Nonprofit leaders know that the road to making a difference is long, bumpy and difficult. Some would even say running a nonprofit can be more challenging than starting a typical business. Although nonprofits share many of the same obstacles as for-profit businesses, it’s important to address them from a unique perspective.
According to a report from the Content Marketing Institute, budgetary challenges are by far the biggest issue nonprofits face, but that’s only one part of the puzzle. Just like any other business, nonprofits must consider crucial concerns like staffing, management, planning, and budgeting.
Securing financial support is just the start of the challenging nonprofit journey. Let’s examine some of the top challenges nonprofits face and the potential solutions for overcoming them.
Challenge #1: Insufficient Funding
Did you know that about 46% of nonprofits can’t find the funding they need to support their staff in carrying out the organization’s mission? In fact, most seek ways to attract funds without selling a product or service, which can lead to serious budget problems. Whether they bring in revenue or not, nonprofits need to find ways to attract and retain key staff, promote their organization and mission and find new opportunities. While some organizations can turn to grants for help, the truth is that charities need to be largely established and capable of sustainability before they can access most grants.
Research from the National Center for Charitable Statistics shows that about 50% of nonprofit funding comes from fees for goods and services, while only 9.2% comes from government grants. As government funding dwindles and competition in the sector thrives, nonprofits must look for alternative ways to earn the bulk of their income.
Challenge #2: Lack of Strategic Planning
Many nonprofits fail to think of themselves as a business. Even if your organization doesn’t seek to profit off consumers, you’re still producing some kind of service or material product and have operating costs just as any business would. Since a nonprofit budget is tighter than that of a for-profit business, these organizations must be especially strategic with their business planning techniques
In other words, you need to examine where you’re going to allocate funds. For instance, most nonprofits can’t afford to pay the price for attracting top talent, which means they need to find alternative solutions for staff retention.
A good strategic plan involves:
- Evaluation of the competitive environment
- Consideration of where to get sources of funding
- Definition on a plan for how and where to offer products and services
- Documentation of all sources of revenue streams (private funding, government contracts, etc.)
- Insights into how the organization can save money
Challenge #3: Minimal Engagement
Engagement is crucial to nonprofit business function — not only in retaining key staff members, but also in convincing people to donate to the cause. All businesses need to convince people to spend money, but nonprofits face an additional challenge, because they’re not generally exchanging money for goods or services.
Nonprofits need to lead their marketing messages with emotion. The problem is they don’t often have the funding to allow for quality marketing solutions, like digital advertising and social media. Unfortunately, most donors responding to print campaigns are over 55 years old, which means that using print-only methods is cutting out a huge demographic.
The nonprofit sector has additionally struggled to keep up with technological advances. Websites and online campaigns can have a huge impact in driving donations. Online campaigns generate engagement — an element that’s severely lacking for most nonprofits. To survive, it’s important to attract and hire staff that can not only help with budget management and planning, but also inspire engagement and support from the general public.
Challenge #4: Shortage of Key Staff
This may be the challenge that underpins all other concerns for nonprofits. With the right personnel, an organization can achieve anything. Tragically, 74% of nonprofits cite staff shortage as their biggest challenge and budget constraints are often the biggest damper on successful hiring and the recruitment processes
Nonprofits have a unique advantage over standard companies, because they can foster employee engagement around the mission of the organization. Yet, they still need to offer compensation — an area where they often struggle to live up to the private sector. Since budgets for wages are low, benefits packages and other perks can provide opportunities to strengthen employee contentment and loyalty. For instance, employer-paid life insurance may be a win-win solution for employee retention — it can ensure strength and liquidity for the organization, while offering long term security to staff members.
Is your nonprofit struggling with any of these challenges? Reach out to our team to address challenges and gaps that Grant, Hinkle & Jacobs can help solve for!