In 2015 Not-For-Profit Organizations Face A Brave New World

The hard times remain

Most for-profit businesses have recognized that it is essential to do business differently post-recession in an Internet environment. Looking at the not-for-profit world it seems this lesson may not be so obvious. While the long hard road out of the 2008 recession may be close to ending for US companies, the path may extend substantially further for nonprofits.

 

As there is no profit or numerical yardstick to evaluate the profitability and soundness of their offerings organizations in the not for-profit sector can often continue long after they are relevant to their members or the marketplace. In the circumstances struggling associations can burn through endowments real estate trusts and bank accounts denying the reality that is obvious.

 

Declining membership and declining revenues are common realities for numerous organizations.

Several nonprofits saw their revenues increase during the recession. These were those based in social welfare charities, survival food banks, homeless shelters and those organizations which sought to mitigate the widespread impact of job losses. Many other nonprofits associations including professional organizations medicine, sports and religious groups have found new relations with funding sources (Chambers of Commerce, American Medical Association, political action groups, charity hospitals, etc.).

 

Public-private partnerships have been a mainstay of community services for many years. Yet the sequester and other substantial cuts in federal government subsidies have substantially reduced the dollars available for public private partnerships. Few states have been able to cover the gaps left by declining federal services.

 

Many nonprofits have closed their doors; nearly all have reduced staff, services and programs since the 2008 recession. Some made these reductions in the face of decreasing income and loss of membership other associations made reductions in response to strategic realignment. Some nonprofits got through the recession using volunteer interns and unemployed individuals who chose to do volunteer work rather than nothing or flip burgers. Several of those nonprofits now recognize that they do not have the human resources to continue without the free labor. In some instances interns and volunteers who found the work rewarding and interesting now recognize the unsustainability of the business model in the nonprofit where they waited out the recession. Doing business the same way it was done pre-recession simply does not work for the future.

 

I’ll spend my next few blogs looking at the not for profit sector and discuss ways Research Design Associates is helping nonprofits position for success in this new environment. As our strategic planner for the arts once said “Tax exempt does not mean reality exempt”. We’ll look at the new and evolving nonprofit reality.


  
  

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