In case you haven’t already noticed it, the not-for-profit sector has increasingly begun to adopt a mindset that it’s time to “get down to business.” There are several reasons why NFPs are turning to the business world for strategies to help them confront their challenges, particularly when it comes to a lack of funding and increasing access to other scarce resources.

Despite Economic Recovery, Many are Still Struggling and it’s Affecting Donations and Volunteering

The effects of the global economic downturn continue to ripple through the economies of most countries. While some have shown definitive signs of improvement, many individuals are still struggling to find reliable work and often have a hard time meeting their personal financial obligations.

These continuing challenges are having an impact in the not-for-profit sector, as many charities and associations have been scrambling to be able to find enough volunteers, and recruit enough donors to help them achieve their mission. Since resources have become increasingly scarce, NFPs are becoming more conscious of the need to put every resource to its best use.

Grants and Endowments More Competitive as Governments Increasingly Apply For-Profit Models to NFPs

At the same time, governments have been increasingly turning to contracts, rather than grants, to assist nonprofits in their work. This increases the competition for scarce funds between NFPs of a similar size and common goals.

To win funding, NFPs have to restructure their operations so that they are more focused on impact and dollar for dollar based outcomes.

These changes in mindset have increased the unpredictability of income streams.

Globally, Business Leaders are Increasing their Philanthropic Efforts

In recent years, board composition and leadership are also reflecting business executives. A significant number of CEOs and leadership professionals are turning to established charities or creating their own nonprofits to fulfil their philanthropic interests.

Others are actively seeking ways to collaborate and partner with nonprofits and other third parties to solve social problems that are increasingly affecting their bottom line.

How NFPs are Adapting and Surviving

More and more, nonprofits are looking at charging membership fees for the first time, or raising their rates for various services, to make-up for shortfalls in funding in other areas.

A more significant number are also selling merchandise as well to increase their revenue stream and be able to fully fund their service projects. Increasingly, NFPs are taking a page out of the book of successful retailers and adding “new” stock to their shelves and sprucing up the appearance of their stores.

Many nonprofits are also investing in the robust training of their staff and volunteers to boost skill levels of associates. Now, there is an increased focus on the need for staff and volunteers to provide excellent customer service just like one would find at traditional, for-profit concerns. Some universities are helping NFPs to meet their new training needs by offering more classes in management, human resources, and finance that are specifically tailored for the not-for-profit sector.

How Your NFP Can Thrive in This Brave New Business Minded Reality

At first glance, adopting a business mindset seems to run counter to everything most NFP professionals have always assumed about the sector. Taking a closer look, it becomes apparent that the “new” mindset really isn’t all that new. At its heart, it isn’t so much about money and funding as it is increasing efficiency and effectiveness to help more people.

The not-for-profit sector has always had, as one of its goals, the ambition to improve the lives of as many people in its service community that it can. A business-minded approach can help to make that aspiration a reality, as it emphasises wisely using resources to create and magnify the impact made by the organisation.

The nonprofits that take a proactive approach towards diversifying their funding, and actively looking for businesses, government agencies and other third parties to collaborate and partner with, will find ways to innovate and deliver services more efficiently. Those that do not will continue to struggle, and possibly not survive, in the long term.

To thrive, nonprofits and their boards must ask themselves the questions that their donors and volunteers are already asking — what is the impact of our organisation? What value do we bring to the table? What steps can we take to improve our impact?

The answers to these questions should then define the organisation’s purpose and all of its activities – including thoroughly illustrating and communicating that impact to all stakeholders.