Key Takeaways
The composition of earned and contributed revenue returned to pre-pandemic patterns in 2024, as organizations relied less on contributed revenue than they did during the height of COVID-19. Both average revenue and expenses fell below pre-pandemic levels for the first time since 2021, driven by revenue uncertainty and cost-cutting measures. Revenue declines outpaced expense reductions, leaving some organizations with deficits or thin margins and eroding working capital reserves built up over the last few years.
Despite this erosion, median working capital remained higher in 2024 than at the beginning of the pandemic, demonstrating the lasting impact of extraordinary levels of government and private funding over the last six years as organizations navigate an ongoing period of financial instability.
These financial pressures were not felt equally. Most organizations reported some revenue growth in 2024, but large losses among a subset of organizations pulled down overall averages, signaling concentrated financial stress even as many others remained stable.
Our Findings
- Contributed revenue accounted for an average of 59% of unrestricted revenue, the lowest percentage since 2019.
- Contributed revenue fell by 30%, with every source declining from 2023 to 2024. Foundation revenue dropped 25% after modest growth in 2023, and earned revenue declined 18%. The decrease in contributed revenue reflects the continued waning of unprecedented pandemic relief funding that began in 2021.
-
In response to rising costs and revenue turndowns, organizations tightened budgets. From 2023 to 2024, average expenses fell by 23%. The biggest reductions took place in personnel costs, which fell by 23% on average.