5 Not-for-ProfitChallenges

Not-for-profit (NFP) organizations work hard to accomplish a world of good, but running one is much harder than it looks. Aside from the common issues that face any company, like adapting to new technology and staying up to date with accounting and regulatory requirements, nonprofits face some additional challenges specific to their sector. The last few years have thrown up a number of challenges. These are the ones I have felt and observed as a NFP leader.

1. The Funding Environment

It would be like ignoring the elephant in the room if the funding environment wasn’t mentioned. Many nonprofit organizations depend on the assistance of the government. This assistance may be in the form of grants or part of a matching scheme, or it may merely serve as a safety net to fill the gap when funds are short.

Shrinking budgets at state, national and municipal levels means there is less to go around. Most nonprofits end up getting less funding than they want or need, while some are left with no funding at all.

Over the past two decades Australian Government policies have applied free market structures to the delivery of welfare services and given rise to a new era of competitive tendering and contracting in the Australian not for profit (NFP) sector. For clinical and client services models of funding now include unit-based funding such as the NDIS where funds are released per occasion of service or client.

What does this mean for managers leading teams? Increased pressure to deliver results. The threat of reduced funding. Staff nervous about their job security. Morale impacted. Potentially clients loosing access to services they rely on. This is a lot of pressure making it hard for managers to get off the dance floor where they are reactive and move to the balcony adopting a strategic approach to their roles, and skills in bringing teams along with them.

2. Pressure to Show Results and Innovate

In the past, the NFP world’s emphasis was on showing that programs were being used and accessed by those they aimed to support. Now, largely because there is less to go around, the pressure has shifted. NFP’s must demonstrate impact and outcomes and that its social impact objectives are being achieved, which can be a much harder calculation. Many NFP’s don’t have the expertise or resources to support this need. Managers need to upskill and face the continuous pressure to develop programs that have a point of difference, show results and cuts through to be recognised.

3. Valuing Your Worth

NFP's feel great pressure to be competitive and do more with less. So many times I have heard it said with pride that projects have been done ‘with the smell of an oily rag’ and acting the role of the ‘poor cousin’ to government and NFP services. Organisations try to absorb costs whether it be financing with own funds or dedicating considerable ‘in-kind’ support such as venue hire or absorbing administration costs. While this is the reality when starting out and care needs to be taken not to give cause for funders or the community to question financial fidelity, by making a habit of it NFPs undervalue and undercut themselves. The phrase you must use money to make money applies as this approach is not sustainable in the long term. The impact not only affects the organisation but the sector as it perpetuates unrealistic expectations of actual resourcing needs. Managers therefore need to be skilled in resource management, tendering and negotiating contracts.

I have done the work, I’ve had positive and negative experiences and I know the challenges. I’d like to be part of your solution.

4. Attracting and Retaining Staff

Many NFPs struggle to win the battle for talent when competing with opportunities in other sectors. This leads to an equally important issue: are they attracting the right people?

It is helpful to look at what type of person is attracted to the sector, and why others are not. People attracted to NFP work are generally very dedicated to the causes they serve and are an asset to the sector. However, the limited resources many nonprofits have also make it tricky to recruit ‘top talent.’ Those that get hoovered up by more lucrative industries with bigger offers and opportunities. Is there a solution? The solution for leaders comes in three parts.

First, fight the fear. If these are the people you need, then invest in them. NFP's must fight the fear that they may leave or cost too much and look at the bigger picture. Investing in your most important asset will result in contracts being extended and new funding attracted.

Second, where investing in new talent is not possible, you must believe in your top talent. I believe some nonprofit leaders are afraid to invest in talent development initiatives in case employees leave. Some may leave but look at the bigger picture.

By creating an environment promoting learning, growth and development, and create an attractive future. Identify strengths and unharnessed talents. Invest time in career planning, training and offer people existing capacity building opportunities. Help them flourish and take their undeniable passion further.

Third, create and foster a culture focused on the values of the organisation. Provide an engaging work experience that allows your people to focus on why they love their work – your mission.

5. Adapting to Hybrid Arrangements

As NFPs recover from reduced donations, limited fundraising options and other disruptions from the pandemic, they’re now facing the challenges of the post-COVID world. Across industries, there is a growing trend of remote and hybrid working with 73% of workers wanting flexible working options to continue.

The NFP sector is no exception to this change, according to The Charity Digital Skills Report 2021, 68% of respondents are planning to adopt hybrid working long-term.

While this is not possible in all roles, many NFP’s demonstrated they could meet some of their client needs remotely and learnt there were advantages in accessing talent outside the office.

As organisation prepared to exit covid restrictions common concerns shared amongst management was how do we keep our teams motivated, accountable and connected to the organisations mission and communities.

In addition to potential cost savings and reaching potential new clients, hybrid and remote working offer not-for-profits and charities the opportunity to create a more flexible and inclusive working environment while reducing costs and gaining access to a wider pool of talent.

By embracing remote working options, NFP's can remove barriers, better support their staff and better serve their mission. Not only does it widen the geographical pool of talent, but it also enables more flexible working conditions which are essential to many working parents and people with disabilities for example. Managers therefore need to shift the way they engage with teams and encourage productivity.

How Lambert Caring Solutions can help you with this problem

Our solutions for nonprofit organizations and their leaders include training, coaching and project management to enable you do more of what matters: making a positive impact in the world.

Charity Digital Skills Report (2021) | Digital Skills & Jobs Platform (europa.eu)

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