nonprofit – Page 71 – The Healthy Non-Profit

Strategic special events?

January 12, 2012 DonorDreams Fundraising, Planning

Back in October, I outted myself as a fundraising professional who isn’t very fond of special events when the purpose of the event is to raise money. I don’t know how many times I’ve shared the link to Charity Navigator’s 2007 Special Events Study with subscribers to this blog. I’m sure it has been too many times, but I’ve haven’t seen anything else that more convincingly makes the case that special events cost more money than they raise.

However, my position on special events does change when the objectives associated planning and hosting an event are more inclusive than: “let’s make some money.”

So, some of you might be asking: “What other objectives could there be?” Well, try some of these on for size:

Engaging new volunteers from a different social circle in your community.
Introducing yourself to a new set of prospective donors from a different social circle in your community, and cultivating new prospective donors for your individual giving annual campaign.
Stewarding existing donors by providing them an enchanted evening awash in mission-focus.
Marketing and getting your agency’s brand into the media marketplace.

I think it is great if your agency wants to run a few (e.g. one, two or three) special events as part of its annual resource development plan. However, I encourage you to ask the following questions before doing so:

How does this event support other aspects of your fundraising plan?
Who is the target audience for each of your special events? Does this event really do a good job of engaging that segment of the donor marketplace?
Are you just sending invitations out to those who attended last year? Are you just blasting invitations out to your entire donor database? Or are you thoughtfully engaging your event committee in identifying new prospective attendees who fit within the target audience parameters you’ve set?
How are you injecting “mission-focus” into each of your events so new prospective donors are getting cultivated and current donors are getting stewarded?

There is something very powerful about throwing a party focused around your agency’s mission. If it is done haphazardly and all in the name of “raising some money,” then you most likely didn’t raise the money you thought you did (read the Charity Navigator report and look at both direct and indirect costs) and you also missed an opportunity.

However, if you are strategic in your approach to special events, then I suspect you are seeing improvements in your overall fundraising program and starting to attract new donors.

Is your non-profit organization “strategic” in its approach to special events? If so, how? Please use the comment box below to answer these questions. The one or two minutes it takes for you to comment might make a huge difference in another fundraising professional’s life.

Here’s to your health!

Erik Anderson
Founder & President, The Healthy Non-Profit LLC
www.thehealthynonprofit.com
erik@thehealthynonprofit.com
http://twitter.com/#!/eanderson847
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The Age of Austerity: Don’t cut your nose off to spite your face!

January 11, 2012 DonorDreams Uncategorized

Yesterday’s blog post introduced the idea that the non-profit sector might be entering into “The Age of Austerity” thanks in part to projected decreases in government funding. Today, we continue exploration of this topic by looking at what types of budget cuts are occurring and processes for responsible cutting.

First, I decided to ask my non-profit Tweeps on Twitter where they were making cuts and why certain things were off-limits. Needless to say, people were all over the place, and there was no consensus except around two things:

100 percent of respondents said they would start with cutting administration and management expenses.
100 percent of respondents also said they would start with facility maintenance cuts.

After an informal survey of my Tweeps, I did a little research using my best friend “Mr. Google,” where I found a recent article from the Wisconsin State Journal titled “‘New normal’: Nonprofits struggling with budget cuts“. Not surprisingly, a much more scientific survey than my informal Twitter poll found that approximately one-third of respondents plan on cutting or reducing programs services. This number is up from where it was in 2009, when 29 percent of respondents said they were cutting or reducing programs.

I suspect there are many non-profits who started cutting what they saw as “non-essential services” a few years ago. Now that there isn’t any more “fat to cut,” it is time to start cutting muscle.

It shouldn’t surprise anyone that more and more non-profits are getting to the brink of collapse, failure and contraction. We see signs of it in the Wisconsin State Journal article where they point out that smaller agencies have no cash reserves. We saw it in the Guidestar report that I referenced in yesterday’s blog post. I even wrote about it during my new year predictions blog series at the end of 2011 — “2012 Non-Profit Trends and Predictions: Contraction Continues“.

