It’s that time of year again – the Nonprofit Finance Fund’s annual State of the Sector Survey of nonprofit leaders.
If you are a nonprofit leader struggling with increasing demand for services amid diminishing funding, if you are frustrated with funders’ lack of understanding of the challenges you face, if you want the sector to recognize the hurdles and get better at addressing them, you need to voice your perspective by taking the survey.
The Nonprofit Finance Fund is one of the country’s leading community development financial institutions (CDFI) making millions of dollars in loans to nonprofits and pushing for fundamental improvement in how money is given and used in the sector.
They started the annual State of the Sector survey when the recession hit in 2008. Collective efforts to understand the extent of the challenges the economic restructuring was having on the nonprofit sector were decentralized and largely anecdotal. NFF’s survey is an effort to bring information about the nonprofit community together so that it can be used to address these challenges. You can view the results from past surveys here.
The anonymous survey takes 10-15 minutes to complete and asks about your organization’s recent financial and management challenges. The knowledge gathered through the annual survey is shared with funders, government officials, nonprofits, media, lending institutions, and many others through conferences, policy recommendations, and other efforts. And now with more than 5 years of Sector Survey data, we can analyze and understand trends and begin to make a larger argument about what nonprofits need and what funders and policymakers must do differently to support their work.
The survey really is the only effort of its kind to take the pulse of the sector. And I am excited to see how the results are increasingly used to advocate for some significant improvements to the state of the sector.
This year’s Sector Survey will be open to responses until February 17th, so if you are a nonprofit leader, click here to take the survey and let your voice be heard. The results of this year’s survey will be available in early April.
Photo Credit: Nonprofit Finance Fund
In my eyes, December was about three main things: the After the Leap conference about moving nonprofits to manage to outcomes, predictions about how the social sector will evolve in 2014, and the impact of the second annual Giving Tuesday. Added to the mix were some demonstrations of the growing wealth inequality (a prediction for 2014 from many) and a dash of controversy about the beloved TED Talks. It all made for a very interesting month.
Below are my picks of the 10 best reads in the world of social innovation in December. But please add to the list in the comments.And if you want to see more of what catches my eye, follow me on Twitter, Facebook, LinkedIn, or Google+.
You can also find the list of past months’ 10 Great Reads here.
- I already linked to several people’s great 2014 prediction pieces in my 5 Nonprofit Trends to Watch in 2014 post, but Tom Watson’s Trends and Collisions That Will Challenge the Social Sector in 2014 in Forbes is particularly thought-provoking. He takes what he calls a “meta approach” by analyzing themes from big social sector thinkers and “adding a few morsels to the stew.”
- One of the predictions on both my and Tom’s list was that the growing wealth inequality will become increasingly obvious. Robert Reich helps this trend by providing a scathing critique of modern philanthropy, arguing that it is becoming less about solving wealth inequality and more about reinforcing it: “Fancy museums and elite schools…aren’t really charities…They’re often investments in the life-styles the wealthy already enjoy and want their children to have as well.” And Peter Capelli, writing on the Harvard Business Review blog, seems to agree, but on the corporate side. He takes issue with “companies that pay poverty-level wages or thereabouts to their employees [while] spend[ing] a good deal of effort to be good corporate citizens in other areas.”
- Some people claim the second annual Giving Tuesday was a great success with a 90% increase in day-of online donations over last year, but others, like Michael Rosen, argue that Giving Tuesday is not actually channeling new money to the sector.
- The first-ever After the Leap conference in December promoted nonprofit performance management. Perhaps the high point of the conference was Nancy Roob’s (head of the Edna McConnell Clark Foundation) stirring keynote pushing both foundations to fund outcomes management and nonprofits to demand it. The Stanford Social Innovation Review did a great interview with her where she makes many of the same points, and an interview with Mario Morino, the main organizer of the conference.
