For the past nine years, Calgary Chamber of Voluntary Organizations’ (CCVO) research – from annual sector surveys to in-depth studies of leadership, workforce issues and funding practices – has contributed to a better understanding of the current state of the nonprofit sector and the challenges organizations face.
Two of these challenges, an increase in demand for programs and services and a complex funding environment, pose a great risk to the health of the charitable sector.
- Increasing demand for programs and services: For several years now, organizations have been reporting increased demand for their programs and services with the greatest increases in the areas of social services, health and education. The major drivers for increased demand are population growth, (which has been a major factor in Alberta,) economic conditions, changing community needs related to an aging population, immigration and greater cultural diversity, and the increased complexity of client needs. More than 55% of respondents to our recent sector survey indicated they cannot meet the demand for their services.What I find particularly concerning is that funding and other revenues are not keeping pace with the growth in demand. Beyond the service gap, the question is how will this imbalance affect the longer term capacity of organizations to serve their communities?
- Complex funding environment: Meeting program demand and community needs is just one aspect of an increasingly complex operating environment. Most organizations rely on multiple revenue sources – a mix of grants, contracts, earned income and donations – to support their work. Competition for fundraised dollars is acute, particularly as governments rely on community generated revenues to fill the gaps left by their funding. Changing expectations around reporting on impact and outcomes measures add another layer of complexity, often imposing costs on organizations that are not recognized or supported by funding.
What can you do?
Most of these trends are beyond the scope of donors to influence, but there are a couple of ways beyond your actual donation that you can have a positive impact on the capacity of the organizations you support.
- Predictable support from donors, such as pre-authorized monthly giving or sticking to a regular donation cycle, helps reduce some of the uncertainty in a complex funding environment. The generous response of donors to emergencies in Canada or elsewhere in the world can have unintended negative consequences if funds are shifted suddenly from one cause to another. Unforeseen revenue loss can have a destabilizing effect as organizations scramble to replace funding, not always successfully in the short term. If donors are able to consider their emergency response as an additional gift rather than redirecting their support, it will help avoid creating a secondary shock wave of need.
- Flexible funding is one of the most valuable assets an organization can have. Organizations that have access to revenue that is not restricted to a specific purpose have the capacity to reallocate funds when necessary. If it isn’t essential to you to choose the project, let the charity decide where funds are needed most. It could be used to bridge an unexpected cancellation of a funding program, the loss of a major fundraising event, to fill the gaps left between program funding or to have the ability to act on an opportunity. Financial flexibility simply helps organizations manage effectively.
Placing as few restrictions as possible on your donations demonstrates not only your commitment to the causes you support, but your confidence in the organization to use your donation wisely. It may provide a great opportunity for dialogue with the organizations that you support.