A new research study, "Measuring the Financial Health of Mid-Sized Nonprofits," conducted by the Indiana University Lilly Family School of Philanthropy and sponsored by Bernstein Private Wealth Management (Bernstein), reveals that mid-sized charities (those with investable assets between $5 million and $75 million) are more financially resilient than their larger or smaller peers.

The researchers found that 69% of mid-sized nonprofits qualified as healthy in a greater portion of measurements used in the study, compared with 65% of large and 64% of small nonprofits. In addition, these nonprofits tend to have higher levels of liquid assets, adequate months of spending on hand, and a low debt ratio—meaning they are more cautious with their finances.

"While much of the research on the nonprofit sector tends to focus either on larger institutions or the more numerous small, grassroots organizations, far less is known about mid-sized nonprofits. Our study allows us to identify specific characteristics of mid-sized nonprofits' financial health," said Jon Bergdoll, Interim Director of Data and Research Partnerships at the school. "This research will better equip nonprofits in examining their financial health and will assist funders, donors and advisors in assessing and contextualizing the finances of nonprofits they may consider supporting."

Among the other key findings:

  • Mid-sized nonprofits closely resemble large nonprofits in endowment presence, with 55% reporting an endowment compared to 65% of large and 12% of small nonprofits.
  • Large nonprofits generate 7% of revenue from investment income, while mid-sized nonprofits generate 3%, and small nonprofits generate 1%.
  • 54% of mid-sized nonprofits have a "healthy" administrative ratio, surpassing small (44%) and large (52%) nonprofits.
  • Nearly two-thirds of both mid-sized (64%) and small (66%) nonprofits have a debt margin below 20%, compared to under half (49%) of large nonprofits.

Measuring the Financial Health of Mid-Sized Nonprofits delves into various aspects of nonprofits'  financial health based on research from IRS Forms 990 data, case studies, and examples of best practices. It aims to broaden the understanding of financial health metrics across organizations of all sizes and provides practical advice to nonprofit leaders, ensuring they have a range of tools to achieve financial success.

Read the full article about mid-sized nonprofits outperforming peers at PR Newswire.