2016: Ten Nonprofit Trends

Change is accelerating in the non-profit sector to a degree that the following trends will become highly visible and important in the new year:

1. Sector Shift: Very slowly, over 50 years ago, the government sector began shifting social services to the nonprofit sector, resulting in much of the responsibility for this area being privatized. Certainly, government is still funding significant portions, along with the added foundation, corporate and individual donors. Now, with social impact investing, for-profit companies, including B-Corps and others, fueled by foundation corpus investments, social impact bonds, mutual funds and individual donor/investors, are taking on low-hanging fruits to produce measurable results and profits. How far this trend goes will become more and more apparent in 2016.

2. Demand for Measurable Return on Investment: Whether resources are going to non-profits or for-profits, additional scrutiny will focus on empirical results. To receive resources, non-profit agencies must develop better, more systematic ways to measure impact, while for-profit companies need to not only produce data that show positive change but also produce an acceptable return on investment.

3. Increase in Cause Marketing; Joining traditional cause marketing is a new wrinkle, based on market research results that show consumers prefer buying products of companies supporting worthwhile causes. Added to this is the narrowing of focus of many corporations and their foundations to support areas in which their customers are most interested. This may skew focus to the more highly publicized and marketed non-profit causes.

4. Consolidation into Larger Non-Profit Units: The shift to well-publicized areas and the drain from for-profit entities entering our sector are increasing support for larger, well-financed non-profit organizations that can market their services and causes. Given society’s dependence on emerging non-profits for creativity and innovation. (Dania often jokes about “innovention” a word borrowed from a 30 Rock episode.) Will this slow down our ability to provide solutions to emerging problems? Or, similar to industry, will smaller non-profits with successful innovations merely be “acquired” by the larger ones?

5. Shift in Donor Demographics: With changes in distribution of wealth and income, donor demographics are also shifting. Concentration of wealth will produce an increase in larger, multimillion dollar gifts to fewer, mostly larger organizations, while the decline in the middle class will result in fewer numbers of reduced amounts from them.

6. Fewer Successful Capital Campaigns. While capital campaigns of the larger organizations, e.g. universities, museums, hospitals, etc., will flourish, campaigns by mid-sized and smaller organizations will run into more difficulty, perhaps with many not making goal or postponing or canceling altogether. This is a direct result of the narrowing focus, the turn to popular causes and the shrinking middle-class base of many agencies.

7. Increased Government Regulation and Fees. Two different trends, government’s need for more resources and the public’s distrust of many social institutions (including government) will result in increased government scrutiny of non-profits and their finances. From curtailing deductions for donations, to increasing regulations, to narrowing of tax exemptions, to upping fees for services, nonprofits will be increasingly affected by the public sector.

8. Increased Board Turnover. With all of these pressures mounting on non-profits, with board selection not entirely disciplined nor new members fully trained and with increased pressure on fund-raising, an increasing number of board members will resign before their terms are completed. This, again, will primarily affect mid and small-sized organizations.

9. Increased Turnover of Top Staff. A combination of retirements of those executives with pension investments returned to pre-recession levels, additional stresses for measurable impact, increased government pressure, more intense competition for resources and greater board and public scrutiny, executive staff will have shorter tenures in office.

10. Scarcity of Top Development Professionals. Increased pressure and reliance on development, lack of effective training, misunderstanding of their role by other executives and boards, a shrinking major and annual donor base and burn-out are resulting in increases in rapid turnover of development professionals, increases in poorly prepared personnel and departure from fund-raising as a profession. The field is in disarray.

There are a number of other trends that should be followed in digital, crowdsourcing, data and training areas. A number of essays during 2016 will attempt to cover these areas as well as expand on the ten above.

The author is always interested in your comments, criticisms and suggestions for improvements. I look forward to hearing from you.

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