Global Economy Pressures Nonprofit Funding Sources

Post a Comment » Written on May 19th, 2006     
Filed under: News
By Stan Friedman

CHICAGO, IL (May 19, 2006) – The rapidly growing Chinese economy will make funding for even small local non-profit organizations in the United States more difficult, says futurist Tom Conger, who addressed a gathering Wednesday during Symposium 2006, sponsored by the Axelson Center for Nonprofit Management at North Park University.

Five hundred people attended the two-day event where experts from across the country helped nonprofit leaders grapple with issues that are rapidly changing the ways in which their organizations will need to operate. Conger, the CEO of Social Technologies, opened a panel discussion that allowed panelists to share how their nonprofits are meeting the new challenges.

Economies such as China and Brazil are increasingly competitive in the world economy, attracting more business, but also demanding more resources such as oil, Conger said. That has contributed to the rise of the middle class in those countries, while shrinking the size of the middle class in the United States.

That gap between the “haves” and the “have-nots” in the United States also is widening, Conger noted. As a result, nonprofits will have to change strategies for soliciting a decreasing supply of money as well as meet an increasing demand for services. Nonprofits will have to depend more on a few wealthy donors rather than the traditional method of obtaining support from a broad base, he suggested.

The aging baby boomer generation will have a profound effect on funding for nonprofits, according to the panelists. Conger noted that by the year 2040, some 10 percent of the New York City population will be older than age 75.

“Baby boomers have reinvented every life stage they’ve been through,” Conger said, adding that he expects the trend to continue.

Wealth is being transferred from older to younger generations, which also means the nonprofits will need to operate differently. A new generation of donors will bring new values. Those donors are expecting more transparency of the nonprofits’ activities and want to be more involved in determining how their money is spent, Conger explained.

Donors, including governmental agencies, also are in the midst of “an incredible shift” in accountability that increasingly demands clearer proof of positive outcomes, said Richard Jones, president and CEO of Metropolitan Family Services, one of the largest nonprofits in Chicago.

The ability of people to contribute time to nonprofits also is changing, panelists observed. The stakeholders’ time is increasingly fragmented, Conger said, elaborating that leisure time for most people is squeezed into 15-minute increments. The organizations will have to be creative in finding times that volunteers can work.

Also changing the landscape is the increasing number of mergers and acquisitions of nonprofits, which offers new challenges and opportunities. Several audience members said their organizations already had gone through mergers, and others said they are expecting the same.

Mergers in the nonprofit sector focus on enhancing mission, as opposed to making more money, observed panelist Thomas C. Vanden Berk, executive director of the Uhlich Children’s Advantage Network, itself the result of a merger between two nonprofits that were each more that 100 years old.

The mergers increase the pressure on leaders to broaden their skill sets and become more intentional in keeping their organizations focused on the primary mission of the respective groups. The changes also can encourage nonprofits to operate more efficiently by offering better economies of scale, which reduces the competition for donor funding.

The panelists and workshop leaders also focused on the importance of appropriate uses of new technology as well as leadership development and development of strategies for change.

Copyright © 2011 The Evangelical Covenant Church.

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