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Six Challenges Facing the Nonprofit Sector

Nonprofits evolve while attempting to regain financial ground lost during the recession.

By University Alliance
Six Challenges Facing the Nonprofit Sector

Nonprofit organizations continue to adjust their goals and priorities to meet changing trends.

The top priority from years past – acquiring new donors – has been eclipsed by the need for nonprofits to engage the community, retain current donors and promote general brand awareness, according to the website Nonprofit Marketing Guide.

The current top trends, however, are not much different than those facing the nonprofit sector several years ago.

Nonprofits continue to evolve in the face of social change, according to the late Jimmie Alford, founder of The Alford Group, a consulting firm for nonprofits.

In 2007, Alford said, nonprofit donations peaked at $330 billion before tumbling due to the recession.

Alford predicted it might take as long as 10 years before donations returned to the 2007 watermark due to low inflation, slower economic growth and personal constraints felt by donors. Those constraints, coupled with an uncertain economy, mean that many donors won’t commit to multiyear recurring donations as they have in the past.

He outlined six challenges facing the nonprofit sector, and described why each is significant:

  • Fiscal: How do nonprofits change pre-existing patterns and identify new funding sources, such as self-generating revenue from monetizing assets such as unused building space?
  • Competitive: How do nonprofits make themselves stand out? How do they utilize brand recognition to energize and mobilize their supporters?
  • Effectiveness: How do nonprofits measure and promote effectiveness by establishing goals and letting donors know what has been accomplished?
  • Infrastructure: How does a nonprofit utilize its resources to build a solid infrastructure? Alford recommended nonprofits focus more on research and development.
  • Legitimacy: How do nonprofits overcome public skepticism and distinguish themselves from the organizations that don’t do what they promote and often are found misusing donation dollars?
  • Growth: How do nonprofits continue to grow, make positive impacts and effect change? 

He also focused on disruptive forces likely to impact nonprofits for several years to come.

A disruptive force can be an unexpected, significant change that defies previous patterns. It can be a situation or circumstance that creates dynamic change, transforming existing industries or creating new ones. It also can be what Alford called a revolutionary force as opposed to an evolutionary progression.

Alford discussed disruptive forces such as:

  • The challenge facing nonprofits in experimenting with different services
  • The continued development of information privacy and how information is used by an organization
  • The integration of science as it relates to specific nonprofit causes
  • A demand for impact as it relates to how nonprofits measure success, and how that impact assists organizations in branding specific causes
  • How nonprofits attract long-term investors as opposed to occasional donors 

Nonprofit Marketing Guide found similar results during its query of 1,535 nonprofit organizations while compiling its 2015 report.

Among the findings: Participating nonprofits ranked a lack of time to produce quality content as the biggest challenge faced, followed closely by a lack of funds for direct expenses and an inability to measure effectiveness.

You can learn how to thrive in the nonprofit environment from successful nonprofit leaders. Earn a nonprofit executive certificate from the University of Notre Dame’s 100% online programs.


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Category: Nonprofit Leadership