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Feb 4, 2011

What’s next for nonprofits?

Nonprofits should always be looking toward their future. In the book, More Than Just Money, Allen Proctor devotes an entire chapter to answering the question, what is next? Below is an exclusive excerpt from Chapter 7 in which Proctor discusses the challenges he feels will confront nonprofits in the coming years.

“The successful nonprofit of the next decade will need to learn to operate in a permanent state of transition. This will require a new definition of resiliency: Learning to let go of donors, grantors, and services when they no longer support the priorities of the nonprofit’s mission.

Donors and grantors increasingly view nonprofits as contractors to carry out programs they define. Their support either is short-term, project oriented or comes with conditions that may create a harmful financial burden on the nonprofit. Whether the donor/grantor chooses to move on because of the former or the nonprofit ends the relationship because of the latter, the resilient nonprofit must plan for a constant churning of its donors and grantors.

Long-term relationships will become scarce and the nonprofit must become comfortable with proactive marketing for replacement donors and grantors.

The nonprofit must create its own path to financial resiliency. The past two decades have seen three recessions and some sharp investment downturns. Nonprofits will need to value cash reserves more than endowments. They must educate donors to view large reserves as signs of good management rather than as indications that fundraising is unnecessary. And they must educate their own fundraisers that there is a hierarchy in the value of a gift: A dollar of unrestricted cash is worth more than a dollar of restricted cash and a lot more than an endowment gift.

When all else fails, nonprofits will need to come to terms with having an annual review of which services they provide. A sharp focus on current community needs with well-articulated service priorities must be the crucible for regularly identifying which services to keep and which to end. Flexibility will distinguish survival from failure. Nonprofits that continually adapt their services will best sustain their core missions.”

*Copyright © 2010 by Allen J. Proctor.

To read about what other challenges nonprofits will face, order your copy of More Than Just Money.