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What’s the real “State of the Sector”?

by Guest Blogger
We are pleased to re-post this article from the National Council of Nonprofits with permission.

In the last month, we’ve reviewed three reports that provide data and perspectives on the “state” of the charitable nonprofit community. Each report provides insights to help nonprofit leaders prepare for challenges ahead.

The Nonprofit Finance Fund’s 2018 State of the Sector survey report offers a data-rich base for understanding the depth of challenges nonprofits currently face. Despite the report’s headline (“our sector is resilient”), the majority (57 percent) of nonprofits surveyed (nearly 3,400 in all 50 states were surveyed) report they are unable to meet the demands for their services. Of the 86 percent that anticipate an increase in demands in 2018, only 43 percent anticipate being able to meet that increased demand. Financial sustainability is a top challenge for 62 percent, and since a strong majority report that the demand for their services is rising (a finding that was also evident in the last seven surveys by NFF, dating back to before the Great Recession), it is uncertain that charitable nonprofits will be able to deliver on their hoped-for outcomes.

Two other new reports shine similar light on the challenges and uncertainties that nonprofits face. In Bracing for a Downturn, the Center on Effective Philanthropy finds that a majority of nonprofit and foundation leaders are concerned about the expected decrease in charitable giving as a result of the new tax law. In The New Normal: Capacity Building During a Time of Disruption, the authors also share their sense of what it will take for charitable nonprofits to be successful, given the tumultuous political and economic climate, limited resources, and increasing demands. Nonprofits told the authors of The New Normal what they believe nonprofit leaders today need, including “more flexible strategies, adaptive leadership, unrestricted funding, and short- term feedback loops that enable them to assess whether they are gaining traction against their goals.” We encourage you to read the full report, which includes recommendations both for nonprofits and for private foundations that support them.

All three reports underscore the downside of relying exclusively on single-source and restricted funding (especially government contracts/grants), and the limitations of long-term strategic planning. In contrast, given the current “state of the sector” there is a compelling need for agile leadership by boards, funders, and nonprofit managers.

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