Do you see any differences in the struggles of large nonprofits and those of smaller ones?
Yes. I’d say that the economic headwinds have, in fact, widened the gap between the strongest nonprofits and those that are finding today’s operating environment difficult. Large nonprofits often have immense name recognition that keeps them going. Smaller nonprofits have to compete with millions of similarly sized organizations for a smaller pool of dollars, which is a difficult task in any environment.
How long will this pattern of decreased funding continue?
Unfortunately, it will probably continue for some time. It’s well known that charitable contributions fall in tandem with wages and earnings. However, it’s amazing how certain events can create a large outpouring of donations. The latest crisis in Haiti has created a tremendous influx of donations for many big-name nonprofits.
But, such crises, unfortunately, often have a reduced impact on smaller foundations and nonprofits. These foundations will likely have to wait a longer period of time before they see their donations rise again.
What strategies can you suggest for struggling nonprofits?
Many nonprofits today are examining potential mergers, in some cases combining entities with similar missions or, alternatively, dissimilar missions. Such mergers allow nonprofits to expand their mission, reach greater groups of individuals in need and help minimize organizational costs.
However, not all mergers go smoothly. Some nonprofits have experienced significant hardships in merging with other entities. It’s hard for nonprofits to combine their missions or to change course operationally. It is, nonetheless, a necessary part of being a nonprofit in today’s world.
What if a merger is out of the question?
If a merger is definitely out of line, nonprofits should consider spending the dollars they have on building name recognition within their communities, vocalizing their successes and providing visible services to the community.
Using this three-pronged strategy can help donors learn about the nonprofit, understand its mission and physically witness the benefits it provides. There’s nothing more compelling to donors than the ability to watch their donations have a direct impact on the community.
James P. Martin, CMA, CIA, CFE, CFD, CFFA, is a managing director of Cendrowski Corporate Advisors. Reach him at (866) 717-1607 or [email protected].
