I’m going to do a brief dive into some key observations from the Center for Effective Philanthropy’s report, “State of Nonprofits 2023 – What Funders Need to Know.” It provides some great insights that can help nonprofits make more informed decisions and perhaps answer some questions about our sector.
Surprisingly, the financial outlook for nonprofits is more positive than you might expect. More than two-thirds of leaders are anticipating either a balanced budget or surplus in the current fiscal year. Only 23% are projecting a deficit, mainly due to anticipated high costs and lower than expected contributions from both foundations and individual donors. On the flip side, those predicting a surplus attribute it to higher than expected foundation and individual giving and lower than expected costs. This is a testament to the resilience of nonprofits and their ability to adapt to challenging economy.
However, it’s not all about the money. Nonprofit leaders have identified several areas that would be helpful to address: changes in funding, organizational capacity building and professional development, as well as staffing help. A small proportion of leaders also spoke to the need for marketing support to provide increased visibility for the organization. This highlights the importance of a holistic approach to nonprofit management, where financial health is just one piece of the puzzle.
The report also provides a snapshot of the demographics of nonprofit leader respondents. Two-thirds identified as women, three-fourths identified as white, 21% identified as a person of color, 15% identified as a member of the LGBTQ+ community, and 13% reported having a disability. This data underscores the importance of diversity and inclusion in the nonprofit sector, and the need for continued efforts to ensure representation at all levels.
So, how can nonprofits use this information to make informed decisions? Here are a few suggestions:
- Financial Planning: Use the financial outlook data to benchmark your organization’s financial health against the sector. If you’re projecting a deficit, you’re not alone, and there are strategies you can adopt to navigate this, such as exploring new funding sources or reducing costs.
- Capacity Building: Invest in organizational capacity building and professional development. This could involve strategic planning, skills training, or recruitment strategies to attract a diverse pool of candidates.
- Diversity and Inclusion: Reflect on the demographic data and consider how your organization measures up. If there are gaps in representation, develop strategies to address them.
- Resource Utilization: Leverage the resources mentioned in the report, such as Fund the People’s toolkit for nonprofits and funders, The National Council of Nonprofits’ resources on employment and HR, and CEP’s guides on funder practices that support nonprofits.
By understanding the broader landscape, you can make strategic decisions that strengthen your nonprofit and enable it to thrive in an ever-changing environment. Remember, knowledge is power, and in the nonprofit sector, it’s the power to make a difference.