Surprisingly, in today’s hostile nonprofit landscape, the sector has achieved a 25 percent increase in the last decade. This rate of growth surpasses that of the business and government sectors (Urban Institute, urban.org/nonprofits/index, 2012.)
However, 2013 will be the year that, for many, the chickens finally come home to roost. State and federal revenue shortages, cancelled government contracts, continued donor cutbacks and fewer foundation grants, will finally catch up with many nonprofits still trying to rely on old ways of doing business.
While some foundations have reported increased giving after the initial hit of 2009-10, a continued drying up of funding from tried and true sources means ever increasing competition for the dollars that remain.
In communities like ours, smaller nonprofits rely on local philanthropists, corporate donors and community organizations for grant funding. These sources are committed to supporting local needs and local nonprofits’ efforts. Few of these smaller nonprofits are in a position to meet the more stringent requirements of major foundations that larger nonprofits can accomplish.
The problem with this solution is donor fatigue. As generous as our local community supporters are, there is only so much they can do. Established relationships that best meet donor interests are honored, and it’s hard for less established nonprofits to get their foot in this door.
As colleagues often bemoan, the donor pool is finite. Few new major local donors appear, and efforts to reach out for smaller gifts are not making up that shortfall. The use of Twitter and other social networking has proved effective for some nonprofits, but many are still not up to speed on how to best make use of these new technologies.
The recent Georgia Gives Day is a great example of a fresh approach to nonprofit fundraising. Just under $800,000 was raised for Georgia nonprofits on Dec. 6. Figures have not been released on the percent of small nonprofits that benefited from this effort, but that would be great information for us all to have.
Recognizing that the old way of operating will no longer work, more nonprofits will survive by making radical and creative changes that recognize the new realities. Still more will decide to combine with similar nonprofits to meet their shared mission as a new entity.
One of the biggest question marks for nonprofits in 2013 is how the fiscal cliff negotiations will finally address tax deductions for charitable contributions. This item has been on and off the table several times in the ongoing discussions.
It’s somewhat surprising that our socially liberal president has several times proposed a reduction to 29 percent for charitable contribution tax deductions. This deduction is a major means by which the federal government supports the nonprofit sector, something in which our president purports to see great value.
However, as noted previously in this column, nonprofit deductions are low-hanging fruit for desperately needed additional federal revenue. Even liberal-leaning political leaders are succumbing to the temptation to grab it.
In the realm of creative and radical change in how we achieve change for social good, I think we’ll revisit nontraditional structures mentioned previously in this column.
Though still a small minority, more organizations and social change leaders are turning away from a conventional nonprofit structure and using constructs like the L3C and B corporation to get the job done. I’d love to see more local dialogue on the use of these nontraditional structures.
The Trend Report is an outgrowth of the Alliance for Children and Families’ Scanning the Horizons annual summary of top nonprofit sector trends.
This report published that “economic pressures are strengthening the trend toward mergers and collaborative alliances between nonprofit organizations. One report shows 17 percent of nonprofit respondents interested in merger information, and 42 percent reporting cross agency collaboration.” (Trend Report, alliancetrends.org)
I expect 2013 to be a year of great creativity in the arena of change for social good – messy, often difficult and exciting for those who are willing to take the ride.
Sarah Todd is founder and principal of Change Pioneers, an information resource on broad scale change for social good. She can be reached at 912-224-2120 or changepioneers@gmail.com.