Innovation thrives in the nonprofit sector despite economic pressures

The COVID-19 pandemic has, unsurprisingly, squeezed the nonprofit industry. According to UHY LLP’s inaugural non-profit survey of industry executives, funding has largely plateaued over the past year, with more than half (54%) of respondents saying their funding has remained the same or had decreased. Only a third (33%) say it has increased.

Meanwhile, 75% of respondents say they received some form of emergency financial assistance during the pandemic – a key source of funding that kept them afloat during the most difficult times, but which is about to dry up in the very near future.

Compounding this precarious fundraising environment is the continued reluctance of donors to contribute to organizations’ operational expenses – something 37% of respondents cite as one of the industry’s top challenges in 2022. how they spend money money for non-programmatic activities – which are nevertheless essential to the effective management of the organization – such as staff salaries, information technology, etc. This scrutiny can become even more intensive in times of economic uncertainty when donors are more likely to tighten their belts and demand evidence of an organization’s resilience and continued viability.

“No sector of the economy has been immune to the impact of the pandemic, but nonprofits have been particularly hard hit,” says Brian Kearns, partner and nonprofit practice leader. of UHY. “Not only have they had to scramble to shore up their balance sheets; they had to deal with a shrinking and increasingly competitive funding pool. But as the saying goes, necessity is the mother of invention – and we’re seeing nonprofits redouble their efforts in innovation and digital transformation to help them accomplish more with less, while making it more attractive to more selective donors. »

Many of the major innovation surveys that respondents have undertaken in recent years focus on finding efficiencies and rolling out new services. A majority (60%) of respondents say they have created new programs and services in the past year, perhaps to differentiate their offerings and highlight the value they bring to their communities. Another 59% say their organizations have implemented some form of new technology to improve efficiency in the past year, reporting a focus on modernizing their technology to meet the demands of the global economy. pandemic era.

Additional findings from UHY’s Nonprofit Survey and 2022 Trends Report include:

  • Increased collaboration:Despite increased competition for donor dollars, nonprofits continue to prioritize the achievement of their missions. More than half of survey respondents (52%) say they have collaborated in the past few months with other organizations, suggesting that partnerships have been a key way for the nonprofit sector to continue its good work in a context of persistent uncertainty.
  • Growth and scaling challenges: Nearly 50% of respondents identify growth and scaling as a key concern, which seems to reflect an industry in the midst of rapid transformation.
  • Talent Prioritization: 40% of respondents say that their top priority for the next year is to attract and retain qualified people. It’s clear that labor shortages persist across all sectors, and nonprofits struggle just as hard to attract and retain top talent as their for-profit counterparts.

To read the full 2022 Nonprofit Survey and Trends Report and learn more about the challenges and opportunities facing the sector, click here.

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