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Article Author:

Nonprofits Need Innovative Thinking to Survive the “New Normal”

With 2009 in the rear-view mirror and the economy showing some signs of recovery, many charitable organizations are not doing enough to weather what is expected to be a tough 2010. Too much complacency: that is the consensus Ian Wilhelm gathers from various philanthropy experts and nonprofit groups in Are Charities Ready for Tough Times Ahead? published in the  November 12, 2009 issue of The Chronicle of Philanthropy.

Why is 2010 expected to be a tough year for nonprofits? Some of the findings Wilhelm cites in the article include:

• Foundations are likely to cut grants or keep them steady at 2009’s reduced levels
• States continue to face large budget deficits
• Individual donations could be hampered due to lack of job security and motivation to be frugal
• Exhaustion of operating reserve funds

In the face of a shrinking pool of available dollars to fund operations, many charitable organizations initially took steps to address the issue by cutting budgets and reducing staff levels. These organizations also sought ways to generate revenue – both from new sources and from those who had given in the past. But with the extraordinary competition for limited funds, it’s inevitable that some organizations will be forced to merge or close their doors. Innovative thinking is critical for organizations to succeed in the “new normal.” 

One such example of innovative thinking comes from The Independent Sector, a Washington-based coalition of approximately 600 charitable organizations and grant makers. The Independent Sector created FutureLab, online and face-to-face forums, where organizations can discuss ideas and prioritize and develop the most viable actions. The strategy is that the collective wisdom of the industry will benefit everyone;  but how quickly can industry-wide ideas be put into practice and are they enough? 

Wilhelm suggests that innovation should be encouraged at the organization level in order to have the most immediate and beneficial impact. He described how the Baltimore Symphony Orchestra (BSO) enacted voluntary staff salary and benefit reductions totaling $1 million dollars and came up with the idea to ask donors to match the staff “gifts” on a $2 to $1 basis. This “outside-the-box” thinking resulted in $1 million in matching contributions to the BSO.   

Are you rewarding creative ideas and resourceful strategies in your organization? To succeed in lean years, an innovative mind-set should become a permanent fixture of an organization’s culture. A culture of innovation has the power to energize and transform your organization for the better, and the next great idea may be as close as your next staff meeting.

Questions about the "new normal" for nonprofits? Contact Jim Hagestad at 312-980-3245.
 

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.