prominent in Los Angeles than in other areas: only 40% of Los Angeles nonprofits received funds on time during fiscal year 2024, compared with 46% of those in the rest of the country, and 29% of Los Angeles nonprofits received payments more than 60 days late, against 23% within the rest of the country.
Concerns at Los Angeles nonprofits go beyond financial. Asked about top
The survey also offered some general insights into Los Angeles nonprofits. For instance:
* Four in 10 organizations have a leader with lived experience that reflects the populace served, and 48% have received and acted on community feedback during 2024.
* Los Angeles nonprofits were more likely to have smaller budgets, more likely to have been established within the last 25 years and more likely to be led by a person of color than all national organizations, excluding those from Los Angeles.
* Los Angeles nonprofits employed more than 12,500 people during 2024. Furthermore, 43% spent more than $100,000 on service, food and other supplies from local vendors, including 7% that spent more than $1 million with local suppliers.
* Organizations within the greater Los Angeles area not only serve their communities, they draw their workforce heavily from them. But the simple fact of being located in Los Angeles presented an issue of its own, with 80% of respondents indicating the high cost of living within their footprint was a management challenge, compared with 68% of respondents nationally.
Beyond trying to function in a high-cost area, nearly three-quarters of nonprofit leader cited employing enough staff to do all of their programmatic work as either a major or minor challenge (74%). Other concerns these nonprofits faced during fiscal year 2024 included employing enough staff to do operational administrative work (72%), staff burnout (69%) and finding staff with the right skill sets (66%).
This report was based on survey responses from leaders at 197 organizations throughout Los Angeles County which were gathered as part of a larger national study. The report is one of three that breaks out responses from specific locations, the other two being the greater Philadelphia area and New York City. Access to the three reports, as well as additional breakouts from the California Bay Area, the Dallas-Fort Worth region, Georgia and Hawaii are scheduled for later in October. Access to the reports is available here: https://nff.org/2025-survey-regional-data-action
