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philanthropy 2011

5 Nonprofit Trends to Watch in 2011

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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