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.
Government budget cuts impact charitable nonprofits in many ways, affecting nonprofits with government
contracts and those without.
o For instance, when the federal government recently cut the SNAP (food stamp) program, 47 million
Americans suddenly needed more assistance for their families, leading some state officials to begin
“encouraging people to seek help from local charities and churches.”
o Many people are surprised to learn that sector-wide approximately 1/3 of all funding each year comes
from nonprofits performing contracted services for local, state, and federal governments. So government
budget cuts force them to raise funds elsewhere to meet their missions, thereby increasing competition
for scarce resources from private donors.
o As state and local governments struggle for money, a growing trend is that they increase their attempts to
divert resources away from nonprofit missions through the imposition of new taxes, fees, and payments in
lieu of taxes (PILOTs).
o Nonprofits with government contracts are often not paid fairly for services they provide with governments.
Read about efforts to reform government/nonprofit contracting practices.
o Governments are cutting spending on services, but they aren’t cutting the related human needs. Those
needing help turn to nonprofits, thus further increasing demands for services.
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.
©2013 National Council of Nonprofits. All rights reserved.
1200 New York Avenue NW | Suite 700 | Washington, DC 20005 | 202.962.0322 | www.councilofnonprofits.org
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