- Writing in The Guardian, Paula Goldman from Omidyar Network discusses how, with impact investing, the blending of social and profit motives is really starting to take hold: “Fifteen years from now…We’ll look back on a host of innovations benefitting millions of disadvantaged people – in education, in healthcare,…in solar lighting—and will have a hard time remembering the day when people viewed charity and business as working towards opposite goals.”
- Leon Neyfakh writes a fascinating expose in the Boston Globe about donor advised funds, which he claims is “where charity goes to wait.” $45 billion—more than the endowment of the Bill and Melinda Gates Foundation – currently sits idle in donor advised funds and that amount is growing fast. A huge financial opportunity for the sector.
- The Center for Effective Philanthropy released a new study about how much impact foundation CEOs think their philanthropy has had. Philanthropy heavyweights Paul Brest and Lucy Bernholz each give their take on the study’s findings.
- I have loved writer Steven Pressfield since I read his fabulous The War of Art last summer. His blog about the creative process is a fount of knowledge and inspiration. His post in December about envisioning and embracing the future in your industry applies to nonprofits too.
- The idea of networked approaches to social change has been around for several years and is gaining momentum. Writing in the Nonprofit Quarterly, Mark Leach and Laurie Mazur describe “the power and promise of networked approaches to social change…creat[ing] a force larger than the sum of their parts.” Definitely a trend to watch.
- And finally, I love it when someone steps back and asks some hard questions about something that everyone else assumes is amazing. Benjamin Bratton does just that about the beloved TED Talks, which he claims “dumb-down the future.”
Photo Credit: Imperial War Museums
As 2013 comes to a close, and we all head off for some much deserved rest and relaxation, I wanted to thank all of you wonderful Social Velocity readers. You are an inspiring group of people working tirelessly to make this world a better place. I am very thankful to be able to work and interact with you all through the Social Velocity blog.
Before I take a break from the blog until January, I want to provide a list of the ten most popular Social Velocity blog posts from this year in case you missed some of them. You can also read the 10 Most Popular Posts lists from 2011 and 2012.
I wish you all a peaceful and relaxing holiday season. I look forward to talking and working with you in 2014. Happy Holidays!
The 10 most popular Social Velocity blog posts of 2013 were:
- 5 Nonprofit Trends to Watch in 2014
- 5 Taboos Nonprofits Must Get Over
- Why Your Board Should Raise 10% of Your Nonprofit’s Budget
- 5 Reasons Your Nonprofit Isn’t Raising Enough Money
- Addressing the Nonprofit Fundraising Elephant in the Room
- Find and Keep a Great Fundraiser
- 5 Questions to Get Your Board Moving
- Getting Real About Nonprofit Overhead Costs
- NextGen Donors and the New Golden Age of Philanthropy
- The Nonprofit Sector Needs to Get Over the Fear Thing
And if you want to make sure not to miss a single post in 2014, sign up for the Social Velocity e-newsletter (and download a complimentary copy of the Financing Not Fundraising, vol. 1 e-book in the process).
Photo Credit: Wikipedia
Among other obvious things, December is a time for reflection on the past year and predictions for the coming year. There have already been some great forecasts about what 2014 will bring the social change sector (here, here, and here). And as is my tradition, I want to add my thoughts about the trends to watch in the coming year. (If you want to see how I did in past years, you can read my nonprofit trends posts for 2011, 2012 and 2013.)
Here’s what I think we should watch for in 2014:
- Growing Wealth Disparity
Evidence increasingly reveals that despite our best efforts the gap between the rich and the poor is widening, not shrinking. This growing disparity means that the work nonprofits do to address the ramifications of these inequities is in growing demand. The problems are simply too big and getting bigger every minute. At the same time government resources are shrinking so the greater burden for solutions is increasingly placed on the shoulders of the nonprofit sector. As problems get worse and money gets tighter the social change sector will take center stage.
