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How Nonprofits Can Thrive amid Increasing Demand and Scrutiny

How Nonprofits Can Thrive amid Increasing Demand and Scrutiny

Nonprofit Financial and Expense Management76 Percent of nonprofits in the United States saw an increased demand for services in 2014. Although down from prior years, one alarming statistic takes root from this: more than half (52%) of these nonprofits are unable to meet said demand.

Led by needs for affordable housing, youth development programs, job availability and healthcare, more and more nonprofit organizations are seeking new ways to meet demand by partnering with other organizations and seeking additional assistance from personal networks. However, this rarely fills the gap, as 71% of nonprofits see the needs unmet.

Related: Confessions of a Nonprofit CFO

This can all be summed up by a statement from a human services organization leader who, when surveyed as part of the annual Nonprofit Finance Fund State of Nonprofits, had this to say:

“People seem to believe that since the economy is improving, the community is less in need of resources. This is not the case. Basic human services have begun falling off the radar of funders and donors, but the need is still great.” -Human Services organization, WA

It’s not just a lack of donors, however. With a great deal of nonprofits gaining funding from government organizations, the ones that do gain funding from federal, state, and local government entities must be able to meet strict reporting and eligibility criteria.

Related: How Three Nonprofits Captured the Heart of Donors

This leaves a nonprofit two options:

  • Increase reliance strictly on Foundations and Individuals
  • Improve reporting and visibility to appease current and future funders while gaining credibility for grants and other sources of income.

The second, of course, is key to improving short- and long-term operational success. Consider these statistics:

  • 64% of nonprofits report that more than half of or all funders ask for output and outcomes data
  • 63% of nonprofits report that more than half of or all funders expect the same data to assess the effectiveness of the programs
  • 38% of nonprofits report that more than half of or all funders will only provide funding if specific outputs are met.
  • 35% of nonprofits report that more than half of or all funders will provide funding specific on specific outputs.

Unfortunately, only 23% of respondents feel that they can have an open dialogue with funders about measuring program outcomes.

Related: Three Must-Have Nonprofit Donor Management Software Features

What does this mean? Reporting and visibility is absolutely critical for raising funding that covers costs and achieving long-term financial stability, something that 19% and 32% of nonprofits see as a challenge respectively.

“Sustainable funding continues to be our greatest challenge. Our actions to address this challenge include developing and adhering to a strong and dynamic strategic plan; diversifying our program funding streams as much as possible; developing and communicating a strong community impact statement for our programs; and focusing on increased donor engagement in order to increase fundraising dollars.” -Human Services organization, NC

What can nonprofits do to achieve long-term financial stability? What can a nonprofit organization do to raise funding that will meet an ever-increasing demand? The report provided questions to ask to build a roadmap to achieve each.

Support Long-Term Financial Stability

Nonprofits can ask the following questions to support long-term financial stability:

  • Do we ask for funding that covers full costs?
  • Can we budget to build surpluses?
  • Can collaboration improve our programs or impact or increase our operational efficiency?
  • Do we have the operational and financial adaptability to enter into the growth or change that we are pursuing?
  • Can we influence policy to improve our funding environment and how resources flow to our communities?

Reporting and Visibility: Discuss Outcomes and Outputs in 2015

Achieving long-term sustainability requires that nonprofits closely monitor both financial and operational measures of success. Knowing how to reduce spending, capture the heart of the donors, and report key monetary metrics are pivotal to gaining donors and keeping current funders.

Learn how you can help your nonprofit thrive by checking out the related resources:

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