Current Challenges in the Nonprofit Sector

Nonprofit organizations in the United States constantly struggle with operational and financial challenges. Speculation about the common challenges faced by our nation’s nonprofits is abound, but what do the concrete statistics say? The BDO Institute for Nonprofit Excellence recently released a report from its survey of 105 nonprofits that reveals the current challenges nonprofits are facing. What did the report find?

One of the biggest challenges nonprofits face right now is the inability to adequately compensate staff. This problem is not new. In fact, in 2016, many nonprofits opposed new federal overtime pay rules, claiming that they could not properly function if they had to pay staff overtime. Nonprofits that cannot adequately pay staff struggle with recruiting and retention. According to the BDO report, nonprofits are using flexible work options as a solution to the problem. Many of the nonprofits surveyed are either currently offering, or expect in the next two years to offer, flexible work options to employees like part-time arrangements, telecommuting and remote work opportunities. These flexible options allow nonprofits to bring on and retain staff in a less costly manner.

Another concern in the BDO report was demand for information made by funders. Over half of the organizations surveyed reported that some of their funders required additional information during the most recent reporting cycle. Organizations whose funders want to see information on the impact of programs and activities may be under pressure to develop new ways to measure and report outcomes.

Nonprofits also reported apprehension about raising funds and fear of losing a main revenue source. As with employee compensation issues, financial concerns are not new to nonprofits. In a 2013 report, the Urban Institute surveyed over 4,000 nonprofits and found that they struggled with financial issues such as delays in payment for contracts and difficulty securing funding for the full cost of their services.

However, the results of the BDO report showed that 70 percent of the same organizations that reported being apprehensive about funding and fearful about revenue sources experienced a growth in revenue during their last fiscal year. Does that mean their financial fears are unfounded? Only time will tell.

As the Nonprofit Quarterly noted, more studies are needed to answer the questions that were raised by the BDO s report. Nonprofits should always monitor current statistics and keep an eye out for these types of studies. By comparing data from other nonprofits, organizations can see how they are doing in key areas and learn how to improve.

NOTE: The information contained herein is not intended to be legal advice and the reader should know that no Attorney-Client relationship or privilege is formed by the posting or reading of this article which is also not intended to solicit business.

Casey Summar, Partner, The Law Firm for Non-Profits,1812 W Burbank Blvd, #7445, Burbank, CA 91506

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