So, how should a non-profit organization go about making these tough decisions? Here are just a few tips:

Always go back to your mission and ask: “how will this cut impact our ability to fulfill our mission?” Obviously, you would prioritize your cuts so the ones that affect mission the most are some of the last cuts you’d ever consider making.
Are there things you can do to save money that are less painful than others? (e.g. Can you stretch a project (and its costs) out over a longer period of time? Can you re-bid certain services such as insurance or building maintenance?)
Stop trying to hide these discussions from key donors. Invite your biggest supporters into the discussion so they can better understand how and why certain decisions are being made. For those not at the table, develop a communications plan to inform them of why certain cuts were made (not just that they were made). No one likes a surprise — especially donors. Remember, this is a way to get lots of smart people, who care about your mission from different backgrounds, around the table and focused on your problem. Please don’t approach this with a hidden agenda to secure more money from your supporters. They are surely able to see through this, and it’ll feel disingenuous.

The bottom line is that non-profits who find themselves cutting services run the risk of harming their program outcomes and community impact. Once this happens and donors see it, fundraising dollars will start drying up, and you know what they say about being on a “slippery slope”. Next thing you know, you’re at the bottom of that hill and you’re going out of business.

Of course, there is a another road to take. Stop exclusively focusing on cuts-cuts-cuts and start focusing on engaging donors and fundraising activities. I’m not suggesting that you stop cutting. There are most likely smart cuts your agency can make, but I’m suggesting you do so while implementing an aggressive resource development plan.

In my research, I found an amazing white paper written by David Maddox of John Wiley & Sons which was reprinted with permission by The Grantsmanship Center. The paper was titled “Strategic Budget Cutting“. It really is an amazing resource with great ideas and process. I encourage you to check it out!

Is your agency in cost cutting mode? What are you cutting and what aren’t you cutting? It is easy to say “use your mission statement to filter these decisions,” but how have you effectively done that? If you are both cutting and trying to do more fundraising, have you had much success? Please use the comment box below and weigh-in with your thoughts because we can all learn from each other.

Here’s to your health!

The Age of Austerity: What does that look like for non-profits?

January 10, 2012 DonorDreams Uncategorized

I love to wake up on Sunday morning and watch the news shows. This past Sunday my favorite show — Meet the Press — hosted one of the Presidential debates for the Republican field. During that debate, one of the journalists or candidates used the phrase “Age of Austerity” in regards to government spending and programs.

I don’t know about you, but sometimes phrases just get stuck in my head, and I gnaw on them like a dog with a bone. This is what happened when I heard “Age of Austerity”. At first, I spent a lot of time processing what that looks like for government (e.g. more taxes to pay off accrued debt and reduction in services like police, fire and garbage). However, my mind quickly wandered to the non-profit sector and the questions started to snowball:

Could the non-profit sector be entering into an “Age of Austerity”?
What could this end up looking like for non-profits?
What could the societal consequences be when so many people rely upon non-profits to “fill the holes” in our social safety net (especially when government austerity likely means creating more holes in that safety net).
How many non-profits will tighten their belts to the point of going out of business because they can’t achieve their mission? And how many non-profits will look at merger opportunities?
Where will the cuts come from? Heck, most non-profits already stretch their resources too thin.

I believe that we might be on the brink of this “Age of Austerity” where donors demand more services, outcomes and impact with smaller and fewer contributions to pay for that demand. Consider the following few data points from Guidestar’s recent non-profit survey:

One-fifth [of survey respondents] projected decreases in operating budget for 2012 …

About half of survey respondents are facing declines in revenue from sources other than contributions (which includes government funding) or had less than three months of operating expenses in reserve. Similar percentages reported that their organizations rely on a limited number of funders, and more than half (52 percent), reported declining or flat philanthropic contributions.

Lots and lots of questions! LOL — Welcome to my world. However, the following question is the one that I’ve been stuck on for a few days:

Are some austerity measures better than others when trying to fulfill
your non-profit organization’s mission and achieve community impact?