- Greater Nonprofit Sector Confidence
As the nonprofit sector is asked to do more and more, nonprofits will no longer be a “nice to have” but an absolute essential component of any way forward. We will move squarely away from the idea of “charity” and toward an economy and a mindset that fully integrates the social. No longer sidelined as a small piece of the pie, the nonprofit sector will be recognized for the undeniable and pivotal role it plays in our economy, our institutions, our systems. As such, the nonprofit sector will stop apologizing for the resources it needs to do the job. The sector will rise up and take its rightful place as a critical force in shaping a sustainable future.
- Increased Movement Toward High Performance
As resources become tighter and we look to the nonprofit sector to solve mounting problems, public and private funders will increasingly want to see the return on their investments. And that can only be done by understanding what results a nonprofit is achieving. The growing push this year away from financial metrics and toward outcome metrics will continue to grow. Nonprofits will have to learn not only how to articulate the outcomes they are working toward, but more importantly, how to manage their operations towards those outcomes.
- More Capacity Investments
And if we are going to get smarter about achieving results in the social change space, more donors will start to recognize that they have to build the capacity of that space. There is no end to the list of capacity-building needs of the sector. From investing in more sustainable financial engines, to funding evaluation and performance management systems, to financing nonprofit leader coaching, philanthropists will increasingly recognize that if we are going to expect more from the nonprofit sector we must make sure they have the tools to do the job. A handful of savvy foundations and individual donors have already made capacity investments, and as those investments pay off, more donors will follow suit.
- Accelerated Effort to Enlarge the 2% Pie
For the past four decades private contributions to the nonprofit sector have not risen above 2% of the U.S. gross domestic product. In recent years there have been attempts to grow that pie. And the big question whenever a new funding vehicle enters the space (like crowdfunding most recently) is whether it will be the magic bullet to shatter that glass ceiling. But we are not there yet. As social challenges continue to grow, the wealth gap continues to widen, and a new generation of donors comes of age, there will be increasing pressure to channel more money (not just the same money through a new vehicle) toward social change.
Photo Credit: John William Waterhouse
The nonprofit sector and the philanthropy that funds it have been changing dramatically over the past several years, and there’s plenty more change to come. This month’s Social Velocity webinar, Embracing the Future of the Nonprofit Sector, will help nonprofit leaders and board members understand how the sector is changing and what they can do to keep up.
Here are some of the future trends facing the nonprofit sector that we’ll cover in this webinar:
- More Demand for Outcomes
There is a growing demand for nonprofits to 1) articulate what results they hope their work with achieve and 2) track whether those results are actually happening.
- Decreasing Emphasis on Nonprofit “Overhead”
More and more people are realizing that you can’t just invest in programs without the staff, infrastructure and fundraising to make those programs happen.
- More Advocacy for the Sector
as a Whole
The nonprofit sector has long been a fractured grouping of organizations of various sizes, business models, and issue areas. But that tide is starting to turn. We are starting to see the sector organize, mobilize and build the confidence necessary to claim its rightful place.
- Savvier Donors
Because nonprofits are getting more savvy, donors are as well. In addition to an increasing demand for proof of outcomes, donors are starting to realize that in such a stark economic environment those nonprofits that don’t have adequate infrastructure simply will not survive, let alone be able to adequately address the social problem they were organized to solve.
- Increased Efforts to Rate and Compare Nonprofits
We are increasingly evaluating nonprofits based on the results they achieve, not on how they spend their money. And to do that a whole infrastructure for evaluating and rating nonprofits is emerging and will continue to evolve as we get smarter about focusing resources on the most effective nonprofits.
These are exciting times for the nonprofit sector. This webinar will help you understand and embrace these trends.
Embracing the Future of the Nonprofit Sector
A Social Velocity On Demand Webinar
Photo Credit: Adolf de Meyer
As the end of 2012 drew near, December brought the usual looking forward and looking back. It was a time to reflect on where we’d been and where we (might) be going. It was also a time to salve the pain of disaster and tragedy with hope and innovation.
