In addition to monitoring key financial information, board members should stay on top of the issues their nonprofit faces. By doing so, they can help their organization proactively address these concerns.
Which issues should you pay attention to? It varies by organization, but the Nonprofit Finance Fund (NFF) surveyed nonprofit leaders across the U.S. to help answer this question and understand the current state of the nonprofit industry.
The top three issues facing nonprofits are increasing demand for services, financial stability, and staffing.
1. Increasing demand for services
Basic needs in communities are rising. 86% of the NFF’s survey respondents said the demand for their services continues to rise. More than half say they can’t meet the demand, while 63% are planning to increase their services.
Affordable housing is the biggest community need. Youth programs and services, mental and behavioral health services, and financial capability also fall within the list of top community needs.
More than half of respondents said the federal government’s actions in 2017 made their funding environment, policy environment, and challenges facing their communities harder. 55% said the federal government’s impact on their ability to deliver their mission is the same as the previous year.
Think about your org
Are you keeping up with the demand for services in your community? Or, do you face this challenge too? How will you respond? What’s the biggest need in your community?
Many nonprofits in the survey invested in their staff by increasing staffing levels and compensation. More plan to.
68% have collaborated with other organizations to address the demand. Some have already expanded the services they provide. Others plan to. What will it take for your organization to keep up with demand?
2. Financial stability
62% of survey respondents said financial sustainability is a top challenge. So is raising enough funds to cover the full costs of the organization. More than 40% said raising unrestricted revenue was also a challenge. Even with these issues, 76% of organizations managed to have a surplus or break-even in 2017.
Just 25% of nonprofits had more than 6 months of cash on-hand. For orgs in Michigan, 21% had just 3 months of cash on-hand, while 28% had more than 6 months.
Think about your org
Did you experience a surplus or deficit in 2017? Did you break even? Evaluate your revenue sources and financial data. Is there a pattern of decline in any of your funding sources?
How much was restricted? Unrestricted? What actions can you take to increase your funding and cash on-hand?
When you’re evaluating this data, take a second to review your financial system. Are you getting all the data and insights you need to make smart decisions for your org?
Any financial shortcomings could prevent you from executing your mission, hiring and developing staff, investing in technology, and more.
Of the nonprofits surveyed, 66% said offering competitive pay is their top staffing challenge. The next is employing enough staff.
Many nonprofits also cite developing the next generation of leaders, sponsoring professional development, finding competent staff, recruiting individuals with leadership potential, and retaining those individuals as top areas of concern.
These issues ring true for Michigan nonprofits as well. And, all of these issues are attributed back to the financial restraints nonprofits face.
Think about your org
First, identify your top staffing challenge. Your next steps should focus on solving or improving this issue.
If it’s compensation, how can you increase it? If it’s retention, why do employees leave? Talk to people throughout your organization to understand your staffing challenges and find the right solutions.
Understanding your organization’s challenges is key to creating a plan for improvement. How do these issues apply to your nonprofit? Is there an urgent need for change?
The data presented above can help you generate discussions about your nonprofit’s current state. They can help outline priorities and set goals. You may even choose to use this in your messaging to inspire fundraising.
Regardless of how you proceed, your role as a board member is to improve the effectiveness and endurance of your nonprofit. Evaluating the present and planning for the future is critical.
Want to see the survey data? Dig into NFF’s State of the Nonprofit Sector Survey 2018.