I believe the answer is probably obvious — YES. However, I don’t believe there is any consensus around what cuts are better than others. For example, should an agency pull back on certain programs and focus more intentionally on core programming? Eliminate middle management and flatten the organization chart? Change executive leadership and hire a less experienced/less costly who might have more upside in the long-term? Reduce the size of the fundraising department?

In an effort to find some clarity, I’m going to ask my Tweeps and other social media friends to weigh-in with their thoughts. I’ll report back tomorrow on what I find out. Of course, you are very much encouraged to use the comment box (see below) and share your thoughts.

Here’s to your health!

Choosing the Right Donor Database is like Buying a Car

January 9, 2012 DonorDreams Fundraising, Mondays with Marissa, resource development, technology

Welcome to “Mondays with Marissa” at DonorDreams. Every Monday throughout 2012, we will start your non-profit week off right with a technology related topic before returning our attention to donors, fundraising, resource development and all things non-profit. We hope you enjoy Marissa as a new addition to the DonorDreams family!

Having a donor database that fits the needs of your organization can make a world of difference. So, how do choose the right one? When I sat down to think about it, it is a lot like buying a car.

There are some people who are more impulsive with their car buying than others. They walk into a dealer knowing they want a blue one with a sun roof and satellite radio. While others take their time to research and test drive different models; finding a car that has exactly what they need at a price they can afford. Both consumers get what they want, but the consumer who went with the second approach might have gotten a little more for her money. Let’s apply that strategy to finding the perfect database solution for your organization.

First, you want to make a list of what you are currently using. This not only includes the current donor database you are using (if you are using one), but the types of computers, any paper filing systems, the technological competency of the people responsible for maintaining the database, etc. Everything you are using to keep track of donor interactions should go on this list. It would be helpful to break down each item into as many details as possible. For example, when cataloging the types of computers being used, list how old they are along with the installed operating system. Next to each item, make sure you include a small statement about how well the item is satisfying the needs of the organization. Being specific now will only help you later.

I should note that if there are plans to upgrade technology, expand staff, or change facilities soon, make sure you have all of those details as well. The database you choose will exist in that environment. So, you might as well plan for it.

Second, you want to prioritize the requirements that you want included in your new donor database. This is the fun part. Don’t think about money. I’ll say it again because I know, working at a non-profit you probably don’t hear that very often — don’t think about money. The goal is to figure out what features are needed for the software of your dreams. Think about the functional requirements such as the need for data back-up, ability to print, run reports, can it run on both Mac and PC, does it need to run on both Mac and PC, does it offer a secure log in, is the design customizable, etc.

Next, turn your thoughts to donor management. What functions do you need included to successfully manage your donors? Some items might include: scheduling, reminders, calendars, events, employee matching, the ability to export to Quick Books, and forecasting.

Make your lists detailed and long. Then sit down and prioritize the list into what is needed most. This isn’t to say that you won’t be able to attain everything on your list, but having priorities will help steer you to the right vendors.

Third, investigate your options with the available vendors. (To help you narrow the field, you can check out sites such as techsoup.org and idealware.org.) Then you’ll want to take the information you receive from the vendor and see how it closely matches your lists. This, of course, is where money comes into play. When thinking about the total cost of purchasing a new database system remember that it includes: equipment, maintenance, training, implementation, customization, downtime during conversion and tech failures. Also, don’t forget to question the vendor to make sure that they are a good fit for your organization. Do they have customer service hours when you need them? Do they have a large non-profit customer base? After considering all of these options, choose the product that will work best for you. It might turn out that the best solution is continue using what you already have or switch to using a CRM.

Oh yeah, don’t be afraid to ask for references and check them!

Finding a new donor database that works best for your organization is not so different then buying a car. By assessing what you have, listing what you need and researching what’s out there; you can walk into the dealer as an educated consumer and can walk out with the product that meets your needs, most of the time at the price you had in mind.

Here’s to your health!

What can fundraising professionals learn from the Iowa Caucus?

