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Ready, Set, Grow – How Nonprofits Are Preparing for Growth

2021Blog Growth CoinStackSMALL AdobeStock 240065665We bet that the title of this blog surprised you. After all, many articles lately focus on gloom and doom: how nonprofit revenues are down, how the pandemic is increasing services while decreasing volunteer hours and potential donations, and so on.

Yes, it’s all true. But here at AccuFund, we don’t believe in focusing on what’s wrong. We believe in focusing on what’s right, and there’s plenty of right in the nonprofit world. Although the research shows that nonprofits around the nation may still struggle, there’s also hope that nonprofits who can adapt and change, leveraging nonprofit software and unique communication and working methods, will see light at the end of the tunnel.

The Research: Effects on Various Sectors

The global pandemic has disproportionately affected multiple sectors within the nonprofit world. Nonprofits that relied upon in-person events, such as tickets to live theater, music performances, and similar events found revenues down as local mandates forced them to close their venues. Other nonprofits, such as animal shelters and humane societies, found themselves welcoming many new faces to their doors as more people spending time at home took the plunge and adopted dogs and cats. Depending on your industry sector, you may be on either side of the spectrum.

Survival to Growth Mode

Some nonprofits hunkered down and went into pure survival mode. With revenues curtailed by restrictions on in-person meetings, they rapidly shifted from fundraising to awareness building. Many arts groups hosted their first virtual events. Faced with numerous challenges, some rose to the occasion with creative solutions.

New York University, for example, could not open their concert hall doors to group performances decided to host intimate "evenings with the artist." The artists live-streamed from their homes, playing their favorite compositions and entertaining questions and answers from the audience. This event proved so popular it went viral, resulting in more people discovering the works of composer and NYU alumni Elenor Bindman and other artists thanks to streaming events and social shares.

Managing Change

Although everyone was affected by the pandemic, how they responded to it is reflected in the recent 2021 State of the Nonprofit Sector Report. According to this report, 89% of nonprofits changed their service delivery method. Streaming is one way in which many organizations responded to the social distancing requirements during the pandemic.

Key findings from the report show:

• 89% of nonprofits responded creatively to the challenges imposed by lockdowns. They altered their plans and marketing, chose new fundraising opportunities, and explored new ideas to serve their constituents.

• 70% experienced a decrease in net income while 61% experienced a decline in program or service fees. That’s a big concern among many nonprofits. Some chose to accept CARES act funds to weather the storm but wonder what will happen once the funding period is concluded.

• 29% plan to eliminate or significantly cut programs or services. This is another big area of concern. Such cuts, combined with financial concerns, may well reshape the nonprofit industry as we know it. Nonprofits fill many societal gaps that for-profit entities cannot or will not fill. If too many nonprofits cut programs, the impact may be big indeed.

Given these statistics, it's good to note that no matter how rough it was during the initial days of the pandemic, nonprofit leaders remain optimistic about their finances. Part of this is likely due to the organizations that responded to increasing challenges with fresh ideas. But another part of this optimism may be found in the smart handling of nonprofit finances and the use of nonprofit accounting software to actively manage budgets and make smart choices about budget cuts during an uncertain time.

The same research states that 37% remain very pleased with the state of their organization’s finances, while 26% are unsure. Unsure is a safe bet – after all, how many of us feel sure about anything when waking up to a new day’s challenges can feel overwhelming? Yet through it all, nonprofits are surviving and thriving, and many are ready to return to serving constituents as best as they can within whatever confines their local health authorities are requesting.

Preparing for Growth: Where to Find Funds

Among those organizations that experienced growth during the pandemic, many sought to manage their budgets through a combination of cutbacks and new funding sources.

Grants
Many organizations renewed their focus and efforts on grant funding sources. Investing in grant management software, seeking new and specific community and local grants, and providing extensive fact-based reports to granting organizations is an important way to increase funds with non-service or program-related funds.

Donations
Americans have always been a generous people, and many responded to the calls for help from humanitarian organizations by donating early and often. Citizens recognized the needs within their local community for everything from financial relief to supplemental nutrition and donated whatever they could afford to human services organizations. Donations didn’t dry up during the pandemic; in some sectors, they increased. Organizations may wish to reinvigorate donor campaigns, especially as people have adjusted to the new economy and found their pace working from home, back at the office, or in a hybrid model.

New Concepts
Some nonprofits remain optimistic that things can only get better. After all, with readily available vaccines, increased flexibility in the work environment, and people getting used to many events moving to a virtual environment, things are improving.

Others areas we have mentioned adopted new strategies to program delivery such as online course delivery (education), telemedicine (health), streaming theater and concerts (the arts), and more.

Not every sector can adapt its delivery services, but for those who can, there's room for growth. It takes a period of adjustment, monitoring, and acceptance, but it can be done, as we've seen from those nonprofits who remain viable and financially healthy during uncertain times.

Uncertainties Remain

Yet even with this level of optimism, there remain major concerns. First, of course, is the pandemic itself. The emergence of the delta variant, which creates ‘breakthrough’ cases even among the vaccinated, is certainly a cause for concern. Future viral mutations are likely, which may create infection surges forcing local areas to once again lockdown until the health system gives the all-clear.

Another big uncertainty is the availability of labor. Everywhere you look, there are help wanted signs – in the windows of stores, restaurants, and offices of all types. Nonprofits are no exception. Those who relied upon volunteer labor find themselves searching for help as many have decided not to risk in-person exposure for volunteer work. Others simply cannot find qualified candidates for open positions and feel they can’t expand or grow until that gap is closed.

Nonprofit Accounting with AccuFund Prepares You for Growth

Like you, we hope – and truly believe – that the worst is potentially behind us. For the arts sector, even limited reopening for in-person gatherings is great news. For all sectors, focusing on what is within your control, rather than focusing on what’s not, is the best way to boost optimism and form a strong plan for growth.

Nonprofit accounting software such as AccuFund supports growth by providing you with the tools you need to review your financial data quickly and easily. Up-to-date reports offer facts that can be used to base timely decisions on budget issues, program revenues, grant status, and much more.

Learn more about AccuFund and how it can help your nonprofit weather the changes brought about by the pandemic and prepare for growth.


Sources:
BKD CPAs & Advisors, 2021 State of the Nonprofit Sector Report

Related AccuFund Materials
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Kristen Faiola