10 Trends That Could Impact Your Nonprofit in 2020
The year 2020 is shaping up to be an exciting and challenging one for nonprofits. We are all familiar with the increasing pace of change around the world, and in the months ahead we can expect more of the same. The overall trend is that change is happening more rapidly than ever, and not just in technology. Change is coming from nearly every direction. In order to rise above it, organizations must be prepared for these shifts and learn how to embrace them.
Here are 10 trends that could impact your organization this year.
1. Contributions to donor-advised funds continue to rise.
Since the Tax Cuts and Jobs Act (TCJA) went into effect, donor-advised funds (DAFs) have become more and more popular. In fact, contributions to Fidelity Charitable increased from approximately $4 billion in 2016 to $9 billion in 2018. This makes Fidelity Charitable the largest recipient of contributions in the country.
2. Grants from DAFs continue to grow.
At the same time, grants from DAFs are growing. Fidelity Charitable alone gave nearly $4.8 billion in grants in the year ending June 30, 2018. If your organization doesn’t have a plan for obtaining grants from DAFs, consider creating one as soon as possible.
3. Government funding maintains its decline.
As government funding continues to decline, organizations that rely primarily on government funding are starting to explore alternative funding options. Many have turned to earned-income opportunities in a bid to increase their dollar inflows.
While earned-income opportunities can lead to a more sustainable funding model, they are not without perils. Many organizations have ventured down this route only to lose money on their ventures. If your organization is seeking new ways to earn income, be sure to develop a solid business plan and consult with professionals who can help analyze the venture’s long-term viability.
4. “Text to Give” gains popularity.
“Text to Give,” a type of giving vehicle that allows donors to easily make donations from a mobile phone, has been around for several years; however, it is not yet widely adopted by nonprofits. In the coming months, we can expect to see more and more nonprofits using text-to-give platforms.
5. More donors are open to monthly giving.
Donors’ willingness to commit to monthly giving is increasing, perhaps thanks in part to the prevalence of month-to-month apps, subscriptions, etc. This is especially true for millennials and Gen Zers who grew up with monthly giving models and appreciate the smaller dollar amounts they allow.
While building a solid monthly giving campaign takes time, it can have a significant impact on dollars coming in. Moreover, monthly giving isn’t as fickle as foundation and major donor gifts. Although not a replacement for a major gift campaign, monthly giving can be an important contribution to ongoing operational expenses.
6. The emergence of smart speaker campaigns.
Techsoup.org predicts donors will start giving via their in-home speakers, which number nearly 119 million across the U.S. alone. Giving via speaker is much faster than writing a check or even sending a text. According to Techsoup, your organization must be “voice-search ready” to participate in a smart speaker campaign: “Being voice-search ready ultimately means being able to provide searchers with up-to-date, accurate, and easily accessible information about your organization.”
7. New minimum wage laws and low unemployment.
Rising wages and employee turnover will put many nonprofits in a difficult spot this year. Nonprofits have, in general, employed quite a few people at or near minimum wage (thrift store workers, general office help, etc.). In Minnesota, new laws are aiming to increase not just minimum wage but all wages. What’s more, there are an abundance of job opportunities for workers at all levels, and particularly for those at lower wage levels.
In response, nonprofits will need to up their game in the employee-engagement area—that is, make your organization an awesome place to work. Nonprofits also must put more effort and resources into becoming efficient in all areas of their organization. Although Lean and Six Sigma philosophies and practices have been in the for-profit world for many years, they’re just starting to take hold in the nonprofit sector. With falling funding and higher turnover, 2020 is the perfect time to implement operational efficiencies.
8. Shifts in foundation giving.
Significant disruptions will continue in 2020 as large foundations change or reorient their giving to different causes. Large foundations are also reducing the number of organizations to which they contribute while increasing contributions to those they fund. Many times, this shift can happen within 12 to 18 months or sometimes without any advance notice.
To minimize the effects of a sudden decrease in funding, organizations receiving significant grants should have a plan in place to replace grant income. While these changes are often unavoidable as foundations pivot their focus and giving, building strong relationships with your major foundations and donors may blunt some of the impact and give you time to prepare.
9. An increased level of scrutiny.
With the upcoming presidential election and win-at-any-cost mentality of many voters, nonprofits can expect more scrutiny of their actions and words. While organizations should not shy away from fulfilling their mission, every organization should have a media response plan to reference in the event of negative media attention.
10. Virtual offices and employees become the norm.
While not a skyrocketing change, we do expect more organizations to either move to a virtual office concept or increase the number of employees working from home. A driver of this trend is the desire to reduce rent and offer employees more flexibility. In a time of declining revenue for many nonprofits, reducing or even eliminating rent expense can translate to significant savings. It can also benefit younger workers who tend to appreciate the freedom and flexibility of non-standard hours.
Prepare for 2020.
If you’re not feeling as prepared for 2020 as you’d like, we can help. For the past 60+ years, Abdo Eick and Meyers has helped hundreds of nonprofit organizations navigate changing times. While we can’t stop change in its tracks, we can help you and your organization prepare for and even capitalize on trends headed your way. Contact us today!
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Steve Anseth, CPA, is a Partner and leads the Abdo Eick & Meyers nonprofit practice area. Whether he’s helping a client reach their goals or competing in an inline marathon, Steve is always thinking ahead.
You can reach Steve at 952.715.3029 or click here to contact him via email.
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