Can 1.8 Million U.S. Nonprofits Sustain Themselves?
A recent article imploring individuals excited about a cause to not even think about starting a nonprofit triggered a multitude of thoughts.
Dahna Goldstein makes so many excellent points in her post, however one paragraph literally stood out as if it was in bold print:
“Existing organizations, particularly those that rely on outside funding in form of donations and grants, are already competing for scarce dollars. Many of them are struggling to survive, let alone to thrive. As we’ve seen in recent years, as funding declines, demand for the services the organizations provide frequently also increases, which further challenges nonprofits that are already resource-constrained. Adding more organizations to the mix risks being counter-productive.”
If 1.2 million nonprofit organizations were struggling five years ago, just imagine the struggles emerging now with 1.8 million registered charities and more coming at a record pace.
Sustainability is Not Easy
In the past, writing about the basics of sustainability often brought out comments that such key items are not worth worrying about. Since the comments were expressed, I have focused my attention on various scientific and non-scientific areas of research regarding the sustainability of the vast majority of nonprofits, those under $250,000 in annual revenue (this group easily comprises 90% or more of all registered charities in the United States!).
Our real life, day-to-day research based upon conversation after conversation with this wonderful group of nonprofits has yield the following insights:
First, and foremost sustainability is far from a given! This group is often as worried about their future existence as they are about fulfilling their mission in a better manner. They realize that just fulfilling that mission does not guarantee their existence into the next fiscal or calendar year.
Second, key aspects of planning are often missing within this group. Listed below are the critical documents that are the most often overlooked or there seems to be no expertise in how to create:
a Strategic Plan
a Fundraising Plan
a Marketing/Communication Plan
a Succession Plan
Job Descriptions for Every Role
Third, they more often than not, do not have a proven method of measuring and communicating the impact or results of their core mission work. In the future, more and more funding is going to be based upon impact and not just the emotional appeal of a year-end letter or email. Larger funders and major donors are just like savvy investors and will demand such proper impact reporting.
Fourth, they comment about the struggle to find and recruit board members capable of assisting in the three areas mentioned above. We all know that such leadership is the core foundation of bringing all of the factors to fruition that lead to sustainability for smaller nonprofits. These charities are so anxious to soak up any aspect of knowledge that can help them fortify their board leadership.
I am heartened by what our daily conversations/research is revealing. An awareness of one’s shortcomings is the first step in correcting!
Each of the four different areas of awareness can be addressed with some extra effort, improved knowledge and perhaps even some technology tools.
Bloomerang is about to announce a free and totally integrated tool for our database product that will address all four areas of nonprofit sustainability! More details will be in an upcoming blog post.
A 30+ veteran of the nonprofit software industry, Jay Love co-founded Bloomerang in 2012. Prior to Bloomerang, he was the CEO and Co-Founder of eTapestry for 11 years, which at the time was the leading SaaS technology company serving the charity sector. Jay and his team grew the company to more than 10,000 nonprofit clients, charting a decade of record growth. Prior to starting eTapestry, Jay served 14 years as President and CEO of Master Software Corporation. MSC provided a widely used family of database products for the non-profit sector called Fund-Master. He currently serves on the board of the Center on Philanthropy at Indiana University and is the past AFP Ethics Committee Chairman. Jay is also the author of Stay Together: How to Encourage a Lifetime of Donor Loyalty.