8 Trends in the Nonprofit Sector

In early June I had the pleasure of speaking to a room full of nonprofit leaders at our first Finance Networking Lunch of 2019, which we co-hosted with the Minnesota Council of Nonprofits. I realize that I’m in an enviable position with lots of opportunities for building relationships with nonprofit and foundation leaders, staff, and board members across the sector. My conversations may start with a specific question, challenge, or opportunity, but they’re also broad and reveal big picture forces and factors facing the nonprofit sector. I took this opportunity to try to distill what I’ve been hearing most frequently for the last year or so into eight themes. I think they speak to the open questions that most nonprofit leaders are currently grappling with, myself included.

While some of these topics are very timely (and often urgent), they’ve also been with us for a while and are amplified in today’s complex environment. Some are tactical, others more existential. We see the effects of the first five every day in our work at Propel Nonprofits and the last three really speak to the broader nonprofit and societal ecosystem. Each of these in some way intersects with structural inequities related to racial, economic, and social justice, which could be framed as the overarching theme for all of our work.

In 2019, these are the key issues at the 30,000-foot level that I see coming up again and again:

1. Revenue complexity and uncertainty

Sources of revenue are increasingly diverse and complex, and at the same time, the level of uncertainty is high. The scope of giving is expanding with new forms and channels (on top of the old ones).

2. Earned income exploration

Market-based, earned income is an option for some nonprofits that can help offset the unpredictable shifts. Developing and learning to respond to a new market takes time and skills.

3. Nonprofit workers’ compensation

Countering history and culture of underpaying staff, both wages and benefits, and addressing expectations for workload and hours. The previous practices cannot be sustained.

4. Financial muscle for flexibility and adaptability

Nonprofits with cash reserves have options for risks and values-based decisions. Planning, protecting, and communicating surpluses builds reserves and freedom to decide.

5. Leadership transitions and change

Retirements and changes in the community are resulting in large-scale leadership succession and transitions. New leaders are different and bring changes to organizations.

6. Questioning nonprofit structures and practices

Discussions about the organizational and financial structure of nonprofits, including control, governance, and influence of legacy institutions and philanthropy.

7. Community influence and power

Turning organizations outward to their constituents and community and moving from listening to engagement and from engagement to transferring power. This transition will be reflected in mission, program design and delivery, leadership, and boards, and is in service to making the sector more equitable.

8. Civil society and democracy

Examining and urging a role for nonprofits in protecting and strengthening democratic institutions and the rights and power of citizens.

If you missed the June lunch, the next one is on August 1 where my colleague Sarah Jackson will be talking about cash flow management. Let us know if you can make it and in the meantime, I welcome your ongoing feedback and reflections on these issues and others I may have missed here.