So, what does the future hold for nonprofit organizations? One thing on which most of us can agree is that this year has been a tumultuous one for the nonprofit sector. My predictions for 2018 emphasized the following topics. I elaborate on each and welcome your questions and observations at any time.
I begin with a quote by David Callahan for Inside Philanthropy in his article, “Trump Effect: Six Ways Philanthropy Has Changed in the Past Year” (January 23, 2018). It sums up our situation well at the conclusion of 2018.
“It’s been an interesting time. Many funders have responded with a combination of new work and business as usual, feeling their way along in a fast shifting, and often alarming landscape. Others have radically changed how they think and operate. And then there are some foundations—many, actually—that have kept doing exactly what they were doing before in areas that are quite removed from national policy battles. Overall, it’d be wrong to say that the 2016 election has disrupted philanthropy in any seismic way. But it’s also hard to recall a period of so much anxiety and action within the funding world.”
With a conservative administration in place, one of my 2018 predictions anticipated reduced federal funding for grants to nonprofit organizations. The verdict is still out. I have witnessed one nonprofit with which I work continue to secure new federal grant contracts this year, while some federal grant programs on which it had relied previously were dissolved. This reflects new thinking and interests on the part of federal officials, and this nonprofit has been quick to adapt.
Federal funding is being funnelled from the federal government to the states, with the states then allocating grants locally, many of them to nonprofits. This mode of operation dovetails with the Republican emphasis on delegating decision-making to the states and not managing those decisions from Washington, D.C. Some have called this the, “Overthrow Project.”
Herbert J. Gans notes in his article for The Nation, “This is How the Republican Party Plans to Destroy the Federal Government” (February 13, 2017). “The essence of the Overthrow Project is familiar: to reduce taxes on the very rich, free the business community from taxes and regulations that interfere with its money-making, and subsidize that community with public funds. In addition, the Overthrow Project aims to privatize as many governmental activities as possible. Left for government is the maintenance of the remaining public infrastructure that enables private enterprise to operate efficiently and safely, as well as the assurance of public safety through ever-higher funding of the military, the homeland-security apparatus, the police, and other forces of so called law and order.”
Those of us in the nonprofit sector must be mindful of this approach and keep our eyes open. Until new leadership comes to the fore in Washington, D.C., reduction forces are at work.
For a reality check about what is happening informed by historical trends, you might enjoy reading this research report from the Congressional Research Service:
“President Trump’s FY2019 budget request estimates that total outlays for federal grants to state and local governments will increase from $674.7 billion in FY2017 to an anticipated $728.0 billion in FY2018 and $749.0 billion in FY2019.
In retrospect, with the exception of the early 1980s, federal grant funding, the number of federal grants, and the issuance of federal mandates have increased under both Democratic and Republican Congresses and Presidents. But, overall, the historical record suggests that for Members of both political parties, regardless of their personal ideological preferences, federalism principles often lose out when in conflict with other policy goals, such as reducing the federal budget deficit, promoting social values or environmental protection, and guaranteeing equal treatment and opportunity for the disadvantaged. As long at this continues to be the case, and the public continues to express support for specific government programs, even though they generally oppose “big” government as a whole, there is little evidence to suggest that the general historical trends of increasing numbers of federal grants to state and local governments, increasing outlays for those grants, an emphasis on categorical grants, and continued enactment of federal mandates, both funded and unfunded, are likely to change.”
Robert Jay Dilger, Senior Specialist in American National Government
May 7, 2018
I still urge my nonprofit readers to continue broadening their funding sources by identifying and embracing a wider variety of types prospective donors (individuals, families, corporations and foundations), and to reduce over reliance on federal funding sources. This might also entail building and enhancing relationships with state agencies that are receiving federal funding.
Alternative “digital” financial vehicles like Bitcoin did retain their popularity, but the market for them was erratic in 2018, hitting dramatic highs and lows. Some left cryptocurrencies behind to focus on Blockchain for social good.
“Making Sense of Bitcoin, Cryptocurrency and Blockchain” by pwc notes, “From a business perspective, it’s helpful to think of blockchain technology as a type of next-generation business process improvement software. Collaborative technology, such as blockchain, promises the ability to improve the business processes that occur between companies, radically lowering the “cost of trust.” For this reason, it may offer significantly higher returns for each investment dollar spent than most traditional internal investments.”
To read more about these entities, follow this link to my development resources page, where I have shared links to a variety of articles including one from TechSoup about enabling Bitcoin for your nonprofit. I continue to believe these are forces to be reckoned with going forward. You might enjoy reading, “‘It Just Felt Like a Miracle’: Small Groups Win Big in Bitcoin Donor’s $56 Million Giving Spree” by The Chronicle of Philanthropy (February 22, 2018).
