Unlocking Warning Signs for Nonprofit Health: Insights from DSSG Project
Guest Blog Post by Florida Data Science for Social Good (FL-DSSG)
Nonprofits are the backbone of our communities, delivering essential services in areas like housing, healthcare, education, and beyond. When a nonprofit begins to falter—whether financially or operationally—the ripple effects on the community can be swift and enduring. Unfortunately, these warning signs are often invisible until it’s too late.
To address this challenge, the Nonprofit Center partnered with FL-DSSG to develop a data-driven approach for identifying early indicators of organizational distress that may compromise a nonprofit’s ability to serve its mission.
Turning Complex Data into Actionable Insights
The project centered on IRS Form 990 data, which offers detailed public filings from tax-exempt organizations. FL-DSSG obtained five years of data (2019–2023) from Giving Tuesday and narrowed the scope to nonprofits operating in the seven counties served by the Nonprofit Center in Northeast Florida.
Analysis revealed two key categories of organizational health:
- Financial indicators like cash reserves, revenue volatility, and net asset growth.
- Non-financial indicators such as governance structures, compliance activities (IRS schedule filings), and staffing patterns.
To uncover meaningful patterns, the FL-DSSG team conducted correlation analysis and applied KModes clustering—a machine learning technique suited for categorical data—to group similar organizations into distinct profiles.
What We Found
Clustering analysis discovered four distinct organizational profiles:
- Preserving and Relentless – consists of nonprofits that do minimal compliance filings, do not have high-value contractors, and have very low net asset growth.
- Compliant Operators – consists of large organizations with strong governance, frequent audits, and consistent compliance activity.
- Growth-Oriented Orgs – consists of nonprofits that have high net asset growth, strong cash position, and frequent grant-related filings.
- Conventional and Stable – consists of nonprofits that have high reserves, low administrative costs, and steady financial management.
These profiles provide a strategic roadmap for targeted outreach—identifying which groups may benefit from proactive support and which are stable but warrant continued monitoring.
Why This Matters
By translating complex data into a clear set of risk profiles, the Nonprofit Center can now:
- Focus resources on organizations that show early signs of distress.
- Offer tailored capacity-building programs.
- Monitor trends over time, refining support strategies as new data becomes available.
Ultimately, this work equips the nonprofit ecosystem in Northeast Florida with a proactive tool—one that can help keep critical community services strong and sustainable.
The findings were presented at the FL-DSSG Big Reveal event held at WJCT Studios on July 29, 2025. A video recording of the event can be viewed at https://www.youtube.com/watch?v=PgnO0vFm6pI.