February 24, 2017
By Cate Redfern, CFRE at Adansonia Consulting
The new presidency and government administration is anticipated to bring significant change to the environment in which nonprofits operate. Indeed, it already has. Decreases in the amount and changes in the type of federal funding available to support nonprofit programs across all sectors is expected to increase the size of constituencies seeking out programs and services offered by nonprofits. The resources needed to serve these growing constituencies will be stretched as donors are expected to be more conservative in their giving, anticipating fewer tax credits and resulting in a lower disposable income; and there are reported to be changes afoot regarding the caps on the value of the tax credit for donations to charity.
The general consensus among industry analysts and forecasters is that federal funding of nonprofits will decrease across all sectors, but particularly within the arts, research and environment sectors.
Anticipated decreases in civil spending in areas such as education, environment and research will mean that these sectors will seek a larger portion of their funding from charitable foundations and individuals – competing for donor dollars will be stronger than ever. Federal funding is expected to be cut by $800 billion over the next ten years. Nonprofits will need to source alternative funding for programs that received federal grants, and the number of constituents seeking out their services will probably increase as low-income services recipients lose housing, food and healthcare aid. Some of the issues expected to arise include:
The Independent Tax Policy Center forecasts charitable giving to fall by 9% or $26.1 billion in 2017. This is due to anticipated limits on charitable giving incentives and larger spending reductions; and
A larger percentage of funding available to nonprofits working with women’s reproductive rights; women’s equality rights; immigrants and poverty may need to be spent on advocacy at the expense of delivering services and programs.
There is anticipation that individuals and corporations with the means to support philanthropy, but which may have been largely apathetic to this point, will be moved to get involved if the causes they care about are affected. In recent weeks we have see sharp increases in online ‘rage’ donations. The American Civil Liberties Union (ACLU) raised $24 million in one weekend immediately after the announcement of the recent anti-terrorism travel ban, which is six times more than their annual online donation revenue. While this is great news for the ACLU, not all nonprofits will be able to leverage anger to increase donation revenue. Instead of hoping for a public outrage trigger that will increase their own donation revenue, all nonprofits that want to succeed and thrive during these uncertain times need to make sure that their messaging regarding their mission and the challenges they solve – essentially what is at stake and what could be lost, and how they address and mitigate these challenges, is clear, articulate, and being heard by the right people.
The nonprofit is squeezed in the middle, needing to deliver more, with less. How do you manage these changes and still make a meaningful impact with fewer resources?
As challenging as it may become to operate in an already difficult environment as a nonprofit, it’s not a desolate and depressing story. I anticipate this being a great opportunity for growth and innovation in the nonprofit sector as nonprofits learn how to become more responsive and innovative in how they deal with change. Traditionally conservative hierarchies, structures and processes will need to be more proactive and responsive to survive, and I think we will see great innovation in how programs and services are offered to constituents, how nonprofits partner to offer higher quality programs and services while sharing resources, and how relationships with donors evolve to become partnerships. In the coming weeks I’ll be exploring how both nonprofits and donors can set goals, manage expectations, and insure that their actions have the greatest possible positive impact for the causes they care about.