19 Dec 2018 / by Dania Toscano Miwa / in Leadership, Nonprofit Management, Nonprofit Sector, Philanthropy
2019: Ten Trends Affecting Nonprofits
Article by Dania Miwa and Jim Toscano.
Transition was the name of the game in 2018 for nonprofits, anticipating changes in government policy, especially in tax law, and trying to decide what directions should be taken. More than ever, large nonprofit organizations’ fundraising focus was on the top of the donor pyramid with programming focused on expansion. Almost everyone else tried to just hold on, with some nonprofits attempting to fill gaps caused by changing societal, economic, environmental and government trends through alternative funding strategies.
Here’s what’s in store for 2019:
- Enlargement of the Civil Benefit Sector. With increases in social impact investments, program related investments, social entrepreneurs, B-Corps and Public Benefit Corporations, to name just a few of the leading innovations, there will be increasing investment, people and energy attempting to work alongside nonprofits in solving societal challenges, dysfunctions, issues and problems. Combined with younger generations’ interest in improving civil society, the scope of public benefit activity will continue to increase and receive increased funding. Increasing numbers of nonprofits will spin out for-profit subsidiary organizations to take advantage of these trends.
- Donation restructuring. Large multimillion gifts, mostly to the top 500 nonprofits, will continue to reshape the donor pyramid. With 49% of all gifts coming from only 1% of donors, and with the number of small donors decreasing, a fundamental restructuring of the development function in nonprofits will continue and widen.
- Monetization. Focus on outcomes and impact will increase, especially by foundation and corporate philanthropy, with measurement of these variables increasingly relying on monetization of all factors in nonprofit processes. Originated in sophisticated form by the Robin Hood Foundation, translating all factors into dollars will give sharper focus to return on investment, although losing qualitative aspects of nonprofit work.
- Donor Advised Fund Growth. Motivated by the new tax laws, donor advised funds will continue to grow rapidly, involving not only people of high net worth but also upper middle class families, especially those seeking to replace lost tax deductible categories with charitable contributions in a given year. Efforts to increase pay-out of the DAF’s will put the agency holders of these funds in line with the efforts of nonprofits to work with donors with DAFs.
- Climate change. The new federal government report and the recent life-saving attempts to keep the Paris Accords alive will bring more and more focus on what can actually be done to ameliorate climate change. Environmental nonprofits, existing and newly-sprung, will spur new advocacy and, hopefully, public support for legislation at city, county and state levels. Financial support will also grow.
- Immigration. With over 10 million undocumented people in the country and 15,000 young people being detained in camps, public awareness will be further heightened. Given inaction by the federal government, private groups, both nonprofit and for-profit, will increase activity to ease the situation, however, without the ability to fully solve the problem.
- Cybersecurity. Given the past lack of substantial investment in cybersecurity, nonprofits will become increasing targets for hackers around the globe. Storing sensitive and highly confidential information, often in outdated computer record systems, will cause nonprofit boards and executives to reexamine their systems and responsibility to constituencies, resulting in much larger than usual expenditures, where possible, for newer and more secure software and hardware.
- Partnerships. Partnerships, if not outright mergers among nonprofits, will increase substantially, extending to partnerships with for-profits and with government agencies. The push for these partnerships by funding agencies to increase efficiency and impact, will result in potentially improved services, but with resulting reductions in personnel and confusion among donors. The emergence of some form of hybrid organizations may result after 2019.
- Social media. Even with current increasing distrust of social media, nonprofits will continue to build presence and encourage participation and donations. Social media sites will encourage this expansion and add new features to help nonprofits attract followers. Digital donations of smaller denominations will increase on social media sites and on the nonprofits’ own websites. The largest challenge ahead for nonprofits is making sure the social media platforms are working to enhance donor and constituent engagement – not harm it.
- Training. The need for increased training and expertise will be even more apparent for nonprofit personnel. The professionalization of management in nonprofits need not take away from commitment to mission, although that fear will persist. With the continued retirement of top executives, there will be substantial opportunity to increase the competency and expertise of nonprofit leadership. Budgeted funds for employee training will also increase to help meet the need for this expertise.
Authors note – We want also to acknowledge the importance and affect that the #MeToo movement has had on our communities, co-workers, families and friends, however we feel that this is beyond a “trend” for nonprofits and in fact is an issue of such importance that we are choosing to devote a future full posting to this topic alone.