Trends in the Nonprofit Sector

United Way’s Center for Nonprofits

Nonprofit Top “Trends” to Watch (Source: Philanthropy Journal)

1) Governments in Crisis2) Strains in the Safety Net3) A Full-Court Press for Modest Gifts4) Grim Grants Outlook5) A Weakened Charity Work Force6) A Sharpened Eye on Charities7) Rising Donor-Charity Tensions8) Proving That Charity Works9) Volunteerism Is Cool10) A Stalled Online Revolution

Governments in Crisis

Charities that rely heavily on government grants and contracts will find little relief in upcoming years.

The National Governors Association's

prognosis is bleak: States are in for a "lost decade," it says, thanks to the recession's severity, the projected slow recovery, and future demands to meet neglected needs.

Governments in Crisis

Governments are increasingly eyeing potential “tax” revenue lost to them through nonprofit status

Increased “fees in lieu of taxes” are becoming more common place

Strains in the Safety Net

While the economy is improving, the recovery from the recession is expected to be long and difficult.

Charities can anticipate a continued surge in requests for food, housing, and many other social services as people struggle with job losses and other problems triggered by the downturn.

The prolonged financial strains on individuals and families are also expected to lead to spikes in crime, domestic violence, mental illness, and substance abuse.

A Full Court Press for Modest Gifts

As charities face cutbacks in state aid, as well as in grants from foundations and corporations, they are turning more intently to individuals — and focusing most seriously on small and medium-sized donations.

Charitable Giving in 2009

Questionable Private Grants Outlook

Although many foundations and corporations are seeing some recovery in investment earnings, they were hit hard by investment losses in the previous years, and many of the nation's largest foundations and corporations will keep giving at 2010 levels.

But as problems like hunger and unemployment continue, they will face greater public pressure to increase their grant making. Some foundations have said they may close at a point in the near future and spend the entirety of their assets in response to financial declines and the growing social needs.

Increased competition for a smaller pot of dollars

A Philanthropy Journal survey of the top 400 nonprofit organizations (in revenues) reported an expected median decline of 9%

The search for money to finance charitable work will grow more competitive than ever, as state governments and private foundations cope with coffers that have dropped sharply in value over the past two years.

Weakened Charity Workforce Charities have laid off thousands of employees.

Even workers whose jobs seemed protected have received pink slips, as Stanford University, one of the nation's most successful fund-raising institutions, laid off 50 staff members in its development office, and American Lebanese Syrian Associated Charities, the fund-raising arm of St. Jude Children's Research Hospital, eliminated 70 jobs.

Many nonprofit employees have left the nonprofit sector.

Weakened Charity Workforce

This is compounded by the fact that many top executives in the Nonprofit sector are predicted to retire (60%) in the next 5 years

A Sharpened Eye on Charities

The Internal Revenue Service is scrutinizing many of the nation's wealthiest organizations, and has undertaken wide-ranging efforts to make sure charity leaders and their boards serve as good stewards of tax-subsidized dollars.

In Congress, lawmakers continue to seek ways to ensure that nonprofit groups justify their tax-exempt status.

Rising Donor-Charities Tensions

As donors grow more inclined to specify how they want their contributions to be used, cash-strapped nonprofit groups will struggle to honor those wishes.

Nonprofit organizations are purposefully moving away from designated funds

Proving that Charity Works

Amid growing concern that donors have no way to know whether their giving makes a difference, efforts to improve how individuals pick and choose charities are gaining steam.

Business savvy donors, led by foundations, government and corporate funders, are pursuing impact funding with measurable outcomes.

Volunteerism Becomes Cool

Volunteerism and national service are getting high-profile attention, with both President Obama and the first lady giving the issue top priority.

This year brings a shift in the conversation, from how to recruit more volunteers to how charities can better absorb and manage them.

A Stalled Online Revolution

Blogs, Twitter, and Facebook allow nonprofit groups to connect with supporters, volunteers, and donors in a far more interactive, cost-effective way than ever in history.

Few charities however, have figured out how to raise money using the new social networks.

The big picture – trends to watch

Continued Legislative Reforms Impacting Nonprofit Sector

Increased Taxation/Fees Imposed on Nonprofits

Intense Media and Public ScrutinyEconomic Strains Continued Discussion on the

“Starvation Cycle of Nonprofits”“Forced” Collaborations and Mergers

The Big Picture – Trends to watch

Venture Philanthropy – Whats my ROI? Measurable Outcomes

Enlightened and Empowered Donors Blurred Lines Between For Profit and

Nonprofit Encroachment of For-Profit Businesses Increased calls for “Professionalism” of

Nonprofits Social Entrepreneurship New Corporate/Nonprofit Structures and

Joint Ventures

The Big Picture – Trends to watch

Shortage of Nonprofit Staff and Board Leadership

Increased Emphasis on Planned Giving Multi-tiered Fundraising Approaches –

(Targeting more than “big” donors)“Cause” MarketingNonprofits Protecting Their

“Brand”Technology Revolution

Nonprofit Boards -

National trends – Governance as Leadership -Board needs to operate in three modes to support org. – NEED ALL

Most boards operate in fiduciary mode Many move into strategic Few are generative

Source: Board Source Strategic

Generative

Fiduciary

Strategic and Generative Planning

The true gifts a board member gives lie not in the answers to questions, but the questions they ask!