January 4, 2012 DonorDreams Fundraising

Welcome to the 2012 Presidential campaign season! I watched hours of news coverage of the Iowa Caucus and my eyes are about to melt out of my head. However, I walked away from the coverage with what I think is a very clear lesson to be learned for fundraising professionals.

The Obama campaign has been chugging along and exceeding its fundraising for about a year now. They have done this in the middle of a soft economy, which has seemingly posed problems for many non-profit organizations. Many political observers believe that Obama will raise a record-setting $1 billion for his re-election bid.

While Team Obama has continued to raise money, the same can’t be said for the Republican field. If you add up all of the fundraising efforts from all of the current Republican candidates, it still doesn’t come close to Obama’s totals. Is this because Obama is that much better at fundraising? Or is it because Obama is the clear choice of the political donor base?

The current political thinking is that once Republicans settle on their general election candidate, donors will line-up and both candidates’ war chests will equalize. It might be possible that both the Democratic and Republican candidates will have in the neighborhood of $1 billion EACH to run their campaigns.

So, you’re probably asking yourself: “Where is the lesson for non-profit fundraising professionals?”

I think there is a valuable lesson to be learned about your non-profit organization’s case for support.

I believe many Republican donors are sitting on the sidelines because the case for support isn’t focused. There are too many different reasons to donate to too many candidates.

Mitt Romney’s case for support involves “electability” and business experience.
Ron Paul’s case for support focuses on libertarian principles and shrinking the size of government.
Rick Santorum’s case for support centers around traditional values and national security.

Eeeeeeek! If I were a Republican donor, I’d probably take a wait-and-see approach, too.

In these tough economic times, non-profit organizations would do themselves a favor if they spent the first few weeks of January 2012 re-focusing their case for support documents.

Donors like clarity. Donors like winners.

When is the last time your organization revisited its case for support documents? How do you ensure your case is aligned with your donor base? What have you found to be the most difficult part of developing your case? Have you ever considered that your written case for support might actually be costing you money? Please use the comment box below to weigh-in with your thoughts and opinions. We can all learn from each other.

Here’s to your health!

Oooops! I forgot my annual campaign plan

January 3, 2012 DonorDreams Fundraising

The holidays are behind us and a new year is here. While this is obviously a time of renewal and fresh starts for some people, it is most likely annual campaign season for many non-profit organizations. I see Boys & Girls Clubs gearing up for their “It Just Takes One” campaign. The Boy Scouts are powering up their “Friends of Scouting” campaign. I also see many YMCAs hitting the streets with pledge cards in hand.

So, why would so many well established charities hit the streets with pledge cards in hand this close to the holiday season?

This seems to be a time (January through April) of the year when donors have a little more time to sit down and talk. Don’t believe me? Think about what your summer look like (e.g. vacations, etc). Now think about your fall (e.g. back to school, United Way blackout period, third quarter sales projects accompanied by planning for fourth quarter initiatives, etc) Now think about the holiday season that we just exited (e.g. shopping, holiday parties, etc).
Pledge drives are wonderful in the sense that non-profits aren’t asking for cash . . . they only want you to sign an IOU. This means that every month you wait to ask a donor to sign their pledge card there is that much less time for the donor to stretch out their pledge payments. Let’s do the math on a $500 pledge. Asking in January means the donor can make up to 12 payments of $41.66. Making the same ask mid-year translates into approximately six payments of $70 – $80. Waiting until September only gives the donor a few months to pay their pledge and results in payments in the neighborhood of $125.

The first bullet point is the bigger reason for planning a January through May campaign unless your annual campaign is direct mail driven. The second bullet point is more relevant to non-profits whose fiscal year ends on December 31st. While it is true that pledges can be dragged over into a new calendar (and fiscal) year, many non-profits like to keep their books clean as they prepare for their year-end audit.

