As funding for nonprofits decline, what can nonprofits do differently?

By Maureen Aylward

It seems like nonprofits around the globe struggle with the same issues around funding and finding new and innovative techniques to tackle the issue. Zintro experts from the US, UK, Albania, and Israel responded to our call to outline what nonprofits can do differently.

“Being too dependent on donations is a challenge that nonprofits have always faced – it has just been magnified in the new, changed economy,” says David Etienne, an expert in marketing, advertising, and communications for nonprofits.  He suggests that nonprofits create alternative revenue streams, such as creating a social enterprise. “Taking a hard look at your mission and vision can help you determine if there is an unmet need in the marketplace for whatever product or service you provide, then develop a business plan to get the funding needed to launch it,” Etienne says. Board support and encouragement is critical to its success.

When fundraising is low, finding funds for general operations can be difficult and other areas of the organization can be affected as well. “Foundations and individual donors who make up the donor pool want to support programs that help people, but they are less excited about helping the organization buy a new copier or pay salaries,” Etienne notes. “Nonprofits need to be able to make the connection for support functions, and a spun off social enterprise business or project may help fund those functions.”

Nachum Katz, an owner and CEO of a start-up in Israel and nonprofit consultant, says that he advocates shifting to a business management approach in nonprofit organizations. “In my past experience, I have suggested that management be a more business oriented one so that value-giving activities can create more income as opposed to just relying on donations, which were the only source of income in the in the past,” Katz says.

Kent Gordon, an entrepreneurial executive with broad expertise in custom marketing research, strategic planning, consulting, and business development, thinks that nonprofits need to move toward research as a base to make decisions. “Through qualitative and quantitative research, we are actively listening to donors and non-donors to understand their needs, attitudes, preferences, and behavior,” Gordon says. “This research enables us to identify key drivers and barriers in a competitive context, segment the relevant population, and develop harmonious new positioning aimed at the most fruitful segments of current and prospective donors.” The research allows insight that can be leveraged for more effective and efficient targeting and messaging, which can enable an organization to increase brand equity and return on investment.

Ray Georgeson, a chief executive for a UK environmental charity, says that UK nonprofits working in the recycling sector are finding that state and municipal grant funding and donations is diminishing rapidly. “As a result, this is leading to some downsizing, but it is also driving nonprofits toward more commercial focus in their activities,” notes Georgeson. “We are employing business development techniques, better marketing, and seeking contract work in competition with the private sector.”

Georgeson says that in his experience there are traditional areas where the non-profit sector has had more of a niche, especially in educating and communicating on waste reduction and recycling and providing re-use services, such as running thrift stores and furniture re-use schemes for those in social need. “In present times, these services are needed more than ever. Nonprofits must become more entrepreneurial in managing their operations to keep services running, but also by earning contract income from selling consultancy expertise, which can effectively cross-subsidize the provision of social need services that receive less state money,” Georgeson urges.

Catherine Weber, a social media marketing expert working with government and nonprofits on interactive and conventional marketing and PR programs, says that she often recommends that nonprofits think about social media channels as an opportunity to create and build relationships with existing donors and new prospects. “For example, creating a Facebook page to keep donors and prospects aware of the good your nonprofit is doing also lets them know where their money goes,” Weber suggests. She also says that social media should feature features donors, staff, and others as a way of personalizing the organization.

Entela Kaleshi a fundraising consultant for nonprofits in Albania concurs that the donation base for nonprofits worldwide is declining. “This is due to in large part because of the impact of the financial crisis on developed countries, especially in Europe,” says Kaleshi.

To help, Keleshi suggests that nonprofits employ some of the following strategies:

  • Train staff to prepare professional proposals,
  • Secure funds by developing relationships with community and local enterprises,
  • Appeal to donors in partnership with other organizations, and
  • Put pressure on governments to increase funds for the nonprofit sector,

By Maureen Aylward

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