Nonprofit Alliance Of Bermuda On Finances

November 13, 2021

[Written by the Nonprofit Alliance of Bermuda’s Awareness Working Group]

The Government’s Throne Speech acknowledged that during the pandemic, “third-sector charitable organisations have filled the void in the lives of the people and…have provided relief to many.” It praised the sector for carrying out this work “with love and genuine care and concern.” Bermuda nonprofits have been at the forefront of the pandemic, helping, supporting, and uplifting the community when people needed it the most.

The Government further noted the strain on the sector which is an accurate reflection on the current state of the nonprofit sector. In some cases, nonprofits are facing significant financial strain which should be concerning for Bermuda. Our nonprofits provide essential services that contribute to Bermuda’s basic social safety net, and which build community wellbeing.

They provide services that, in some cases, should be the responsibility of the Government and which, in other countries, are funded through Government contracts and fees for service. Currently, the Government provides less funding to nonprofits than in other countries such as the UK, the US and Canada.

In the USA, approximately 30% of revenues in the nonprofit sector come from Government funded grants, contracts or fees for service. In the UK, Government contracts and grants add up to almost 40% of the sector’s revenue. In Canada, the government accounts for 20% of the sector’s revenue sources. In Bermuda, Bermuda Philanthropy Survey by Wavecrest’s 2020 data showed only 8% of revenues came from Government sources.

All in all, Bermuda’s nonprofits are supported less by the Government than in other countries, so it is welcome news that the Government is interested in further supporting the financial sustainability of the sector.

However, to echo the concern from The Salvation Army’s Major Kerr, loans are not the solution nonprofits are looking for, except perhaps for unique needs or projects. Loans must be paid back, which results in future funding being diverted away from running programmes and services. This is even more challenging if funding must be directed towards debt servicing, which donors are not likely to fund.

Nonprofits do benefit from flexible, multi-year grants that support their ability to financially plan and manage their sustainability. It could also be hugely valuable for the entire Third Sector, including nonprofits, donors and the Government, to have better data on the Third Sector landscape.

The Registrar currently regulates nonprofits and captures important data on how the sector is functioning. There is great opportunity for nonprofits and the Registrar to collaborate around how to improve the data collection and information sharing functions so that we can all better understand the state of the sector and use that data to seek opportunities for sector-wide improvement.

- This article was written collectively by the Nonprofit Alliance of Bermuda’s Awareness Working Group. The Nonprofit Alliance is a group of nonprofit leaders committed to working collectively to improve the impact of nonprofits and champion their value in the community. IAC facilitates the functioning of the Nonprofit Alliance and coordinated the release of this article. To learn more about the Nonprofit Alliance, visit here.

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