What will the world look like for nonprofits when COVID-19 is just a bad memory?
This COVID-19 nonprofit sector will be smaller, at least temporarily, by about 20-25%, consisting largely of smaller organizations which have closed, compared to the normal 10% we normally lose annually. That means approximately 10% of the nonprofit work force will still be unemployed, at least for a time. The competitive mix will be different in two ways: the surviving larger organizations will dominate the marketplace in terms of larger share and hold on resources, while competition from for-profits, B-Corps and other forms of organizations focused on social benefit will increase five-fold. Survival of nonprofits of any size will depend on their creative response to the new forces in the economy, e.g. the so-called new normal. The need for societal services of all kinds will be ever-present and the demand will exceed pre-COVID-19 nonprofit levels.
Charitable support for provision of these services will be dependent on impact, scalability of response and even monetization of any process to determine return on investment.
Here is what we think it will take to have significant survival and success in this environment to meet and exceed the expectations of constituents, both clients and supporters:
- Renew, Restore and Reimagine Our Work. The new normal will be very different from operating in a society lockdown. Only some elements of the previous methods of operation will work and may be restored. Change will be determined by empirical efforts, surveys, statistical analysis—a much larger involvement of those served and those providing resources. Differences between for-profit and nonprofits will lessen, with nonprofits fielding for-profit subs to take advantage of impact investments and warding off competition.
- Digital interaction and Direct Delivery of Goods and Services. We will hear more from our constituents, with a significant amount of this communication being digital. Expectations for positive response will also grow as well as the need for rapidity in that response. This will require nonprofits to increase their investment, training and personnel in digital service and delivery.
- Data and Its Understanding. Such interactions will bring large amounts of information about constituents, requiring enlarged capacity to understand and better serve the needs and values of these individuals and groups. Constituent and donor segmentation will play a major role in the ability to improve this service. Organizations will increase their ability to store, analyze and use this data to inform policy and program though more sophisticated hardware, software and people.
- Analytics and AI. Beyond segmentation, analytics and the use of AI to combine disparate elements of this data will enable nonprofits to increase their impact, not only helping deal with problems but, perhaps, actually solving them.
- Continuous Up-skilling of Personnel. Operational demands will require greater training, from graduate degrees to continuous in-service instruction. The above complexity will demand this continuous training of our staffs, re-skilling and up-skilling them to enable the services that will be required for desired positive results and impact.
- Lifetime Value of Donors will Guide Development. The increasing levels of information, analytics, use of AI and segmentation will result in better understanding and prediction of lifetime value of donors. This will be the major focus of increased funding for the development department, complete with sophisticated stewardship of existing donors and the building of new constituencies using these tools.
- Reorganization from the Bottom Up. Combining and crossing skills and expertise will result in what are called “agile tribes”, those groups of the varied talents needed to produce the high impact areas that produce the successful programs and attract additional resources leading to organizational stability and growth. Informal leaders will often replace chain of command in this world of digital communication and virtual services. Organizations will flatten out and aspire to have as few levels of organization as possible. Results, impact will rule.
As we all begin this work together in an environment that none of us anticipated just six months ago, we encourage organizations to rise to the challenges, assisted by the many resources available to both for-profit and nonprofit organizations. The demands are greater, the resources needed are larger, the needs continue to grow, and we in this current COVID-19 nonprofit sector must be best equipped and trained to achieve success in this demanding environment.
What other COVID-19 nonprofit success factors would you add to the list?
This post was co-written by Dania Toscano Miwa and James V. Toscano; the Principals of Toscano Advisors, a National Nonprofit Consulting firm based in Portland OR. They consult primarily in the areas of fundraising strategy, board training and capital campaign management.
Jim has over 55 years of experience in nonprofit management. His expertise includes: strategic planning, governance, outcomes measurement, feasibility studies and resource development in nonprofit organizations. He is a past chair of the Minnesota Charities Review Council and served on over fifty boards and commissions during his career, including the Minnesota Health Care Commission and as Chair of the Medical Education and Research Committee of the State Health Department. A chair and co-chair of the committees that produced the three editions of Minnesota Council of Nonprofit’s “Principles and Practices for Nonprofit Excellence,” he has taught management at the Wharton School, University of Chicago, University of Saint Thomas and Hamline University’s Graduate School of Business. He is a graduate of Rutgers College and Yale University.