As we emerged from 2020 into 2021, there were high hopes that we were returning to some level of normalcy. COVID vaccines were, restrictions were loosening up, and employees were starting to go back to work. It seemed we had weathered the storm. Fast forward eight months later and COVID is still the 800-pound gorilla sitting in the room. While COVID deaths are down, the delta variant has brought a resurgence to the pandemic and has created a whole new level of concerns and regulations that will continue to shape the landscape for the balance of 2021 and beyond.
The pandemic has dramatically changed the way business is done, and while it has created a significant level of hardship for everyone, it has had a particularly significant impact on the nonprofit sector, with agencies either in a state of feast or famine. Certain health and welfare organizations are experiencing significant levels of demand, while schools and arts and cultural organization are experiencing significant declines in services and revenue. Add to that staffing shortages, continued concerns with in-person fundraising events, and an everchanging regulatory environment, and it’s no wonder that many nonprofit leaders are finding themselves in crisis management mode.
So what does the future hold for the sector and what do organizations need to do?
Return to Strategic Thinking:
Over the last year and a half, the sector has been focused on dealing with the COVID crisis. That still needs to be a significant focus as agencies grapple with vaccination policies (employees and fundraising events), the HERO Act, and the complications of the various CARES Act funding options and how they interplay with government funding (see webinar). Nonprofit leaders also need to focus on where their organizations are going, how their operations and missions may have changed, new service models, changing policies, and more. The sector is dramatically changing, and organizations need to adjust to these changes. For many that may mean some level of merger or other affiliation, changes to delivery models, increased reliance on technology, increased diversity, and more. It might be time to dust off your organization’s strategic plan and set a new path for your organization.
Heavier Reliance on Technology:
If there is a faint silver lining to the pandemic, it may be that the nonprofit sector advanced technologically by more than a decade over the last year, closing the gap between them and their for-profit brethren. This move to increased dependence on technology is going to need to continue to streamline operations, improve systems and controls, enhance security features, etc. Those organizations that get on-board will be able to enhance communications with donors, measure impact more effectively, monitor key operational indicators more closely, develop more flexible work environments, establish better checks and balances, and provide more meaningful and directed services. For instance, an organization working with the developmentally-disabled population is incorporating technology into consumer goals and experiences to maximize the level of service delivery and keep them connected during these difficult times. This connectivity will continue long after the pandemic is a chapter in the history books. Even so, organizations need to remember that increased technology means increased cybersecurity threats; something that is unfortunately on the rise. Nonprofits will need to continue to focus more energy on ensuring they are protecting information (HIPAA, donor, staff, etc.).
Flexible work arrangements will need to be the new norm. Study after study has shown that employees do not want to ever return to the pre-pandemic work environment. Nonprofits will need to find ways to create more flexible working arrangements for their staff, where possible. For many nonprofits that are involved in direct service delivery, this may not be easy, but to retain staff, it is going to be essential for agencies to be more creative in their staffing decisions. This is even more prevalent given the overall lack of quality staff in the marketplace.
The country has become very polarized across many demographics – race, religion, economic status, political party, vaccination choices, etc. As nonprofits, it is very important for organizations to be representative of the individuals they serve. This puts an increased emphasis on ensuring diversity is in place within your organization at all levels – the board, staff, committees, volunteers, vendors, etc. Those organizations that are able to achieve greater diversity will be in a better position to develop appropriate programming, reach underserved populations, and attract fundraising dollars.
Changing Service Delivery:
We have been extremely isolated during the pandemic and have been called upon to find innovative and creative ways to deliver impactful service. It is essential that this trend continues. People need more services than ever before and they are looking for those services in different ways, different times, different places, etc. Organizations need to be more communicative and adaptive, really taking the time to understand the dynamic needs of their constituents and developing innovative ways to meet those needs. Regular communication and follow-up on how service delivery is effective/ineffective and how your agency can differentiate itself from other similar organizations can go a long way to ensure organizational longevity, especially given the regulatory environment we are in and the likelihood of increased consolidation.
Organizations need to look for ways to strategically collaborate with other agencies, governmental programs, and for-profit entities. It is important for agencies to develop joint programs, shared services, and linkage agreements with other nonprofits. Strong advocacy and open dialogue with funders are necessary to ensure that programmatic needs are being considered and appropriately funded. Nonprofits also need to approach the business community and donors differently. The days of “one size fits all” sponsorships are shrinking. Donors want more open communication, and they want to understand how their donations will be utilized to drive impact. Finally, it is important for agencies to understand that consolidation is going to happen. Government funders and regulators are calling for it. The question will be “what side of the equation will you be on, buyer or seller?”
We’ve lived through in-person fundraising prior to the pandemic and virtual fundraising during the pandemic. As we continue to emerge from the pandemic, fundraising will need to become a hybrid of the two, incorporating the flexibility and accessibility of a virtual event and the social aspects of a live event. This can happen through a single event (simulcasting) or through multiple events throughout the year (some in-person and some virtual).
The pandemic has brought about change, and nonprofits will need to pivot to remain relevant to everyone they interface with. While the sector has and will continue to undergo change due to the dynamic world we live in, a constant remains: nonprofits need to ensure that their voices and messages are heard. We may be communicating differently, but it is important that this communication continues to take place.
Kenneth R. Cerini, CPA, CFP, FABFA
Ken is the Managing Partner of Cerini & Associates, LLP and is the executive responsible for the administration of our not-for-profit and educational provider practice groups. In addition to his extensive audit experience, Ken has been directly involved in providing consulting services for nonprofits and educational facilities of all sizes throughout New York State in such areas as cost reporting, financial analysis, Medicaid compliance, government audit representation, rate maximization, board training, budgeting and forecasting, and more.