The Nonprofit Sector In 2011 And Beyond

Now is when some us look back at the year that’s about to end and make predictions about the coming one. Recent reports and events from the Center on Nonprofits and Philanthropy (CNP) give us a snapshot of the nonprofit sector in 2011 and a peek at what nonprofits face in 2012 and beyond.

The Nonprofit Sector in Brief: Public Charities, Giving, and Volunteering, 2011 reports that the sector is burgeoning.

More than 1.4 million nonprofits are registered with the Internal Revenue Service, a 19-percent increase over the first decade of this century. And this number excludes organizations that aren’t required to register with the IRS—namely, nonprofits with less than $5,000 annual revenue or religious congregations that opt not to register.

Private giving is on the uptick, reaching $291 billion in 2010, after a decline during the Great Recession. Forty-four percent of nonprofits saw contributions rise during the first half of 2011, and 25 percent said contributions held steady. In 30 percent of charities, funding fell.

Patrick Rooney, executive director of the Center on Philanthropy at Indiana University, points out that at the current rate of increase, funding wouldn’t return to prerecession levels for six years.

CNP discussions with nonprofit leaders and experts also confirmed that challenges will dog the sector well into the future. Less government funding. Growing demand for programs and services. Heightened funder scrutiny and demand for accountability. Challenges to the nonprofit tax-exempt status. Combined, these forces could put many charities at risk.

Some experts on performance management and mission effectiveness do see these challenging times as a possible “inflection moment.” Twenty leaders from government, nonprofits, philanthropy, and business agreed at a recent convening that nonprofits have every reason right now “to step out of their comfort zones, take a hard look at what they’re doing well and what needs work, and look for new means of assessing and improving their performance as they adapt to the ‘new normal’ and learn to do more with less.”

In an earlier blog I also listed possible workarounds and solutions for nonprofits. Be strategic about limited resources. Collaborate and partner. Identify and reward best and promising practices. Innovate. Advocate for the sector, especially at the state and local levels. Educate the public. Harness technology and the internet.

It will be rough sailing ahead for nonprofits, but those that can ride the wave will land in solid ground, better and stronger.

Originally posted on Urban Institute MetroTrends Blog, December 29, 2011.

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