Below are my top 10 reads in December in social innovation. But please add what I missed to the comments. And if you want to see an expanded list, follow me on Twitter, Facebook, LinkedIn, Pinterest or ScoopIt.
You can see the 10 Great Reads lists from past months here.
- First we took a look back. Lucy Bernholz, queen of social sector predictions, reviews the ten year predictions that she made in 2010 to see how she’s doing so far. PhilanTopic offers an infographic that demonstrates how effective online and social media fundraising was in 2012.
- Then we look ahead. Writing on the Nonprofit Quarterly blog, Rick Cohen provides a wrap up of various social sector leaders’ predictions for how the nonprofit sector will change in the coming year. And Twitter’s Manager For Social Innovation describes how social media is shaping the future of nonprofits. And on the Stanford Social Innovation Review blog Mark Tobias offers nonprofits Ten Technology Trends to Watch in 2013.
- Amidst the season of giving, Caroline Fiennes and Phil Buchanan explain (on the Freakeconomics blog) why giving to fewer charities is actually better.
- In a very interesting thought piece Kenneth Rogoff, economics professor at Harvard, takes issue with those who argue that our current economic troubles stem from a long-term innovation crisis.
- Building on a growing movement to get the nonprofit sector to stand up for itself, Johns Hopkins University released the results of a nonprofit sector survey that found a widespread consensus that seven values lie at the core of the nonprofit sector. But they also found that nonprofit leaders believe the sector must better articulate these values to the media, government, and general public.
- In his usual fashion, Seth Godin likes to pronounce on the nonprofit sector, a sector which he doesn’t quite understand. His post Non-profits Have a Charter to be Innovators drew some fire, but raised some interesting questions. And echoing that interest in seeing more nonprofit innovation, Google shifts their philanthropic focus in an interesting way.
- And not to be left behind, philanthropy is getting into the innovation game too with more foundations exploring design thinking.
- After the horror of the Newtown tragedy on December 14th, this collection of 26 photos from 2012 helped restore our faith in humanity and was a much needed salve.
- The Red Cross provided a great case study on how pull (instead of push) marketing can work in the nonprofit world.
- Something really interesting came out of hurricane Sandy: crowdfunding disaster relief. No longer is disaster response the sole responsibility of government and large nonprofits, individuals set up their own relief efforts via social media.
Photo Credit: Svenstorm
My annual predictions for the coming year are probably a bit more wishful thinking than actual prediction. It’s hard to say if my predictions for 2011 became a reality for the sector as a whole. But I am ever an optimist and continue to think that the nonprofit sector is getting smarter, more effective, and better able to create real, lasting change in our communities. I truly believe that our challenging economy offers nonprofits a real opportunity to reinvent themselves.
So here are my predictions (hopes) for what the nonprofit sector will move towards in 2012:
- More Open, Engaging Organizations
Smart nonprofits are getting better at engaging armies of supporters. In order to do that, they have to cede some control. Nonprofits that can allow volunteers, donors and advocates to engage their friends in their own way will unleash a growing army of support for their organizations. Those nonprofits that continue to control the message and the method, that only engage their donors when they need money, and ignore the increasingly networked world will wither on the vine.
- Smarter Boards
I am an endless optimist when it comes to nonprofit boards of directors. Boards are, for the most part, dysfunctional, but I believe that they are getting smarter and more effective. I think boards will start asking more and better questions, increasingly put themselves to their highest and best use, focus more on strategic issues as opposed to day-to-day tasks, empower their staff leadership to take the organization in more innovative directions, and start putting their money (and their networks) where their mouth is. Because this new harsher environment absolutely necessitates a smart, strategic, innovative board.
