Recently I read a sheet for a presentation that was given by the National Association of Nonprofit Organizations & Executives (NANOE). The title caught my attention, “Why We Serve: The Nonprofit Sector is a Non-Growth Sector.” It’s important for nonprofit executives to understand what many of us have been saying for a long time. During a time of immense disruption, which will only continue as we integrate technology with all aspects of human life, we can’t expect that the nonprofit industry will remain as it has been. It will either have to adapt and thrive or stay in place and perhaps even be supplanted.
NANOE had the following to say about the nonprofit sector:
Charity is in desperate need of an overhaul. Current legislation, tax laws, industry standards, outdated philosophies, organizational structures and practices stop the sector from growth on all fronts. Yet, for the past twenty years, government and philanthropic communities have relied more and more on the nonprofit sector to tackle many social and environmental issues. Simply put, industry standards have not kept up with or changed to meet the new demands of the 21stCentury.
The document from NANOE went on to enumerate the following:
- 6 million nonprofits, including all organizations designated as 501 (c).
- 5 percent operate with budgets of less than $500,000.
- 39 percent have budgets of more than $1 million.
- In the past 50 years, only 145 nonprofits have exceeded revenues of $50 million. On the other side of that same coin, more than 45,000 for-profit companies have done it; meaning, most nonprofits do not grow to scale.
- Charitable giving remains at approximately 2.2 – 2.5 percent of the Gross National Product of the U.S., where it’s been for the last 50 years.
- The final point, I will directly quote because it is so important to emphasize: “The charitable sector generates and spends $1.65 trillion dollars annually. Meaning, over the next 20 years, nonprofits will spend over $33 trillion dollars WITHOUT ACHIEVING SIGNIFICANT IMPACT.”
As an entrepreneur and social enterprise owner, this troubles me, and it should worry you. We understand that because of the advances in technology and the sciences, we’re at an inflection point. Take a look at almost every area of society, and you’ll find that in ways large and small, we’re operating with new rules and experiences. These include the chatbots that we’re all interacting with in our daily lives, new fundraising techniques with the use of technology, social media and search engine algorithms and bots, the new ways that we’re recruiting people to nonprofits and businesses with the use of artificial intelligence, and all the way to the curing of disease.
I’ve tried in this blog to share with my readers the trends and best practices that I have seen. I think it’s important for nonprofit leaders to realize, plainly speaking, nonprofits are not the only game in town. There are for-profit social enterprises that are bridging the chasm between fundraising needs for nonprofits in the U.S. and people in need of a hand-up (instead of a hand-out). Many of these social enterprises are successful precisely because they are agile, innovating and not stuck with dated practices and methods.
You also have the fact that the public has less trust in nonprofits in today’s world, and they expect for-profit businesses, as part of their corporate social responsibility, to lead efforts toward positive social change.
I do believe that nonprofits have not merely to exist but make an impact and thrive. I think they should be bold and look to become sustainable and scalable. If those are not the thoughts of leaders who operate within nonprofit organizations, they shouldn’t be in their positions.
There’s enough room, so to speak, for businesses, social enterprises, and nonprofits, but leaders have to understand that the world has changed and will only be shifting more monumentally because of technological advances that are rapidly pushing us forward every year. In the coming weeks, I’m going to make a sharper focus on ways your small nonprofit group can make a more significant impact toward becoming sustainable. I will be specifically focusing on small groups with limited resources. However, it’s crucial to know that the discussion in the nonprofit world of cutting the cord with the past has become mainstream.
Today, not just some people, but many people in the nonprofit sector are speaking about how to leave the past behind and use the resources at hand today for a much more profound impact.
Author of “Not Your Father’s Charity: Grip & Rip Leadership for Social Impact” (Free Digital Download)
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