2014 NONPROFIT TRENDS TO WATCH

At the Northwest Minnesota Foundation we know that nonprofit organizations within our 12-county region provide vital services to many of our region’s citizens.  It is fascinating to see how your ideas and service has strengthened our region. As we close out 2013 and prepare for 2014, we wanted to share a piece by the National Council of Nonprofits.  Trends: What’s Ahead for 2014 provides a look at some of the most interesting nonprofit trends to get ready for in 2014. Please share this piece with your nonprofit’s staff, board and volunteers so they can be prepared for what is ahead.

2014 NONPROFIT TRENDS TO WATCH

WHAT ARE THE IMPLICATIONS FOR NONPROFIT STAFF, BOARD MEMBERS,

DONORS, AND COMMUNITY LEADERS?

THE RESOURCE SQUEEZE: One prominent trend that began with the Great Recession will continue its drain in 2014: scarce financial resources. The vast majority of charitable nonprofits will continue to be squeezed for financial resources in 2014. In the current environment of increased competition for scarcer financial resources, no nonprofit’s board of directors should be caught ignoring its fiduciary duty to help the nonprofit fundraise.

THE UPWARD SPIRAL OF NEED: The dramatic decline in government funding often increases demand for services, as communities and individuals continue to struggle and look to nonprofits to provide basic services. In 2013, more than half of nonprofits surveyed by the Nonprofit Finance Fund reported they didn't expect to have enough resources to meet increased community needs. The upward spiral of need for basic services is likely only to increase in 2014, while the resources that nonprofits have available to them will continue to be squeezed.

ADVANCING MISSIONS THROUGH ADVOCACY. The significance of the first two trends heightens the need for all nonprofits to advance their missions through advocacy. Indeed, a recent study by the Center for Effective Philanthropy reveals that foundation executives (76 percent of those surveyed) now recognize that the greatest barriers to their foundations’ ability to make progress are the current government policy environment and the current economic environment. If nonprofits and funders are serious about bringing things “to scale,” advocacy is how to achieve it.

INCREASED SCRUTINY: 2014 will bring a continued focus on good governance and pressure on charitable nonprofits in reaction to stories about individuals or groups that abused public charity status. This is a good time to make sure that your nonprofit is adhering to ethical and accountable fundraising practices and establishing compensation appropriately. Is your nonprofit transparent about its finances? Has the nonprofit complied with state registration requirements in order to raise funds? What about establishing sound internal controls? State associations of nonprofits offer many resources including Principles and Practices/ Standards for Excellence® that offer guidance for ethical and accountable governance and financial practices.

TRANSPARENCY ABOUT OUTCOMES: Because of the intense competition for financial resources, and donors’ desire to know where their contributed dollars are going, it continues to be important for charitable nonprofits to be transparent about not only their finances, but also their outcomes. What is the change your nonprofit desires to see in the world? Is your nonprofit effectively making progress towards that change? One of the best resources available is the Leap of Reason website. It offers free e-books and many other excellent resources to help nonprofit staff and boards understand the outcomes imperative and become leaders in this movement to improve performance.

OWNING OUR COSTS: In 2013, the overhead myth started to burst and, as the initiative Real Talk about Real Costs teaches us, dialogue between nonprofits and funders can raise awareness about how much it really costs to run the operations of a nonprofit. In 2014, we anticipate there will be a growing awareness about the need for charitable nonprofits to know and really “own” the true costs of meeting their missions. One way to learn about the importance of recovering your indirect costs is to review Investing for Impact: Indirect Costs Are Essential for Success.

PICTURES THAT TELL STORIES: If 2013 was the year of the infographic, 2014 is going to be the year of wider spread data visualization. Storytelling with pictures will increasingly be the way we read and understand data, so having the ability to communicate effectively with data will be important. Looking for a resource about best practices in data visualization? We like the consistently practical advice shared by Cole Nussbaumer in her blog: Storytelling With Data.

ONLINE GIVING: Charitable nonprofits can now receive donations via text message, mobile app, social giving or online. Giving Tuesday (a day dedicated to charitable contributions) is here to stay. Network for Good estimates that in 2013 online giving was only ten percent of all charitable contributions, but gifts online increased by over 100 percent in 2013 over 2012. With 60 percent of adults using their phones to browse the internet (Pew Research Center), any charitable nonprofit that doesn’t have the capacity to receive contributions online and through a mobile device will be at a disadvantage. In 2014 we predict the question will be, “Why do I need to open my computer? Can’t I just use my smartphone/tablet to donate?” This trend also means that charitable nonprofits expecting to attract volunteers and donors via their websites will need websites optimized for viewing on mobile devices.

THE CLOUD IMPERATIVE: The cloud epitomizes the rapid increase in technology tools that offer charitable nonprofits a place to convene, converse, and share/store data. In many cases, migrating to the cloud is less expensive than a new server and provides more protection from data loss. Nonprofits may need education and/or encouragement to understand the pros/cons of moving to the cloud, but they will get there if it means less expense over time and more efficiency for program delivery.

THE LEADERSHIP CHALLENGE: Several years ago, predictions were that the retirement of baby-boomers would leave a void of experienced leadership in the nonprofit sector. Now there is a different sort of leadership crisis: a genuine shortage of experienced board members and too many stressed-out staff leaders. As the workforce is infused with GenX/Millennials eager to make their marks on the world, cross-generational empathy presents another challenge. At the core of this trend is the heavy burden placed on staff leaders of whatever age: They need to be good managers of people, gracious with demanding donors, tech-wizards, advocates for their missions, equally savvy with legal issues and social media, and at the same time strategists able to keep their nonprofit ‘on mission’ and on top of all that -- world class fundraisers. No wonder it’s hard to hire a nonprofit leader these days! For more insights, read The Millennial Impact report, and Underdeveloped: a National Study of Challenges Facing Nonprofit Fundraising.

WHAT IS A “NONPROFIT” – NEW FINANCING STRUCTURES ADD CONFUSION: There is already unfortunate confusion about what a “nonprofit” is – and is not. Some people continue to think that a charitable nonprofit may not show a profit at the end of its fiscal year! Others think that everyone involved with a nonprofit is a volunteer (unaware that approximately ten percent of the US workforce is employed by nonprofits). A trend that will continue in 2014 is experimentation with corporate structures designed to deliver social good. Several states have passed or are considering laws that appear to recognize new forms of corporate entities that combine for-profit investments with social benefit objectives. Social impact bond financing and the promise of “pay-for-performance” are getting lots of attention, but how this trend will play out is yet to be determined.

©2013 National Council of Nonprofits. All rights reserved. 1200 New York Avenue NW | Suite 700 | Washington, DC 20005 | 202.962.0322 | www.councilofnonprofits.org