Seven Actions Required to Meet NonProfit Challenges in 2020
In a survey by AIDC of nonprofit challenges in 2020, financial sustainability has been found to be the #1 Top Issue for Board Directors and Executive team members of Australian nonprofit entities. Nonprofit funding has always been challenging but in the COVID-19 era of change, reduced government assistance and growing competition for each charitable dollar, it’s no surprise that fund raising effectiveness is now top of mind for nonprofits.
With the enduring COVID-19 pandemic, Nonprofit organisations, particularly those with a focus on mental health, are increasingly vulnerable and are feeling their financial and operational issues even more so in this “new normal”. The pandemic has exposed the economic vulnerabilities and driven nonprofits to be more resourceful, innovative in the way they do business, and to find ways to plan ahead.
NonProfit organisations were initially left out of the Australian Government’s stimulus package announced in response to the impacts of the global pandemic. This delay in support has put added pressure on organisations to rethink the way they seek and manage funding.
Financial and operational stresses that were present before the global pandemic have been exacerbated and a new set of challenges has been created.
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The Uncertain Fundraising Challenges for NonProfits
Just how long the COVID pandemic and global economic recession last is uncertain. So, the dilemma confronting Australian Nonprofits is how to keep the doors open and remain viable at this time.
The global pandemic has forced many organisations to pivot their priorities to deal with constantly changing circumstances. Nonprofits are being asked to deliver more with the same or decreased level of funding, forcing many to restructure their operations and reduce costs which is causing multiple financial and operations issues for the CEO and CFO
Why do NonProfits Fail
Many Nonprofit organisations are struggling with siloed data and no real-time business information. This is stemming from the utilisation of many different software solutions, often outdated, and results in manual process over-rides and spreadsheets. Many organisations, in the Nonprofit sector, rely heavily on manual processes, which leaves them vulnerable to accounting errors and lost revenue. This does not only affect their bottom line, but it prohibits these important social enterprises from achieving the impact they aspire to make, programmes to fail, gives management no effective planning insights, and provides a lack of transparency for Board and Governance reporting.
What Do NonProfits Need Most for Compliance Requirements?
COVID-19 has driven many organisations in the Nonprofit sector to become more flexible and agile. The Management Team are faced with the need to adapt and change their financial policies and procedures to address the many demands from the public, strict financial management and governing compliance and regulations.
While the traditional in-person fundraising events have not been possible, and their future is still in doubt, Nonprofits are developing new ways to raise the funds they need. However, this brings a new level of risk to their compliance.
Many Nonprofit organisations are now implementing innovative ways to raise funds are struggling with many disparate systems, with limited, or no, interconnectivity and multiple manual processes and spreadsheets to manage those programmes and activities. They are having to juggle systems and re-enter information in various areas to maintain their regulatory and funding compliance. Organisations are relying on these systems for reporting and risk inaccurate information making its way into their reports.
Another challenge to staying compliant is that legislative arrangements have not kept pace with the development of new fundraising activities like web-based and crowdfunding. While residing in one state, nonprofits must remain compliant in all states that they collect donations, and the cost of this is creating further stress for already tight operating margins.
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Economic Downturn and Increased Demand for Nonprofit Services is a Key Not-for-Profit Issue
As unemployment rises as a result of the global pandemic, nonprofit organisations that focus on mental health support are facing increasing demand for their services. Australians under financial and emotional stress are seeking help such as employment services, housing assistance, financial counselling and other counselling services. This increasing demand is putting even more pressure on a sector that was already facing significant constraints before the global pandemic.
Nonprofit organisations are spending more time and resources on managing relationships with major donors and partners, as well as working closely with their organisations’ Boards to manage uncertainties. Organisations also have to dedicate more resources towards marketing to increase the awareness of the issues their organisation addresses which put added pressure on their already stretched resources.
Adapting to Rapidly Changing Fundraising Challenges for NonProfits
The Centre for Social Impact and Nonprofit organisation Social Venture Australia forecasts a massive revenue drop and more than 200,000 job losses in the Nonprofit sector. These organisations will struggle further once the Australian Government ceases stimulus packages which many fear is artificially keeping some organisations afloat.
It is more important than ever for Nonprofit organisations to manage the resources carefully they do have and to adapt to the rapidly changing fundraising opportunities that are available.
The Future of NonProfit Fundraising and Donations has Changed Forever
The Australia’s health 2020 report shows one in five Australians reported they had a mental or behavioural condition in 2017-18, and it is expected that the impact of COVD-19 will see an increase in these numbers. Lifeline reports the pandemic has created a $5 million funding gap as demand on its mental health services grows.
With live events cancelled temporarily, many organisations are focusing on the future, and digital events are a way to safeguard their funding streams and seeking alternatives to close the funding gap. Nonprofit organisations need the ability to manage these digital fundraising events effectively, including being able to accept donations and sell merchandise and tickets online.
With the ability to accept donations online, Nonprofit organisations can create a robust online presence with an online e-commerce store that seamlessly integrates into their accounting, marketing, ordering and inventory management systems. They can also allow donors to choose the amount they want to donate, reducing the likelihood of donor fatigue.
