Nonprofit trends to look out for in 2020 and strategies for managing them.

1. Diversity, Inclusion, and Equity.

Nonprofit trends suggest that most nonprofits have integrated into their core values policies and procedures that denounce discrimination, racism, intolerance, and bigotry. Throughout 2019 nonprofits have increasingly worked towards building capacity to intentionally address internal biases and adopt practices that promote diversity, equity, and inclusion for all. The Council of Nonprofits has a variety of tools that can be utilized for those who are just beginning their journey to creating more equitable, diverse, and inclusive environments. 

2. Addressing Nonprofit Burnout.

Nonprofit burnout prevention requires organizations to embrace self-care for employees by adopting policies and practices that are employee-centered. In a study conducted by Capacity Building Experts, LLC and Rider University, we found that managers are employing the following strategies simultaneously to attempt to create stronger connectivity to the organization and to reduce burnout: 

* Professional development opportunities/ training, 

* Standardization of practices, 

* Building stronger team relationships, 

* Workplace restructuring, 

* Building stronger support systems from the supervisor, 

* Staff coaching, 

* Stronger self-care practices, and

* Internally reconceptualizing outcome measures that exceed the standards set by funders. 

3. Move Towards Mergers.

Mergers are a growing nonprofit trend in order to ensure sustainability for organizations. As funders are increasingly shifting resources to medium and large-sized organizations, smaller nonprofits are looking to increase their economies of scale and scope through mergers in order to ensure the sustainability of their organizations. This endeavor, of course, is one that requires a great deal of exploratory work, preparation, negotiation, and investment of time and resources. Some considerations to keep in mind when undertaking a merger include the following: 

* Ensuring organizational compatibility: This includes examining whether goals, culture, financials, and services are aligned. 

* Examination of the key elements of each potential partner in the merger: This includes examining key elements of the current organizations’ past and current situations to gain a fuller understanding of the strengths and risks that the merged organization will “inherit” and have to manage.

* Determining the most appropriate corporate structure: The legal team and the boards of the potential partners must decide whether they will undertake a technical merger, dissolve-and-combine, or create an affiliation/ subsidiary. 

* Identifying short-and-long-term costs: This includes assessing and making decisions on severance pay, the cost of aligning health care packages, expenditures, savings, and losses that can be attributable to the merger.  

* Aligning systems: This includes assessing and strategizing around merging the administrative, programmatic, technological, management, and facilities systems.

* Determining a new governance structure: This includes assessing the governance approaches for both organizations and developing a new governance plan.

4. Reduced funding.

In the past two years, there has been a growing and disconcerting nonprofit trend that is endangering the fiscal health of organizations. A significant reduction in funding from federal, state, and local governments has imposed financial hardships on nonprofits and service recipients. One example of this is the recently proposed rule that limits the ability of states to waive work requirements for able-bodied adults receiving SNAP benefits regardless of the absence of work opportunities.

Simultaneously, there has been a shift towards cost-reimbursement models that require organizations to provide services upfront and be reimbursed after the services have been provided. This has created cash-flow issues for many organizations.

The government has also eliminated the charitable deduction tax incentives which have resulted in diminished giving for nonprofits. According to Giving USA 2019: The Annual Report on Philanthropy for the Year 2018, individual giving declined by 1.1% in 2018 to $292.09 billion. This is a decrease of 3.4% when adjusted for inflation. Giving by individuals also decreased from 70% in 2017 to 68% in 2018. This is the first nonprofit trend showing a decline in giving since 2013. Up through 2017, individual giving trends had increased by 5.7%.

These nonprofit trends point to a potential scarcity of resources, particularly for health and human services, that could result in a reduction or elimination of vital services. Nonprofits should come together and engage in advocacy efforts with government, legislatures, corporations, and foundations to: 1) stress the dangers of weakening our social safety net, 2) propose solutions regarding where to invest resources, 3) educate funders regarding the changing needs of the recipients of services, and 4) to work together in broad-based coalitions to impact changes in fiscal policy. 

5. Preparing for the Minimum Wage Increase.

A growing number of states have increased their minimum wage. According to the Nonprofit Council, several states in 2019 joined this growing trend and passed legislation to increase the minimum wage with staggered increases throughout the next few years.

Of course, the increase in the minimum wage is considered to be a positive development that advances the economic justice goals of many organizations. In addition, it can build capacity for nonprofits by reducing turnover and attracting more qualified employees. However, if this wage increase is not supplemented with an increase in funding, the impact could be devastating.

Unfortunately, nonprofit trends point towards a decrease in revenue streams from the government. Foundations have not committed to increasing financial support to help nonprofits absorb these new costs either. Without funders increasing their allocations to ease the transition, the combined fiscal pressure from reclassifying exempt employees and paying higher salaries from the wage increase will likely result in financial hardship for nonprofits. The resulting remedies could include reductions in services since many human service and education nonprofits do not have enough private payers to offset the costs.  

Nonprofits should engage in advocacy efforts with state legislatures to secure funding increases. In addition, education campaigns targeting corporate, private, and philanthropic donors are an essential step to adequately facilitating the transition to the new rate.  

Organizations that want to update themselves on the new wage requirements in their states should turn to their nonprofit state associations in order to: 1) sign-up for training, and 2) obtain the latest information on advocacy efforts.

Happy Holidays and New Year!

This is the last blog posting for 2019. On behalf of Capacity Building and Policy Experts, LLC, we wish you a very happy holiday season and a wonderfully joyous New Year!!!!!!!!!!!!!

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