By Erin M. Connell, Consultant at Cause Strategy Partners, LLC
Those who work in the nonprofit sector know there have been major shifts recently within the field. Economic hurdles, dramatic political shifts, and innovative technologies have all changed the face of the nonprofit world. At Cause Strategy Partners, we serve as witness and counsel to many organizations facing these challenges; through consulting engagements and customized programs, our team works to leverage nonprofit Boards of Directors and ensure organizational successes.
There are four major shifts that we see the nonprofit sector experiencing, and affected organizations can benefit from understanding and responding appropriately.
1. Changing sources of funding
Given shifts along political party lines, many communities around the U.S. may be at risk of losing federal and state funding; the risk for sanctuary cities like New York is yet unknown. Per the Jossey-Bass Handbook of Nonprofit Leadership and Management, the stagnant economy has stalled expansions in private sector funding of public sector work. Though government budget cuts and public sector financing reductions have had – and will continue to have – a negative impact on the nonprofit sector, there is hope. For example, the corporate sector is engaging more public sector financing initiatives, such as corporate social responsibility initiatives and employee gift matching programs.
At Cause Strategy Partners, we match high-performing professionals from Fortune 500 companies to the Boards of nonprofits in New York and Chicago, a great way to reenergize a nonprofit’s funding sources. As we expand to San Francisco, we are excited to extend our successes across the U.S. by empowering more not-for-profits through great board leadership.
2. Responsive business models
Nonprofits are responding to these changes in funding sources by augmenting their business and fundraising models. Nonprofits are inherently mission-driven, not driven by the bottom line. However, as the number of nonprofits in the public sector increases and the amount of available funding decreases, nonprofits are forced to engage more competitively for resources. The nonprofit sector is increasingly engaging in more for-profit business models.
Take Hot Bread Kitchen, a New York-based hybrid nonprofit and for-profit organization that combines “social welfare and revenue generation models” by teaching skills to employees while selling the fruits (or baked goods, as it were) of their labor. This hybrid business model increases the public good while bolstering the organization’s bottom-line.
3. Increased use of data and technology
The nonprofit sector is engaging in measuring impact and outcomes like never before. Foundations and funders more frequently require detailed explanations of the impact intended by a program, a clear method for measuring that impact, and careful reporting on success compared to stated goals. Business models are integral to this trend towards impact evaluation: fundraising successes can flow from these evaluative methods ensuring program effectiveness, and the data points themselves are often measured in monetary values – an untraditional approach for the nonprofit field.
Foundations and funders more frequently require detailed explanations of the impact intended by a program, a clear method for measuring that impact, and careful reporting on success compared to stated goals.
Unsurprisingly, this data-oriented trend has also meant a more tech-oriented nonprofit sector. Having recently completed an MPA at New York University’s Wagner School of Public Service, I have seen this change reflected in the material taught to students looking to work in the public sector. Courses such as Nonprofit Accountability or Program Analysis & Evaluation teach graduate students to ensure programs are results-oriented and gather data during implementation, to ensure program successes are measured against program goals and activities. Additionally, classes like Design Thinking have become increasingly popular, as the next generation of nonprofit leadership is trained to solve community needs through creative technological solutions.
With increasing frequency, the public sector is employing new technologies and social media to measure data and enhance mission achievement. Of course, not all nonprofits possess the capacity to support such efforts, but the need for data around impact and partnering these tools with new technologies is increasing. In a word, evidenced-based programs are increasingly popular, though they are often expensive and require additional staff time and resources to measure successes. Regardless, the move towards rigorous program measurement and impact evaluation is an important one and is here to stay.
4. Changing demographics
The nonprofit sector is led by, staffed by, and serves the diverse spectrum of individuals that exists across the country. Nonprofits, in serving the public good, must position themselves to account for and support these individuals. Below is a selected list of some of the ways demographics across the U.S. are changing – changes to which the sector must adjust.
- Race: More diverse population in terms of race/minorities
- Age: Millennials engaging in social sector, Baby boomers retiring
- Gender: More women working, Greater gender diversity and representation
- Education: More individuals graduating from four-year colleges and universities
- Class: Shrinking middle class
As communities change, diversify, and grow, the demographics of those who nonprofits aim to support will similarly change. Nonprofits must ensure that they are appropriately meeting the needs of their clients through their missions and programs. Equally important, nonprofits must also ensure their Boards and staff reflect the clients their organization serves. At Cause Strategy Partners, we were excited to partner with The New York Community Trust to design and launch BoardLead Arts NYC in Fall 2016. Through this program, we matched over one-dozen talented professionals from Google, Goldman Sachs, and MasterCard to arts-oriented NYC-based nonprofits looking to diversify their Boards of Directors. We encourage such initiatives, and hope to see more movement to similarly embrace social change within the social sector.
What nonprofit leaders should do
Nonprofits do essential work to provide services and build community across the U.S., and it should be every nonprofit’s top priority to remain mission-aligned and to best meet community needs. In order for nonprofits to continue serving their communities, we advise that you creatively rethink your funding sources, business models, and program measurement tools, all while being responsive to the changing face of program and service recipients.
Specifically, nonprofit leaders should
- Strategically employ new technologies and social media platforms,
- Reexamine revenue streams and hybrid business options,
- Employ data-driven impact evaluations for programs, and
- Include more underrepresented individuals and groups at all levels of your organization.
Through these practices, nonprofits will be better positioned to shape the future of our communities and act as thought leaders in our changing world.