I can’t tell you how many times I’ve seen non-profit friends get into early January with first and second quarter revenue budgeted for an annual campaign, but no written plan in place on how to move forward. If you find yourself in this situation, you’re in good company. However, you may want to reach for your “To Do List” and add the following things to it for this week :

Develop your Range of Gifts chart. (Click here to read a really good article on this from Joanne Fritz at about.com)
Engage a few volunteers and start brainstorming names of prospective donors who fit into various gift ranges.
Build a prospect list of potential volunteer solicitors who you think possess the skill sets and experiences to do a nice job with a personal solicitation model (e.g. face-to-face asks)
Start recruiting from your volunteer solicitor prospect list.

If the end of 2011 was a blur and you find yourself at the beginning of 2012 without a written annual campaign plan, these simple four bullet points are a great place to start. However, you can’t afford to dilly dally. These four things are your tasks for this week. There is still a mountain to climb. If you want to get a preview of your impending journey, you might want to read this very thorough article by Henry Rosso and Robert Schwartzberg that I found online at The Center on Philanthropy at Indiana University.

Are you one of those non-profits who find themselves without a plan? If so, what do you find on your “To Do List” this week and next week? If you are one of those well-planned agencies, what advice or suggestions do you have for those who aren’t as fortunate? Please use the comment box below to weigh-in with your thoughts because we can all learn from each other.

Here’s to your health!

Introducing Mondays with Marissa

January 2, 2012 DonorDreams Mondays with Marissa, technology

Happy New Year! I hope that your year-end celebrations were fun, and you are ready to tackle resolutions in the new year. Speaking of resolutions, I made a number of them, and a few of them had to do with the DonorDreams blog.

Specifically, it is easy to see how technology is dramatically changing the world around us, which is why I reached out to my friend and fellow blogger — Marissa Garza — and asked her to address technology issues every Monday. (A picture of Marissa is posted to the right on your screen . . . Hi Marissa! 🙂 )

Marissa graduated from the University of Illinois with a BA in Education. She has taught in the classroom, worked for Kaplan, and is one of the most curious self-taught students I’ve ever met when it comes to technology. In fact, every time we get together she is telling me about a some new technological piece of magic.

When I needed help customizing this blog, I turned to Marissa. When I needed feedback on the The Healthy Non-Profit’s website, I turned to Marissa. When I needed to test my webcam with regards to Skype, GoToMeeting, GoToWebinar, and Google+, I turned to Marissa. When a former co-worker asked me for tips on how to get her blog up and running, I sent her to Marissa.

If you haven’t figured out that Marissa is my “go to gal” when it comes to technology, then let me just say for the record . . . she is super smart and someone I think of very highly. I am thrilled to death that she has agreed to become part of the DonorDreams family, and I predict you will fall in love with her.

The inspiration behind “Mondays with Marissa” came from the following two places:

One of National Public Radio’s (NPR) popular shows is Talk of the Nation with Neal Conan, and on Fridays Neal turns his show over to Ira Flatow who hosts a show branded “Talk of the Nation: Science Friday“. This approach to specialized content inspired me to add a new voice to DonorDreams one day a week.
Perhaps, more central to my decision to ask Marissa to join the team is how often non-profit friends ask me about technology related issues and those questions have been very broad including: websites, social media, email marketing, blogs, ePhilanthropy, e-commerce, donor databases, CRM, etc.

I’ve asked Marissa to write about all of these topics and more. As she does, I will use the comment section of this blog to weigh-in with my thoughts on how these technology topics apply to non-profit management, marketing, board development, programming/operations, and resource development (including prospect cultivation, donor solicitation, donor stewardship, etc).

I don’t know about you, but I am very excited about 2012! I am very optimistic and excited to get started.

Please use the comment box below and weigh-in with a few technology topics that you’d like Marissa to write about over the next few Mondays. Your suggestions are very much appreciated. Please also help me welcome Marissa to our family.

Happy New Year and here’s to your health!

The Final 2012 Non-Profit Prediction

December 30, 2011 DonorDreams Fundraising

This entire week we’ve been looking back upon 2011 for major trends, and then looking forward to 2012 with an eye towards making a few predictions. Today’s post speaks to a fundraising prediction that has been true every year since the birth of our country more than 235 years ago:

If you ask people to donate, then you will raise lots of money.

