The voices of Urban Institute's researchers and staff
October 21, 2011

The Outlook (And Some Solutions) For Nonprofits

October 21, 2011

“Where’s the light at the end of the tunnel?” This was the key question for panelists at a recent Center on Nonprofits and Philanthropy (CNP) event held to explore what’s ahead for this sector.  Marking its 15th anniversary, CNP asked nonprofit leaders and thinkers to give their take on the “new normal” – limited funding, increased demand, and intensified scrutiny.

The outlook for nonprofits is daunting, according to Stephen Bennett, president and CEO of United Cerebral Palsy:

I’m not sure there’s an end to the tunnel. I think things are totally different, and I’m not sure I’m looking for light at the end of the tunnel anymore. It’s kind of a wasted exercise for me. We have to do things very differently, I think, in going forward.

Bennett’s view is understandable. The Great Recession and lingering economic torpor strain nonprofits while government funding is down and private giving remains static. Nonprofits make do with less while demand from Americans with nowhere else to turn grows. Talk in Washington about reforming the tax code and charitable deductions and revisiting nonprofit tax-exempt status heightens nonprofits’ anxiety.

Yet, nonprofit experts and leaders convened by CNP at this and other anniversary events offered some solutions for getting through today’s dark tunnel.

Be strategic about limited resources.  Obvious? Maybe, but nonprofit executives and boards need to weigh both the short term and long term costs of cuts. Letting go of staff or drawing down reserves might bridge current gaps, for instance, but can also undermine capacity and viability.

Collaborate and partner. Nonprofits have long worked together to help the individuals and families they serve. Besides sharing resources and expertise with each other, nonprofits can partner with the wider community to address systemic issues. Nonprofit housing assistance agencies in the Washington, D.C. metro area, for instance, can collaborate with school districts to minimize the impact of the foreclosure crisis on children moving homes and switching schools.

Identify and reward best and promising practices.  Private and public funding has to be maximized and channeled to programs proven to get results. Mario Morino, co-founder and chairman of Venture Philanthropy Partners, urges nonprofits to “manage to outcomes.” That means using information to guide decisions and operations, which leads to measurable and meaningful impacts.  That said, nonprofits need financial support to gather information and measure outcomes.

Innovate. Marta Urquilla, senior policy adviser at the White House Office of Social Innovation and Civic Participation, says that “when we talk about innovation in this context, we’re not talking about novelty. We’re talking about the innovation that comes from the relentless pursuit of results.” Funders must resist funding “the latest thing” for two to three years and then chasing the next big idea. They should see a new initiative through since false starts and glitches can bedevil even very viable programs.

Advocate, especially at the state and local level. The political climate in Washington means that there’s little or no pay off in trying to get Congress and the administration to act on behalf of nonprofits. Julie Rogers, president and CEO of the Eugene and Agnes E. Meyer Foundation, cites the Think Twice Before You Slice Campaign in the Washington, D.C. metro area as an example of an initiative that has convinced local and state governments to preserve funding for nonprofits (in this case, more than $45 million) by showing the contributions nonprofit make in their communities.

Educate the public. Bennett believes that the general public isn’t aware of the extent of nonprofits’ contributions and challenges because nonprofits are resilient and usually don’t turn anyone needy away. Educating people, many of whom benefit from nonprofits, can get them to support nonprofits more.

Harness technology and the internet. Joining the digital revolution can be a low- cost and effective way to reach out to the public, raise funds, and train practitioners.

Nonprofits may be stuck in the tunnel for now, but there are ways out of the dark.

SHARE THIS PAGE

As an organization, the Urban Institute does not take positions on issues. Experts are independent and empowered to share their evidence-based views and recommendations shaped by research.