Challenges Facing Today's Nonprofits

Nonprofits have always faced challenges, but there are ways to turn them into opportunities.
Chief Ideation Officer, CODA Concepts, LLC
March 02, 2012

Nonprofits have faced challenges as long as they’ve been in existence. Most organizations have been working to overcome the same obstacles for years. But as the years go by each challenge gives way to new opportunities.

Donations are up, but funding uncertainty remains

Between 2010 and 2011, nonprofit donations increased by 7.5 percent, and Atlas of Giving projects a 3.9 percent increase in 2012. But the volume of donors is down. According to Donald Cummings, Jr., managing partner of Blue Haven Capital LLC, “Donor numbers have been reduced, but...per capita giving is up...individual donors are giving more dollars to the groups they decide to continue to support.” Blue Haven Capital manages money for nonprofit endowments and foundations.

However, several unpredictable variables can impact these predictions, such as a man-made or natural disaster, which can dramatically change the distribution of donations. For instance, a hurricane making landfall in the Gulf Coast may draw funds that otherwise would have been allocated to a homeless shelter in Chicago.

In addition, government funding cuts appear to be inevitable. Many government-funded organizations are surviving on a safety net established with the Recovery and Reinvestment Act of 2009. However, those funds are dwindling. “The groups that receive state support are getting paid less money less often and the money that states do send is often 180 or more days in arrears,” Cummings said.

As federal, state and local budget cuts loom, funding from these sources remains uncertain. Over the years, nonprofits have seen steep cuts from government agencies, forcing them to rely more on the public sector for support. “I have always encouraged nonprofits to wean themselves of government support, but even that is no guarantee of a worry free economic environment,” explains Cummings.

In addition, there has been a significant increase in nonprofit organizations, creating increased competition for their share of allotted monies from both public and private sources. According to the latest data compiled by the National Center for Charitable Statistics, the nonprofit sector grew by 31 percent between 1999 and 2009. The sheer volume of organizations poses a threat to fundraising.

“The groups that are involved in any way whatsoever with human services are facing more demand than ever for those services,” Cummings said.

Funding sources are being solicited by multiple organizations, and with already tight purse strings they may be limited to the number of donations they’re able to make. Or, they may be forced to donate less in order to oblige more requests. The status quo will no longer be acceptable. Organizations must think outside  the box to establish fundraising and awareness campaigns to differentiate themselves from those with similar missions.

Technology challenges pose threats to funding

With many nonprofit organizations working to keep their doors open and lights on, advances in technology have gone by the wayside. Many fight for every donated dollar, finding themselves behind the curve in tech trends. They turn to interns and high-school students for Web design to save a few dollars, and the thought of a mobile campaign is beyond both technical and financial comprehension.

Nonprofits that don’t have the bandwidth or funding to establish a strong digital presence will be missing out on a critical tool. Online marketing can raise money and awareness and draw the attention of potential funding sources.

There are a limited number of grants available to help nonprofits incorporate innovative technologies and competition is extremely tough. However, there are companies willing to provide in-kind donations for content marketing, Web design and other technology services, eliminating the overhead costs of employing or outsourcing.

Success isn't always about money

The coming years are sure to bring challenges not yet seen, coupled with those that have plagued the sector for years. Cummings says the combination of less funding, higher demand and reduced cash flow has been devastating, straining an already reduced staff with longer working hours and and forcing the funneling of donor dollars to only those with the most urgent needs.

Finding opportunities amid the chaos separates the organizations that meet their yearly goals from those that don’t. Being successful in the nonprofit world sometimes means just breaking even. After all, transforming lives transcends profits for those truly engaged in charitable nonprofit work.

Angela Stringfellow is a PR and MarComm Consultant and Social Media Strategist offering full-circle marketing solutions to businesses. Angela blogs via Contently.com.

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