A few days after Christmas, a friend sent me an email with the following Benjamin Franklin quote from Benjamin Franklin: The Autobiography and Other Writings:

“It was about this time that another projector, the Rev Gilbert Tennent, came to me with a request that I would assist him in procuring a subscription for erecting a new meeting-house. It was to be for the use of a congregation he had gathered among the Presbyterians, who were originally disciples of Mr. Whitehead. Unwilling to make myself disagreeable to my fellow-citizens by too frequently soliciting their contributions, I absolutely refus’d. He then desired I would furnish him with a list of the names of persons I knew by experience to be generous and public-spirited. I thought it would be unbecoming in me, after their kind compliance to me solicitations, to mark them out to be worried by other beggars, and therefore refus’d also to give such a list. He then desir’d I would at least give him my advice. “That I would readily do,” said I; “and in the first place, I advise you to apply to all those whom you know will give something; next, to those whom you are uncertain whether they will give anything or not, and show them the list of those who have given; and, lastly, do not neglect those who you are sure will give nothing, for in some of them you may be mistaken.” He laugh’d and thanked me, and said he would take my advice. He did so, for he ask’d of everybody, and he obtained a much larger sum than he expected, with which he erected the capacious and very elegant meeting-house that stands on Arch-street.”

Ben Franklin is considered by most people to be the “Father of American Philanthropy”. His advice is timeless and perfect for those non-profit executive directors and fundraising professionals who are stewing over what their 2012 new years resolution should be:

Don’t say “NO” for anyone.

Ask everyone if they want to support your mission
and invest in the outcomes and impact your agency produces.

Ask! Ask! Ask!

If you do this, then my 2012 prediction for you is that regardless of the economy and any other external influences your non-profit organization will thrive and you’ll exceed all of your fundraising goals.

Speaking of non-profit new years resolutions, do you have any? If so, please use the comment box below and share your thoughts because we can inspire each other.

Here’s to your health!

2012 Non-Profit Trends and Predictions: Volunteerism

December 29, 2011 DonorDreams volunteers

This week I’m looking back upon 2011 for major trends, and then looking forward to 2012 with an eye towards making a few predictions. Today, we are looking at non-profit volunteer recruitment, retention and management.

Throughout the course of 2011, I had the opportunity to write about non-profit organizations and volunteerism. I’ve kept my eyes open for signs of what non-profits are doing with volunteers, and I see indicators everywhere pointing to:

2012 continuing non-profit agencies’ focus on volunteerism.

Here is what I’ve seen that leads me to this conclusion:

My fellow Generation Xers continue to increase the amount of time they spend volunteering. (I personally suspect this has less to do with their charitable outlook on life and a lot more to do with the fact that they’re in the heart of their child rearing years)
I see my parents’ Baby Boom Generation starting to retire, and they just don’t know what to do with themselves when they wake up in the morning. They are volunteering because they don’t see themselves as being old and they want to keep busy.
I see my Millennial generation friends standing in the unemployment line, and then turning around in search of volunteer opportunities that they hope might just turn into a job opportunity (or at the very least turn into a great reference or a referral).
I see my former employer — Boys & Girls Clubs of America — partnering with one of their major corporate supporters to fund a volunteer management pilot project in an effort to develop a program to teach their local affiliates to become better with volunteer recruitment, retention and management.
I see corporations demanding volunteer opportunities and projects from their philanthropic partners in an effort to drive down their employee turnover rates and grab onto what marketing professionals call “the halo effect”.
Let’s not forget about the research out there on the Millennial generation that shows this emerging generation is very much into volunteerism unlike any other recent generation.
According to a recent Guidestar survey, many non-profit agencies are trimming staff or putting a cap on hiring plans in 2012. Not surprisingly, the same survey showed that 65-percent of all non-profit respondents are looking for volunteers for program work and 54-percent are looking for volunteers for administrative work.

