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5 Nonprofit Trends to Watch in 2011

By Nell Edgington



The end of 2010 is upon us and perhaps this difficult economy is waning as well. It appears that the nonprofit sector may have brighter times ahead. Indeed, the philanthropy that funds it is arguably on the rebound. I’m excited to see what the new year will bring for a sector that has had a very difficult couple of years, but has adapted and innovated despite the challenges.

Here is what I think (hope?) we will see more of in the nonprofit sector in the coming year:

  1. More Confident Funding Strategies: A more confident nonprofit sector will emerge that stops chasing funding, any funding. Instead nonprofits will strive to pick a path and raise money around that path. In so doing nonprofits will increasingly learn to “fire bad donors”, as David Henderson encouraged, and instead strategically go after the funding that integrates well with their long term vision and business model.

  2. Diversified Funding Sources: Along with more confident funding strategies will come more diversification of funding. This diversification will not be just for diversity sake, but because of a growing realization that putting the majority of your funding eggs in one basket (foundation grants, for example) is unwise and terribly risky, particularly given this economic climate. Nonprofits will increasingly become more strategic and savvy about their overall financing structure and in so doing will strengthen and diversify accordingly.

  3. Greater Investment in Organizations: Nonprofit boards, staff and donors will increasingly recognize that “overhead,” or administrative costs, are absolutely necessary to successful program execution. They will increasingly invest in their organizations (staff, technology, training, systems, space) in order to strengthen and grow their impact. The revamp of nonprofit rating systems, like Charity Navigator, that are moving away from penalizing organizations that spend on “overhead” will help move this process along.

  4. Larger Focus on Impact: Nonprofits will increasingly focus on the social change they are working towards, as opposed to the service they are providing. Although it is true that many nonprofits exist to simply provide services to our most needy fellow human beings, there will be an growing demand from funders to articulate how even those services fit into a larger theory of change. It will no longer be enough to be a charity for charity sake, but rather nonprofits must analyze and articulate how their services fit into a larger solution to the problems they exist to address.

  5. More Strategic Use of Social Media: More nonprofits will make bigger, better, more strategic forays into the world of social media, not just because everyone is telling them to do it, but rather because of a realization that in order to get more change done, nonprofits must build support, partnerships, alliances, advocates from outside their own walls. Social media is a cheap, effective and available way for organizations to exponentially expand their force, resources, ability to make change happen. If used effectively, social media can be a tremendous gift to the nonprofit sector.

I think we will start to turn a corner in 2011. The recession has been a wake up call for the nonprofit sector. Those organizations that have recognized the game-changing nature of this economic downturn will emerge stronger, more confident, more capable of creating change.

Photo Credit: ChazWags

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About the Author: Nell Edgington is President of Social Velocity (www.socialvelocity.net), a management consulting firm leading nonprofits to greater social impact and financial sustainability. Social Velocity helps nonprofits grow their programs, bring more money in the door, and use resources more effectively. For more information, check out Social Velocity consulting services and clients.


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11 Comments to 5 Nonprofit Trends to Watch in 2011

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Geri Stengel
December 7, 2010

Good points all. I especially like the idea of investing in organizations and “firing bad donors.” Money just for the sake of money is a bad idea. It can take you off-mission and can even cost you more than you got if you have to beef up unfunded support staff.

Nonprofits are like businesses in many ways, including the need to invest in infrastructure in order to thrive and the need to have a solid funding base for its core services.

Nell Edgington
December 8, 2010

Thanks Geri.

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Evii Xyrafa
December 11, 2010

Excellent article! I particularly liked the argument about the current need for nonprofits to articulate how their services fit into a larger solution to the problems they exist.

This is how the nonprofits will gain a reputation to the community at large and remove from the silo effect that has been established so far. Meaning that, till today usually nonprofit organizations serve only their own purposes and don’t cooperate with other nonprfits of other functions, as if they function within silos. For example, environmental organizations could partner with human rights orgs and culture orgs, forming thus a very powerful alliance for a common purpose. Why not?

One move to that direction has been attempted by http://www.flowmagazine.gr, which presents the work of selected NGO’s globally, from all functions, as a means to promote social solidarity and volunteerism to the public at large.

I truly hope that 2011 will be the year of transformation for NGO’s, in which they will substantially create change!

Melinda Lewis
January 8, 2011

Let’s hope all of these blossom in this new year! Obviously, #3 and #4 are connected; if nonprofit organizations are to realize the kind of transformational impact on which we should all be judged, we’ll have to hire the best people and invest in the infrastructure that for-profit companies have long considered essential to effective work. I agree that the revamping of the charity rating system facilitates this–we can only move in the right direction when we’re watching the right indicators. Thank you for this!

Nell Edgington
January 10, 2011

Thanks Melinda!

Fundly
February 7, 2011

I might even go so far as to combine #2 and #5 – Diversified Funding Sources and More Strategic Use of Social Media. There are tools cropping up all over the place to use Social Media to raise money. We’re one of them, but the marketplace is full of others.

My company, Fundly, has a Facebook app that solicits small donations and makes donations social. You can get those $20 donations that aren’t worth it in the larger fundraising scene. I like to think of it as taking advantage of the “Long Tail” of donations.

That’s my two cents. Social fundraising is a big trend to watch.

Shawn (Marie) Paul
July 1, 2011

Great information Nell! I particularly agree with the fact that nonprofits who make it through this economic down-turn and now hopefully upswing, will be wiser and more savvy with their funding strategies.

Along with the concept that funders will want to see the bigger picture social change work, they will also be focusing much more on serious sustainability plans than ever before. Filling that blank that asks for sustainability plan will be almost (if not more) important than the project design. It will no longer work to say “we will look for continued funding” to keep the project going. With that in mind, nonprofits have a little more work to do now before they apply for grant funding.

I also want to point out how excited I am about the shift in recognizing the importance of general funding for savvy administration and would like to see every grant funder require a line item in the proposed budget that is designated for emergency financial reserves until the organization can show a reserve of 4-6 months of operating expenses. This is truly getting down to operating outside the insolvency zone as any stable business would do. What are your thoughts on nonprofit leaders being more business savvy?

I would like to invite you and your readers to visit and consider joining the International Association of Professional Nonprofit Directors (www.IAPND.org) where conversations such as these can tackle the issues plaguing the nonprofit sector.

Shawn (Marie) Paul is the Founder and President of IAPND and The Break Away Group, LLC as well as the author of Life in Motion, a leadership development book.

Nell Edgington
July 1, 2011

Shawn, thanks for your comments and suggestion of resources for further discussion. To answer your question about nonprofit leaders being more business savvy, I think that this great resetting in the economy that we are all enduring is requiring nonprofit leaders to become more strategic about how to create social impact in a financially sustainable way. Those leaders who heed the call and restructure their organizations to bend to new models and new pressures will survive and thrive. Those nonprofit leaders that continue business as usual will have a rude awakening.

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