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Not-for-profit organizations (NFPs) are vital to improving the most imminent environmental and societal issues we face today. In an increasingly crowded and competitive fundraising environment, demonstrating relevance has become a high priority for many NFPs. Top leaders in the sector have found ways to demonstrate organizational relevance by driving and measuring program effectiveness, and reporting results in timely and innovative ways to a more globally conscious and value-driven culture of stakeholders and donors. Advancements in social platforms, cloud technology, and mobile payment gateways have created dynamic data-driven tool sets for NFPs to maximize outreach and fundraising efficiency.
There are 1.8 million registered NFPs in the United States, many of which are competing for donor dollars. Clear and aligned storytelling is more critical than ever. Savvy NFPs make sure their message is authentic and connect with today’s culturally aware donors by synthesizing program evidence with compelling narratives. Communicating financial metrics, programmatic initiatives, and qualitative data alone are not enough to sustain engagement in this socially connected world; NFPs need to message how these contribute to outcomes that drive mission impact and align with the objectives of their donors.
With this in mind, in this article, we have identified actions not-for-profit organizations can take to demonstrate relevance in 2023.
Benefits of data governance and security
Donors want to support organizations that align with their core values. They want to know these organizations uphold their promises. They expect NFPs to be ethical and act responsibly in their environmental, social, and governance (ESG) practices.
Effective and efficient data governance strategies and practices are imperative for organizations to support stakeholder demands, including those of regulators. New federal and state data privacy legislation makes data governance a higher priority than ever. Today’s robust customer relationship management (CRM) and enterprise resource planning (ERP) systems have become valuable tools to gather, evaluate, store, protect, and report data; but many NFP executives believe there are also opportunities to optimize these critical data management objectives.
Undoubtedly, the rapid accumulation and use of data in our daily lives, the migration of data to cloud environments, and the use of newer, smarter applications to process that data have brought significant opportunities and risks to NFPs. High among those risks is cybersecurity. In a recent survey cybersecurity was identified as a top concern for the next 12 months. Accordingly, NFPs without systems and practices to effectively secure and utilize data will find it extremely difficult to tell their stories. Those organizations may also experience disruptions that could deter stakeholders from using and supporting their programs. Supporting the need to evaluate these opportunities and risks has contributed to the growing interest among NFP executives and boards in standing-up and supporting an enterprise risk management process.
Emboldening NFPs with rich qualitative data
Having rich, qualitative data and the systems to analyze, protect, and socialize them will aid in driving mission impact and demonstrating relevance to existing and new stakeholders. With good, clean, quality data, NFPs can reduce risks and seize new opportunities. Do you know:
- Which programs are driving impact?
- The ROI of your events?
- The age and geographic demographics of your recurring donors?
- The cost per dollar raised, by location, event, campaign, etc.?
- Whether you are accomplishing the short and long-term objectives of your strategic plan?
- Trends in social and environmental indicators relevant to your mission?
- The effectiveness of your social media campaigns?
- The risks your organization is facing that could impede mission priorities?
Good data is the foundation for informed decision-making, better risk management, greater stakeholder engagement, operational effectiveness and efficiency, regulatory compliance, and greater transparency; all essential attributes of high functioning NFPs.
The new generation
As the traditional donor base of baby boomers and Gen X continues to shrink and Millennials become the driving force behind "the giving culture," NFPs need to adapt in order to better reach, inspire, and engage this important dynamic class of donors. Better understanding how Millennials consume and share digital data on evolving technologies is essential to telling your story to this new and increasingly influential and generous class of potential stakeholders.
Younger donors appear keenly interested in funding organizations that align with their objectives and demonstrate progress towards them. Not surprisingly, ESG objectives and reporting are getting more attention from NFPs than ever before.
To address the expanding interest in ESG information from NFPs, forward-thinking NFP executives and boards are evaluating their organizations’ ESG profiles and finding mechanisms to report on them. These pillars of trust are no longer just trends but are foundational ways NFPs are reflecting this significant paradigm shift. In today's socially conscious world, NFPs are expected to embrace values, and, not only understand these important issues, but champion them. NFPs must be adaptable and forward-thinking, embracing new technologies and current values to meet the realities of a dynamic social world. By prioritizing ESG and cultivating a direct understanding of the communities they serve, NFPs can build more meaningful relationships with the next generation of donors and create a sustainable future for their missions.
Today, donors value greater transparency and authenticity from NFPs. They are also more informed supporters with more access to data to confirm their decisions. Any breach of trust, negative publicity, or mismanagement of sensitive data can expose NFPs to social fallout in ways that are impossible to recover from. NFPs need to clearly tell their story, but they must prioritize data security and governance first to earn donors’ trust and cultivate stronger relationships. Stakeholders listen to trusted messengers.
The path forward
Facing economic headwinds, greater competition, changes in stakeholder interests and engagement, and a need for greater transparency without compromising privacy, it is increasingly important for NFPs to demonstrate relevance in ways that will resonate with new constituencies, including a more globally conscious and value-driven culture of stakeholders.
In short, NFP organizations that effectively collect, measure, and use data to position and drive mission impact will be better equipped to advance critical mission objectives, manage risks, build more meaningful relationships with the next generation of donors, and create a sustainable future for their missions.
Contact
John Alfonso, CPA, Partner, Not-for-Profit & Education Industry Leader
646.254.7415
Allison Guttenplan, CPA, Senior Manager, Risk Advisory
646.601.7835
Lori Rothe Yokobosky, CPA, Partner, Exempt Organizations Tax Services Leader
973.228.3500
Subject matter expertise
John Alfonso
CPA, CGMA, Partner - Not-for-Profit & Education Industry Leader
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This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.