The success of any new technology adopted by an organisation often depends on making sure the technology is put to its fullest use. An important lesson we have learned from 2020 so far, is that every business must be digital, and that work is no longer a place so employees must have the tools to work and deliver results from anywhere. Through innovative technology, Nonprofits are revolutionising the future of fundraising and donations by shifting away from short-term transactions to a more sustained impact, ready to scale.
NonProfit Challenges and COVID – Managing New Government Grants Created in Response
There are several new, COVID-19 related, grants available from the Australian Government and individual States. These grants may take some of the pressure off nonprofit organisations, if they have the right systems in place to manage these temporary relief measures. These include:
- Supplementary Volunteer Grants of $1,000-$5,000 to volunteer involving organisations across Australia to support the efforts of volunteers in building stronger, more resilient communities.
- Community Support Package: an additional $100 million worth of support to more than 300 charities.
- VicHealth is offering between $3,000 and $50,000 for local organisations who can support young people or Victorians experiencing disadvantage.
- QCOSS The Mercy Foundation Grants to End Homelessness are available Australia-wide with amounts between $5,000 – $50,000
- Sport Australia has grants and funding opportunities available for sporting organisations
To manage these temporary grants effectively, nonprofit organisations need complete control and visibility over their spend management. Organisations need to establish budget and spend controls to ensure they comply with organisational and grant policies.
How to Overcome Strategic Issues Facing NonProfit Organisations
Many Nonprofit organisations are fighting for their lives with COVID-19 wreaking havoc on their bottom lines and making it difficult for them to support vulnerable Australians. So, what actions can be taken now to support and protect your Nonprofit? Something about a list of key actions to be taken which includes:
1. Know your current trading and cash flow position
Understanding exactly where your organisation stands when it comes to trading and cash flow will help identify areas that could impact your organisation. With the future still uncertain due to the pandemic, identifying these areas will help your business know how to respond.
Understanding what cash reserves are tied to grants and which resources can be drawn upon if required is vital. Nonprofit organisations need a detailed understanding of expenses in the business so decisions can be made on where to adjust spending to improve the forecasted cash position.
2. Have full visibility of your funding agreements and expected milestones
Some funding agreements have milestones tied to them, such as the number of participants, which have been heavily impacted by the global pandemic and the implementation of social distancing measures. Nonprofit organisations may not meet all the requirements for their funding grants, and there can be profound implications if the government and nongovernment donors reinforce the expected milestones – which may not be manageable or even possible.
Funding sources may be at risk if programs or fundraising events are cancelled or postponed causing, through no fault of their own, Nonprofit organisations to miss critical funding agreement milestones. Having a clear view of the grant lifecycle with the ability to track terms and conditions will help mitigate the risk of missing a funding milestone.
3. Deploy your employees and volunteers where they’re needed the most
With fewer resources, Nonprofit organisations need to look for innovative ways to deploy their employees and volunteers to areas of the organisation where they’re needed the most. With increased competition for funding, successful Nonprofit organisations need to optimise their resources and make them work smarter, not just harder.
Using business technology can have a significant impact on your organisations’ ability to manage costs and make better use of volunteers by breaking down information silos. Employees and volunteers alike can help strengthen relationships with existing donors and seek new supporters by creating projects that generate additional income.
In 2020, non-profits are more important than ever. Employees and volunteers associated with Nonprofit organisations are motivated by enthusiasm and passion. However, leaders of these organisations should not lose sight of the need to provide the adequate tools for their organisation to function so it can meet the mission of the organisation. Nonprofits looking to increase their fundraising effectiveness should adopt a culture of digital innovation to overcome the challenges they face as a result of the COVID-19 pandemic.
Data is becoming vital to Nonprofit organisations operating on tight margins. Nonprofits must use data to inform their fundraising strategies or risk reducing the effectiveness of their activities and wasting valuable funds on activities that don’t work. This means tracking the performance of marketing activities on social media, email and blog, and taking the time to assess what is and isn’t working. Social media has simplified fundraising and is an incredibly easy way to access new donors if done correctly. With the right technology, Nonprofit organisations can increase the effectiveness of their fundraising activities and meet the rising costs of supporting vulnerable communities.
CEO’s and CFO’s need to reimagine their Nonprofit organisation to survive 2020 and the COVID-19 crisis. While they may be overwhelmed with the ever-changing conditions and sense of uncertainty, it is necessary to implement the changes they need to make now so they can still have an impact on the future. Leaders who view the pandemic as an opportunity to change for the better, to reinvent the way they operate, and to not just survive but thrive.
Taking action now as economies open back up means Nonprofits will be poised and ready to act on any funding challenges they face. Now, more than ever, Nonprofit leadership must realise the power of their expertise to engage and mobilise to build a connected digital experience for their employees, volunteers and donors.
Download our “7 Actions Businesses Need to Take Now” playbook to discover how the right technology and processes can support your nonprofit organisation to meet your NonProfit Challenges in 2020.