On another front, crowdfunding has not lost its panache. My resource page for nonprofits on this blog provides some helpful guidance for those wishing to embark on crowdfunding campaigns. If you are seeking a review of current crowdfunding platforms, you might enjoy this article by Larry Kim, CEO of MobileMonkey, “Top 10 Crowdfunding Platforms of 2018” (Inc. Magazine).
I do not see crowdfunding becoming less popular in the months and years ahead. What I suspect is a growing number of major gift donors will invest more in crowdfunding campaigns. The traditional donor “donor pyramid” is being turned upside down.
But as I have cautioned before, crowdfunding requires advance research, planning, scheduling, attention to detail, and continuous monitoring and communication, including well after a campaign attains its goal. Crowdfunding is not simply an easier way to raise money. And, many if not all of these above factors are involved in traditional major gift campaigns.
Traditional major gift campaigns are not dead. I believe they will continue to be implemented – albeit with the use of new technologies to heighten their efficiency. These two forms of major gift fundraising will continue to co-exist.
Last year, I predicted the nonprofit sector would see an increase in full-time, nonprofit data management professionals. To collect data, interpret it properly, to manage it across departments, and to continually make improvements for the benefit of the organization requires trained staff. But sometimes it also takes convincing nonprofit leadership that hiring data managers makes sense.
Follow the link to read Christina Wells of Omatic Software, who writes for GuideStar, “Why Nonprofits Need to Care About Proper Data Collection” (April 2, 2018). Christina notes, “For both nonprofits and businesses, collected data can either be a gold mine of useful information, or it can be inadequate for any purpose. Leveraging good data can help a nonprofit stay up and running with limited resources, or better yet, make impactful changes for the future. Unfortunately, nonprofit organizations rarely have visibility into their existing data, or the quality of their data is questionable.”
Some investors stepped up this year to make data collection and management a more central part of nonprofit operations. From Cision PR Newswire, “Ballmer Group Makes $59 Million Commitment To Software Company Social Solutions To Accelerate Use Of Data By Nonprofits And Public-Sector Agencies” (August 9, 2018). The former Microsoft CEO remarks, “I’d like the tech industry broadly to innovate in this sector as well, bringing more tools, integration, and expertise on how to use data to improve our communities.”
From Alan Murray in his Fortune CEO Daily last April, “The fastest growing job in America is…data scientist.” If this true for corporate America, the nonprofit sector should follow suit! And, if you are considering a career in data science, one alternative to university training is General Assembly (follow the link to learn more). Here in Austin, they office at WeWork coworking space on Congress Avenue. Check it out!
Donor Advised Funds
“What do you think is the nation’s biggest charity? The United Way? The American Cancer Society? The Salvation Army? Nope. It’s something called Fidelity Charitable Gift Fund, which is also the largest donor-advised fund in the United States.”
Richard Eisenberg for Forbes,
“There’s A Target On Charity’s Booming Donor-Advised Funds” (August 2, 2018)
I was pleased to hear a plenary speech during this year’s AFP DFW Philanthropy in Action conference at the Irving Convention Center that focused to a great extent on DAFs, or Donor Advised Funds. The nonprofit sector and nonprofit support organizations need to continue educating us about how best to build relationships with professional advisors as well as the donors who establish DAFs.
Having worked with several professional advisors during my career, I would suggest nonprofits claim and fully complete their GuideStar profiles, securing the gold seal, if not the platinum. GuideStar profiles are about transparency and sharing how professionally nonprofits operate to the public. It is free to claim and update your profile, and doing so shows you care about how your nonprofit is perceived. In my opinion, a well composed GuideStar profile is better than relying on charity rating services for endorsement. There is no preset “formula” involved on GuideStar, only levels of transparency. No two nonprofits are alike.
You might want to sign up to receive GuideStar blog posts as well. Here is an inspiring article by Anthony Bugg-Levine, CEO of the Nonprofit Finance Fund writing for GuideStar, “The State of Our Sector Is Resilient” (May 16, 2018). “Demand is rising, policy and funding outlooks are uncertain, but nonprofits are absolutely not retrenching.” The article links to a formal research report, an infographic summary of which may be found via this link.
Change is here. The tumult of 2018 is likely to continue well into 2019. But I remain optimistic the nonprofit sector will, as suggested above, remain resilient and many donors will help us rise above and defeat our challenges.
Best wishes for your fundraising success,
Carolyn M. Appleton | December 2, 2018
P.S. – Be sure to read my post, “During Good Times, Don’t Forget To Prepare for Rainy Days.”
This article is illustrated with imagery from the Adobe Spark free image library.