Report: Nonprofit Sector Recovering, Open To Expand

The nonprofit sector has largely rebounded from the impacts of the COVID-19 pandemic, creating new growth opportunities, although many leaders remain cautious due to ongoing political and economic challenges.

A recent survey, Nonprofit Standards: A Benchmarking Survey, conducted by the accounting firm BDO, highlights several positive trends within the sector. Over half (52%) of nonprofit leaders reported an increase in revenue in the past fiscal year, and 82% indicated their workplace culture is “strong” or “very strong.” This strong foundation has encouraged many organizations to look toward growth, with 52% planning to invest more in new programs and 73% aiming to expand or adjust the scope of their missions.

The survey also emphasized the success of nonprofits’ investments in digital transformation, which have helped organizations adapt to changing times. BDO suggests that nonprofits are now in a position to assess and refine their strategies.

“Now is the time for nonprofits to reflect on what’s working and consider what adjustments might be necessary,” the report stated.

Despite these positive developments, the survey also identified some areas of concern. Only 59% of nonprofit leaders expect revenue growth in the upcoming year, down 10 percentage points from 2023. Many nonprofits are increasing their reserves, and a significant decline in advocacy spending is expected—just 25% of respondents plan to spend more on advocacy, a sharp drop from 52% the previous year. This shift points to growing anxieties over the 2024 elections and ongoing economic uncertainty.

However, the report suggests that nonprofits are also embracing forward-looking strategies, particularly in technology. The incorporation of tools like AI is seen as part of a broader foundational shift.

“Nonprofits are moving beyond the challenges of recent years and are now focusing on proactively shaping the future of their organizations,” said Andrea Espinola Wilson, managing principal and co-leader of BDO’s Nonprofit & Education practice.

The survey also highlights areas where nonprofits plan to allocate more resources in the coming year. Forty percent of leaders indicated they plan to hire more talent, a slight increase from 2023, while 52% intend to invest in new programs. Many of these decisions are driven by pressure from board members, as well as the need to adapt to changing demands from their constituencies and explore new opportunities.

“Nonprofits are reassessing their missions and engaging in strategic planning in response to both internal pressures and external factors, such as political, social, and environmental shifts,” the report noted. “The strong internal structures that have been built over the past year are providing nonprofits with the flexibility to focus on mission and programming, building on what’s already working well.”

The findings come from a survey of 250 nonprofit leaders conducted in May and June 2024. Participants represented a variety of sectors, including higher education, foundations, health and human services organizations, international NGOs, and public charities.

Source:  Associations Now