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7 Nonprofit Sector Growing Pains That May Slow You Down

Katy Teson
Katy Teson  |  October 24, 2019

As the nonprofit sector swells, and individual charities look to expand, there's an increasing need to address growing pains that can hinder future success.

When new and competing priorities arise, it’s easy to overlook the necessary processes and tools that help you keep your nonprofit running smoothly . A period of intense growth can quickly derail best practices or make it obvious that the old way of doing things won’t work in your new reality. 

How the nonprofit sector is growing

According to the latest nonprofit statistics, the number of nonprofit organizations in the U.S. has been on the rise since 2005. Not only that, the nonprofit sector has one of the largest workforces in the country, and in spite of economic downturns,  it’s been growing faster than even for-profit business.

Nonprofit finances are also on the rise. Revenues, expenses, and assets for public charities have expanded in recent years, however, not all areas of the nonprofit sector are experiencing growth in the same way.

From 2005 to 2015:

  • Religious organizations had a 59.3% increase in revenue
  • Environmental and animal-related charities saw an increase of 51.5% in revenue
  • Health organizations experienced an increase of 42% in revenue

Other sub-sectors have been riding a roller coaster of revenue drops and climbs:

  • Arts organizations saw a 0.6% revenue decline from 2005-2010 only to increase 28.9% from 2010-2015.
  • Public and social benefit charities had a 1.3% revenue decline from 2005-2010 with a 37.1% increase from 2010-2015.

Driven by whose donations? 

Philanthropy isn’t going out of style, but it isn’t individual donors that are driving nonprofit expansion.

In fact, despite the sector’s overall growth, the number of donors has fallen. From 2017-2018, the total amount of charitable giving by Americans increased less than 1%, compared to 5.4% for corporate giving and 7.3% for foundations. Nonprofits that historically relied on a single fundraising model (like membership or annual funds) might find that their next phase is powered by new partners and approaches.

Regardless of who or what is fueling its expansion, it’s clear that the sector needs to be planning ahead for growth. Increased competition for public awareness, skilled nonprofit professionals, and donor dollars is just the tip of the iceberg. How else will your organization prepare to scale from the inside out?

Rather than sticking with business-as-usual until you reach a breaking point, focus on these seven nonprofit growing pains that you can work on now. 

Common nonprofit growing pains 

The ways you manage growth and change at your nonprofit can have ripple effects across your team and the community you serve. Keep your organization moving forward by paying special attention to areas where new people, programs, funding and technology are coming on board. 

1. Scaling internal communications

Adding new staff, volunteers, or vendors can cause logistical and communications headaches, especially as you try to wrangle people for meetings or gather feedback. If your nonprofit is increasingly spread out over multiple locations or includes remote employees, it could be time to add video conferencing calls, virtual trainings, or an employee newsletter to your toolbox.

See the Easiest-to-Use Video Conferencing Software →

While internal communications is often a role for HR professionals, it doesn’t have to be. Nonprofit marketers can also help make the transition to effective internal communications and keep all corners of your organization engaged and informed.

2. Managing projects across teams

Are you launching a new program or partnership, or starting work in a new service area? Maybe you’re planning a new type of big annual event? Making a huge to-do list for yourself and others won’t be sustainable in the long run. More than ever, you’ll need to find ways to collaborate with people across your organization (and even outside of it) to meet important deadlines and deliverables.

Transitioning to highly structured project management software can help you map out the steps to launching a new initiative and make sure it all happens. As an added bonus, project management software can also help cut down on email traffic and meetings so that you maintain momentum.

TIP: Is your project management software doing the most for your organization? Explore all of your options on G2. 

View the Easiest-to-Use Project Management Software →

3. Diversifying your fundraising strategy

Growth in the nonprofit sector is still largely determined by fundraising power. Rising operations and program costs are all but inevitable when an organization expands. As the number of line items in your annual budget multiply, you might turn to new nonprofit revenue streams like grants, major gifts, or corporate sponsors.

Putting together a fundraising plan will help you identify areas where your fundraising processes and tools will need to grow to match your goals. Now is the perfect time to take a hard look at your donor database or CRM to make sure it is properly set up to collect supporter information, maintain funder relationships, and produce accurate reports.

View the Easiest-to-Use CRM Software →

4. Creating a technology plan

Now that you’re thinking about your CRM, what other software and hardware needs are on the horizon for your nonprofit? Failing to plan ahead for new technology can become a major speed bump that pops up at the worst moment, like when you’re trying to get a mailing out the door, send an urgent email announcement, or accidentally delete important digital records.

Rather than relying on temporary solutions (or stringing together endless free software trials), get started with a technology plan for your nonprofit. Look at the full picture of what your organization needs now and in the future; this will help you make purchasing and IT decisions without last-minute panic.

5. Managing and integrating data 

Bringing on more technology tools means paying close attention to how you collect and store data. People care about privacy more than ever before, and nonprofit data security can’t be an afterthought if you want donors and community members to trust you. Get your privacy policy in place as soon as possible and don’t let it get dusty as your organization grows.

Another important consideration is determining how data will flow across tools. To save time (and increase accuracy), you might want to collect data on your website and  automatically add it directly to your donor database or email marketing platform. Keep data integration top of mind as your nonprofit expands to eliminate unnecessary work.

6.  Measuring success

Growth is great, but what are the outcomes for your mission and the community you serve? While you can talk about revenue and financial projections in the boardroom, it’s important to be able to evaluate your nonprofit holistically as well. This needs to be a part of the plan from the very start so that you collect the information you need along the way.

In addition to key performance indicators (KPIs) for programs and services, determine your measures of success for other areas like fundraising and operations. For example, a great nonprofit marketing plan will include goals and objectives plus a section on how to measure if a campaign is successful. Over time, KPIs continue to serve as powerful points of alignment across the entire organization.

7. Building staff resilience 

The nonprofit sector is no stranger to employee burnout, and a rapid or prolonged period of organizational growth can add extra stress and responsibilities that lead to dissatisfaction, loss of productivity, and turnover. The resiliency of your nonprofit’s staff and how you plan to sustain it in the long term has major implications for team happiness—not to mention the speed and quality of work.

Create a healthy work culture by offering ongoing employee recognition and using tools like employee pulse surveys to gather iterative feedback. Even taking small steps can add up, building a strong foundation that helps you overcome new challenges as you grow. 

Start planning for growth 

Growing a nonprofit presents an opportunity for you to better serve your mission and the community, but it’s not without challenges. Organizations across the nonprofit sector are facing big-picture questions about the best ways to raise more money, work more efficiently, and make more of a difference.

These discussions should include the tools and processes that make nonprofit work happen. Growing pains aren’t completely unavoidable, but planning for them can help you keep moving forward. And if you need help with planning, try out nonprofit software solutions to get you on track. 

Find the best Nonprofit software on the market. Discover Now, Free →

Katy Teson
Author

Katy Teson

Katy Teson is a content strategist at Wired Impact, which builds powerful websites for growing nonprofits. In her role, she helps organizations get the most out of their marketing and web presence, from organizing and creating content to measuring its success. Prior to joining Wired Impact, Katy spent a decade working in nonprofit programs, communications, and fundraising.