The Imperfect Storm, Part 1

This post was written by Marc Chardon and Hal Williams. It was orginally featured on The Huffington Post, May 18, 2012.

The storm, for nonprofit organizations, is fully brewed. The demand for services is up; contributions have barely regained their pre-recession levels; government funding is way off; and expenses are rising. We are tempted to call this a perfect storm.

This turmoil, however, is actually imperfect. Although it’s tempting to blame the economic downturn for all that ails nonprofits and charitable giving, the reality is that the current uncertainty is the new normal.

There are five key shifts affecting the environment for nonprofits that have co-mingled with the economy to create the potential for continued rough times if organizations don’t change:

Donors are dramatically changing what they want from philanthropy. The fundraising appeals that used to bring in record donations no longer work, even in a stronger economy. Smart nonprofits want the check writer, not just the check.

Contributors increasingly shift from funding programs to investing in results. They are less interested in how many are served, than in how many are improved. Soon, information on nonprofit effectiveness will trump information on efficiency and even sustainability.

Many donors have moved from a desire to support multiple groups working on a single issue to investing more in the specific organization that produces the strongest result. Blending in for nonprofits is now less useful than standing out.

Donors want to see data, not just hear a few stories. Donors want to see data showing impact beyond the few stories that can be told. They will use the same business sense that they used to make their money in deciding how to give it away.

Execution of programs no longer defines the results. The shift is from the program to the participants and how these individuals make progress toward improving their lives and conditions. A great predictor of success lays in the extent to which a person engages in his or her own achievement.

Nonprofits cannot ride out this storm. They have to find a way to succeed within it. Put differently, we are not interested in how groups manage in tough times. Too often, that is about staying afloat. We are focused, instead, on how these groups thrive in a new reality, which is defined as both having a destination and reaching it.

So we begin the conversation, and we hope you’ll join in. In the posts that follow, we’ll dive deeper into our take on how to navigate the imperfect storm, organizing our thoughts as a response to the five shifts noted above. In all cases, our responses share one premise: that loosening up is better than hunkering down.