nonprofit leaders know the road to making a difference is long, bumpy, and difficult — some would say running a nonprofit is 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: Not Enough Funding
About 46% of nonprofits can’t find the funding they need to support their staff in carrying out the organization’s mission. Most nonprofits seek ways to attract funds without selling a product or service, which can lead to serious budget problems. No matter whether they bring in revenue or not, nonprofits still need to find ways to attract and retain key staff, promote themselves, 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: No Strategic Planning
Many nonprofits fail to think of themselves as businesses. Even if your organization doesn’t seek to profit off consumers, you’re still producing some kind of service or material product, and you still 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 in 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:
- The evaluation of the competitive environment
- A consideration of where to get sources of funding
- A defined plan for how and where to offer products and services
- A record of all sources of revenue streams (private funding, government contracts, etc.)
- Insights into how the organization can save money
Challenge #3: Lack of 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 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, nonprofits need to attract and hire staff that can not only help with budget management and planning, but also inspiring engagement and support from the general public.
Challenge #4: Not Enough 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 often get in the way of successful hiring and 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.