The reality is literally this simple . . . donors are saying they want to see non-profits do more with less . . . volunteer recruitment and management helps accomplish exactly this . . . and in the final analysis volunteers turn into new donors a lot easier than cultivating new prospects from scratch.

Investing in volunteerism could just turn out to be the non-profit sector’s version of an economic stimulus plan that pulls agencies out of their economic doldrums.

Volunteer recruitment, retention and management isn’t as easy as just putting out a call for volunteers. As with everything in life, it is science that requires planning and careful management.

Since the economic collapse four years ago, this trend has been taking form and the non-profits who are leading the way have been experimenting with such things as: volunteer databases, volunteer coordinators, various recruitment strategies, strategic alliances with agencies that specialize in volunteerism, recognition programs, orientation and training programs, placing value volunteer hours, and much much more.

As budgets get even tighter in 2012, the flood of non-profits who commit themselves to figuring all of this out will continue to propel this long-term trend.

Is your agency recruiting more volunteers? How has it gone about doing so? What challenges have you experienced along the way? How important is it to have a volunteer coordinator on your payroll to orchestrate recruitment, orientation, training, volunteer opportunity assignment, evaluation, retention, etc? How successful have you been at turning volunteers into new donors?

Please scroll down and use the comment box to weigh-in with your thoughts and experiences. We can all learn from each other.

Here’s to your health!

2012 Non-Profit Trends and Predictions: Contraction Continues

December 28, 2011 DonorDreams Uncategorized

This week I’m looking back upon 2011 for major trends, and then looking forward to 2012 with an eye towards making a few predictions. Today, we are looking at non-profit failures, mergers, acquisitions, and strategic alliances.

I have heard rumblings for years that the non-profit sector is about to experience a wave of mergers. This conversation always involves facts like:

There are approximately 1.5 million non-profit corporations in existence of which three-quarters are classified as “charitable”
Every year brings another 20,000 to 60,000 new non-profit agencies in existence (depending on what source you read)
Almost 25-percent of non-profits allegedly report $25,000 in annual revenue and are obviously very small (and the vast majority operate with annual budgets of less than $3 million . . . in fact most are smaller than $1 million)
Every year 30,000 to 60,000 non-profit organizations go out of business

In 2008, Paul Light predicted that the new economic challenges would result in more than 100,000 non-profit organizations failing over a two year period. Two years later Caroline Preston wrote a follow-up article in the Chronicle of Philanthropy and investigated whether or not this prediction actually came true. As you can imagine, the answer was difficult to ascertain, but in the end the conclusion seemed to be a resounding — “YES“.

With so many friends working in the non-profit sector, I’ve tried to stay on top of where they perceive their agencies to be with regard to financial solvency, and I must admit that I see too many indicators pointing to:

2012 continuing (and likely escalating) the trend
of non-profit failures, mergers, acquisitions and strategic alliances.

Guidestar recently published a great document titled: “Late Fall 2011: Nonprofit Fundraising Study“. If you have some time, you need to read this report! While I am usually very skeptical about the validity of survey research, I indulge in it every once in a while. After looking at this report, I am even more convinced now that the non-profit sector is still only at the beginning of a long-term trend involving bankruptcy, mergers, and alliances because:

small non-profits are experiencing more financial stress than before (and I suspect many are finally at their breaking point)
small agencies are experiencing more donor turnover (most likely resulting from poor stewardship efforts)
small organizations have less money in the bank and their reserves are marginal (a bad position to be in if there is another economic shock)
small non-profits report are preparing to downsize staff in 2012 (not a great situation to be in when donors want to see more impact for less money)

Combine some of these generalizations with the government funding contraction trends we’re seeing, and it becomes obvious to me that more failures and mergers awaits us as we travel down the 2012 road. If you want some good reading materials on this subject, you may want to check out the following resources:

Is your non-profit organization living on the edge? Have you ever looked at merger, acquisition, or strategic alliances? If so, what were your considerations in moving forward or not moving forward? If the best time to look at mergers and strategic alliances is BEFORE a crisis, are you starting to look more seriously at these opportunities?

Here’s to your health!