Now is the time of year when blog editors worldwide ask their writers for predictions and trends for the coming year. I thought Mary Beth Westmoreland’s latest piece on npENGAGE did a great job summarizing the high-level technology trends we often see and hear about in the nonprofit sector. So, I wanted to focus on the market trends and influences that will inform how nonprofits implement and leverage this technology.
(For a refresher, my 2013 piece Non-Technology Trends for the CIO and a 2011 white paper for the Association of Fundraising Professionals on similar topics may be good places to start and worth a read as well.)
The More Things Change…
So many market forces are the same or trending in the same direction as last year (and years before).
The overall economic pie for many nonprofits feels smaller, and year-over-year giving in the States has barely kept pace with inflation (the Blackbaud Index is a great resource for those interested in these trends).
Many businesses are getting tighter and more selective in their corporate donations. Large foundations have been increasing both application requirements and outcome reporting for nonprofit grants, consuming increasing levels of staff time.
Donors continue to get smarter about how they give, actively researching organizations online and looking for information on outcomes, impact and fundraising expenses. Additionally, the dramatic increase in online engagement (for instance, peer-to-peer, mobile, and social media) has made the nonprofit marketplace seem smaller: donors are exposed to more causes, more organizations and more opportunities, in a more personal and globalized way than ever before.
These trends are all part of the New Normal, and will increase competition for a relatively stable pool of funds, as well as put pressure on organizations to fulfill their missions and meet ever-increasing demands for services. And, for better or worse, this New Normal is not going away anytime soon.
Many nonprofits will deal with the New Normal by emphasizing “smart growth” in terms of both fundraising and program delivery. Maintaining top-line growth (e.g. raising more money) as well as delivering services better, faster, and cheaper can significantly move the needle for any organization. But, achieving this win-win will require both drastic and longer-term incremental changes to the way nonprofits operate.
Here are some things to look for:
- Prioritization of predictable fundraising sources: Many organizations that lost funding sources over the past few years had to cut back or cut programs, a very painful experience. Smart organizations will increase focus on stable and predictable fundraising channels rather than “swinging for the fences” to prevent getting burned again.
- Diversification of fundraising sources: Organizations that heavily depend on Direct Mail, government grants, or a single funder or event will continue to diversify fundraising channels to minimize the significant risks associated with the loss of a single fundraising source or channel.
- Re-focus on core competencies: Organizations that experience rapid and significant organic growth often suffer from “Mission Creep,” resulting in a complex portfolio of initiatives, systems and processes to manage. Look for top nonprofit brands to actively double-down on what works best (in terms of cost, performance, and impact) and consolidate second-tier programs and initiatives.
- Strategic focus and right-sizing for sustainability: Out of necessity, nonprofits tend to be extremely creative, grass-root-driven organizations, often resulting in tradeoffs with internal efficiencies and operational excellence. Nonprofit executives will look to maintain this entrepreneurial culture, but channel it into a more deliberate and prioritized approach to initiatives in order to focus the energies of the organization.
A Delicate Balance
Technology has enabled increases in personalization in most aspects of our experience (Amazon, Twitter, and Facebook come to mind), although even strident technologists will admit that technology-mediated communication is often a poor substitute for a face-to-face discussions. The need to strike this important balance will impact the nonprofit community in several ways:
- Raising more from fewer donors: Most nonprofits I speak with are making an intentional move from acquisition-based fundraising to focusing more on retention and upgrades of current donors. See this and this for good articles on the topic. New relationships will be grown out of current ones, and your best major donor candidates are likely already in your database.
- Analytics no longer just nice to have: The ongoing demographic shift in the U.S. means significant opportunities for planned, major, and principal giving, as older generations look to transition their estates and leave a legacy. For better or worse, everyone knows this, so there is more competition for these large gifts. Using analytics and data modeling to provide a more detailed understanding of the capacity, linkage, and preferences of donors will be more important than ever. Anyone who has been surprised by a longtime annual donor making a significant major gift or donation of an estate to another organization will likely know what I mean.
- Internal efficiency: Many nonprofits have legacy processes, outdated systems, or just “the old way of doing things.” This creates challenges in hiring, motivating, and retaining staff, and makes many talented candidates shy away from the nonprofit sector. For many organizations, nominal increases in staff retention will help stabilize and yield returns in terms of internal efficiencies, donor retention, and the bottom line. I’m a firm believer in the power of technology to relieve burden on staff, re-focus teams on donors (rather than internal issues), and serve as an attractive intangible for recruiting and retaining team members.
Complexity and Clarity in “the Cloud”
Ask ten people what “the Cloud” means, and you’ll likely get ten different answers. Cloud-based solutions represent an exciting future for nonprofits, yet this paradigm shift introduces unanticipated complexity, side effects, and consequences. As more solutions become Cloud-based, keep the following considerations in mind:
- Which Cloud? Private Cloud, Public Cloud, or Hybrid? True Software-as-a-Service (SaaS) or Managed Hosting? Single Tenant or Multi-Tenant? Turns out, there are lots of Clouds out there. Some will work better for some organizations (or programs or applications) than others. Nonprofit CIOs will increasingly need to understand these distinctions and how they impact their business – as well as communicate these impacts to stakeholders.
- Data ownership and accountability: In addition to the architectural considerations above, there are many business, compliance, and legal implications to moving operations to The Cloud. Who owns the data? How easy is it to get back? What are the contractually guaranteed compliance measures, privacy protections, and uptime? Nonprofits CIOs and technologists will need to drive conversations related to these decisions.
- Integrations and other stuff we didn’t know to ask: How will Cloud-based solutions talk to each other? To systems you host in-house? Will an upgrade to one solution impact the others? Are there data size or scalability considerations? What is the business impact of moving my solution(s) to the Cloud? What is the impact on data quality in my system(s) of record? As with any new technology, there is a lot to learn, although I anticipate answering these questions will become more straightforward as solutions mature and become commoditized.
Happy new year!