The storm, for nonprofit organizations, is fully brewed. The demand for services is up; contributions have barely regained their pre-recession levels; government funding is way off; and expenses are rising. We are tempted to call this a perfect storm.
This turmoil, however, is actually imperfect. Although it's tempting to blame the economic downturn for all that ails nonprofits and charitable giving, the reality is that the current uncertainty is the new normal.
There are five key shifts affecting the environment for nonprofits that have co-mingled with the economy to create the potential for continued rough times if organizations don't change:
Donors are dramatically changing what they want from philanthropy. The fundraising appeals that used to bring in record donations no longer work, even in a stronger economy. Smart nonprofits want the check writer, not just the check.
Contributors increasingly shift from funding programs to investing in results. They are less interested in how many are served, than in how many are improved. Soon, information on nonprofit effectiveness will trump information on efficiency and even sustainability.
Many donors have moved from a desire to support multiple groups working on a single issue to investing more in the specific organization that produces the strongest result. Blending in for nonprofits is now less useful than standing out.
Donors want to see data, not just hear a few stories. Donors want to see data showing impact beyond the few stories that can be told. They will use the same business sense that they used to make their money in deciding how to give it away.
Execution of programs no longer defines the results. The shift is from the program to the participants and how these individuals make progress toward improving their lives and conditions. A great predictor of success lays in the extent to which a person engages in his or her own achievement.
Nonprofits cannot ride out this storm. They have to find a way to succeed within it. Put differently, we are not interested in how groups manage in tough times. Too often, that is about staying afloat. We are focused, instead, on how these groups thrive in a new reality, which is defined as both having a destination and reaching it.
So we begin the conversation, and we hope you'll join in. In the posts that follow, we'll dive deeper into our take on how to navigate the imperfect storm, organizing our thoughts as a response to the five shifts noted above. In all cases, our responses share one premise: that loosening up is better than hunkering down.
This series is about thinking, sharing and engaging others in a sector we all care about. Yes, I’m the CEO of a tech company that sells products to nonprofits to help them be successful. But I’m also a nonprofit board member, a volunteer, the leader of a social venture philanthropy group and the father of two kids who look at nonprofits as a vital part of who they are.
And BTW, I agree with you about technology; it doesn’t “save everything.” Hal and I see nonprofits struggling with the “five key shifts” practically every day, and people can make huge strides addressing them without buying any new technology. Vision and leadership, not technology, are the keys to riding out the storm, and we’re hoping to spark a dialog about doing just that.
And, to get things started, I'll even weigh in. :) (Ask Rachel H. - no surprise here.)
I, too, have seen a shift in the nonprofit sector as a result of many factors. This new "Age of Philanthropy" got its start with Warren Buffet and Bill Gates taking the lead. Add in many celebrities and billionaires since then, coupled with the ease of digital metrics, and we see an entirely new focus on results and ROI. However, we must also be able to evaluate the SROI (social return on investment) and balance that wisely.
Where I believe the sector has been weak, in general, is its resistance to an "investment" mentality. No business today can survive and thrive if it spends every dollar it makes on product/service delivery without investing in its people, infrastructure, marketing and branding. However, this business-like paradigm has evaded many nonprofit boards and executive leaders.
Many university nonprofit management certificates are void of any education on branding - the heart and soul of every nonprofit. Without an eternal (and internal) "customer" orientation, nonprofit employees cannot fully live their brands and fulfill their missions.
Just as "the shift is from the program to the participants and how these individuals make progress toward improving their lives and conditions," so must the shift take place internally to include a strong stakeholder-customer focus.
You also make an excellent point about stakeholders/customers and their critical role right in the center of everything. Later this summer, Hal and I will blog about supporters specifically (and changes we see if how they need to be managed) and – you’ll be happy to hear – nonprofit branding. Thanks for the comment and for engaging.