- More Honest Communication Between Nonprofits and Their Donors
Oh yes, I do, I do believe it. The nonprofit sector’s proclivity to endlessly beat around the bush, tell donors what they want to hear, and sugar-coat the truth will start to wane in the new year. Because the reality is that a severely under-resourced nonprofit sector is the new normal. That truth is harder and harder to hide. Nonprofits need more money for infrastructure, more and better staff, technology. And they need their donors to step up to the plate and fund it. Those nonprofits that continue to fear their donors will continue to struggle. Those that take the leap and tell donors how it is, how it REALLY is, will propel themselves out of the starvation cycle.
- More Strategic Approaches to Solving Social Problems
It’s increasingly meaningless for nonprofits to talk about the “good work” they do. In order to attract donors, nonprofits must be able to articulate what they do and how it results in change. This necessitates an overall strategic approach to their work. From creating a theory of change, to developing on a comprehensive strategy, to raising the money required to execute on that strategy, to aligning money and mission, to evaluating their efforts, to translating their evaluation into a compelling story, nonprofits have to get more strategic. Those organizations that take a step back and create, and fully integrate their organization into, a long-term plan will be much more successful and sustainable.
- More Financed Nonprofits
As part of this more strategic approach, nonprofits will (must) move towards a broader, more strategic approach to funding their work. They will realize that the hamster wheel of chasing receding dollars in a scattered approach just isn’t going to cut it anymore. As the fundamental economic restructuring that we are currently experiencing continues, nonprofits must create a financial model for their work. The financial status quo just will no longer work in the nonprofit sector.
I’m not a fortune teller, but I am an optimist. I have tremendous hope for our great nonprofit sector. We may be in the depths of an on-going, structurally transformative recession, but it in no way is the death knell for the nonprofit sector. It is simply an opportunity for nonprofits to get smarter, more honest, more open, more strategic, and more sustainable. And that’s exciting.
Photo Credit: riptheskull
November was another great month in the world of social innovation. Here is my pick of the top 10 posts, articles, graphics, and discussions. As always, please add your favorites from the month to the comments. And if you want to see a longer list of what catches my eye, follow me on Twitter @nedgington. You can also read past months’ 10 Great Reads lists here.
- Some very interesting reports and predictions on how nonprofits and philanthropy are changing. First, the Philanthropic Ventures Foundation predicts a pretty exciting future for philanthropy. And Blackbaud released a report on what 35 experts think it will take to grow philanthropic giving in the US. And finally the 2011 Nonprofit Almanac is out. The annual report shows the nonprofit sector growing and that giving is back to 2000 levels
- DC Central Kitchen founder and nonprofit sector advocate Robert Egger launched a new group called CForward to help nonprofits fight for their rightful place at the political table.
- The Washington Post gets into the social innovation business by launching a new “On Giving” section to discuss philanthropy, social entrepreneurship, socially responsible business and much more.
- The Nonprofit Finance Fund offers a great worksheet to assess a nonprofit’s strengths and weaknesses in order to link their financial health to their impact. Love it!
- HubSpot offers a great infographic on pull vs. push marketing, but I’d argue it applies to fundraising as well.
- The Alliance for Global Good is launching a $10 million fund to promote innovation in philanthropy. The new fund will “draw attention to charities that have found new approaches to tough problems and provide money to help them expand their work.”
- On the Unsectored blog Jeff Raderstrong encourages us to start asking the right questions about the charitable deduction currently the focus of so much debate.
- Always one to tell it like it is, Mario Morino from Venture Philanthropy Partners offers 6 Wrenching Questions Every Board Member Must Answer.
- Jim Kucher argues on his blog that there is a bipolar disorder in social entrepreneurship, between the competing, and sometimes conflicting, social and business perspectives.
- Tom Tierney, chairman of Bridgespan Group, a nonprofit consultancy, has written a paper, “The Donor-Grantee Trap, about the dangers of the nonprofit starvation cycle. In a recent interview about it, he argues “Nonprofits should be clear about their definition of success, articulate their strategy for achieving success and be up front about what that costs. That includes understanding the organization’s true overhead costs and making a case for funding good overhead.” Amen to that!
Photo Credit: Sim Van Gyseghem
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