What is a 2st Century Nonprofit?

Anne Hays Egan
October 4, 2011 — 1,212 views  
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The first ten years of the new century (and the new millenia), significantly re-shaped the landscape of the nonprofit sector.

Some Trends

The traditional way nonprofits did business was challenged by Information technology, and the new strategies it created for doing business --  from communicating with stakeholders, to managing databases for outcome evaluation to budgeting and managing the fund development operation. Government contracting created a different service model. Foundations focused more on outcomes, and a return on investment. And, the fiscal crisis caused major cuts for much of the sector.

Nonprofits made great strides in the 20th century, and also experienced some of the worst difficulties since the Great Depression. The landscape of the nonprofit sector has been fundamentally reshaped by decades of federal and state policy changes, budget cuts and privatization -- and by the impact of the recent fiscal crisis. 

There has been an increasing call for smart management, community-based collaboration, and building on effective practices.

So what is different about a 21st century nonprofit?

You will find a range of answers from different nonprofit leaders. Here are some of my thoughts. I believe that, by and large, nonprofits do good work, and don't need to be "fixed." Often, however, nonprofits are pressured by changes in the external environment and stressed by their own developmental challenges. Many nonprofits could expand their capacity, especially with additional resources and technical assistance. 

Moving forward in the next decade of 21st century, nonprofits will probably find continuing challenges. Some of the greatest challenges of the last decade came from the economic crisis. It has been called the Fiscal Crisis most often in the nonprofit sector. Whatever the term, the nonprofit sector has been particularly hard hit by these financial challenges. Many donors have cut back, but not all. A large number of foundations have reduced their grantmaking because of market's impact on their corpus. And, perhaps the worst, most states are cutting, and in some cases, substantially. This has many nonprofits reeling. 

If an agency is able to develop plans for dealing with cuts, they stand a better chance of long term survival. The should review their budgets, and find every possible area for trimming. They should decide where they will make the hard cuts, when they come, and how they will do that. Nonprofit executives and Board Chairs should rally the board, and them everything they need to get out and do serious fund raising (one of the board's most important responsibilities). Volunteers should be recruited.

And, What May Lie Ahead?

I believe that, even after this current crisis abates, there will be more ongoing challenges. And nonprofits will need to run more like businesses than ever.

There will be continuing opportunities and pressures to leverage, and with new resources and partners. Ongoing external pressures will require nonprofits to collaborate more strategically, to impact and improve community services and the service delivery system. Hopefully, nonprofits will continue their role as the center of our communities. Public policy will become increasingly important, and nonprofits will need to take the lead on key issues to ensure that the sector is better represented in local and state decision-making, and better funded. Building diversity will be central to all aspects of work. 

It will be good if nonprofits can build more streamlined, practical program evaluation systems. That will require both advocacy to change government funder data reporting requirements, and sector support for capacity building around evaluation. Can nonprofits build evaluation capacity, and work to have funders coordinate more on data, evaluation and reporting? The sector may need to advocate for more realistic requirements as well as support for capacity building to meet those requirements. There will need to be more funding for evaluation and operations. To build effectiveness, nonprofits, funders and government entities will change.

After decades of discussing the importance of clients, consumers and customers, nonprofits may be able to better integrate customers into planning and evaluation. Strategic partnerships will increase: with other nonprofits, grantmakers, community groups, business and government. Nonprofits will continue to seek to diversify funding by increasing donor income. And they will utilize technology much more often for communications, in order to reduce meeting and travel time and costs. Making progress in these areas will build nonprofit sustainability.

The way a nonprofit does fund raising may well determine how well it fares over the coming decade. Quality programs, current technology and interagency collaboration are all very important. But, one area that I think will really move to the fore in terms of influence is the agency's work with donors. Those agencies that have strong boards with a vision, board members active in fund raising, and board members recruiting other donors and volunteers -- these agencies will do well. Nationally, 85% of all money given comes from donors. Much of that money is given to faith communities and colleges and universities. However, the individual who has been touched by an agency's work is one of the best investments in a strong financial future.

21st century foundations will become increasingly strategic in grantmaking, seeking to leverage resources. People will talk more about investment, and the return on investment. Government funders will be pressured to streamline their data and reporting requirements, to coordinate more between governmental agencies, and partner with nonprofits to be increasingly effective. 

We will shape that 21st century future together – by the priorities we set with public policy, community building, collaboration, leveraging, funding, programs and other factors.

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Anne Hays Egan

Nonprofits Online

Anne Hays Egan is an organizational development consultant to nonprofits. She is based near Santa Fe, NM. She has worked with hundreds of nonprofits throughout the United States, focusing on strategic planning, organizational development, evaluation and interagency service network development. She has published newsletters for the sector, as well as books and chapters. She has presented papers internationally to Independent Sector, International Society of Third Sector Research and United Way of America. Her work has been cited in nonprofit management association networks, funding networks and association groups. She is the former publisher of the Digest of Nonprofit Management, and Tools for Nonprofits. She provides information, resources, newsletters, fund-raising plan outlines, and many other materials from her website, Her website is: nonprofitsonline.net and her email is: [email protected]