3 concerns for the future of the nonprofit sector

Almost every conference I attend and newsletter I receive lately has themes related to the future of learning and work. Yet, the discussion as it pertains to the nonprofit sector isn’t generally being featured as a part of these themes.

That’s unfortunate, because the nonprofit sector represents 10 percent of our nation’s workforce, contributes billions in economic activity, and works to solve some of our communities’ most pressing challenges.

In the past few weeks, however, I attended two conferences that did start to address the issue of work in the future of the nonprofit sector – New Profit’s Gathering of Leaders and The Collaborative.

Although the backgrounds of attendees to these conferences varied wildly, people I talked to had common concerns centered in three areas: consolidation of funding, falling behind with technology, and keeping up with the changing demographics of the nation.

1. Funding equity. As a funder, I was approached repeatedly with concerns about money flowing to larger nonprofits – those organizations with the resources, systems, and language to compete for larger dollars. These concerns of smaller nonprofit staffers mirror what we hear from non-social sector entrepreneurs about larger, more established companies getting the bulk of resources. The consolidated flow of capital to nonprofits happens not only with private dollars but also with government. And, the larger the nonprofit, the easier it is for the diversification of funding to sustain when an appropriation falls through or government program and related funding ends.
2. Investment in tech and talent. Nonprofits large and small are challenged by rapid changes in technology. Funders have been unwilling to make significant investments in helping the sector invest in new hardware, software, and tools to allow nonprofits to stay current. The inability to efficiently track the people served inhibits a nonprofits ability to report results, make improvements on programs, and tell its story. And, beyond the tech itself, the sector doesn’t have the talent available to take advantage of the data produced by technology, on behalf of strengthening programs and creating financial stability.
3. Diversity, equity, and inclusion. Like in corporate America, there was a real concern that the field is not keeping up with diversity, equity, and inclusion. As our population becomes increasingly diverse, the sector is not keeping up. As of today, 30 percent of the U.S. population is Black and/or Latino. Yet, only 10 percent of nonprofits are led by Black or Latino individuals. The funding patterns paint a worse picture. A study released at New Profit’s Gathering of Leaders highlighted that only 4 percent of all philanthropy goes to organizations led by persons of color. That number isn’t helped by the fact that only three of the top 50 charities in the nation have leaders of color.

Kauffman’s approach

After taking some time to listen to our community and the sector, the Foundation engaged in two initiatives under its Kansas City Civic program area to support increasing the capacity of organizations in order to meet the needs of a rapidly changing future.

The first initiative provides key city assets in Kansas City with support directed toward increasing financial stability over the long haul. Although the Foundation is prohibited in its grant guidelines from providing direct endowment and capital funds, we have engaged with larger cultural institutions such as the World War I Museum and Truman Library Museum to help them develop the leadership and staff capacity necessary to meet fundraising needs. We’ve also provided the Nelson-Atkins Museum of Art with support to allow the museum to update its technology and develop data systems to help it move visitors from being patrons to members to sustaining donors.

Although these organizations are larger, they don’t tend to have the flexible funding necessary to build capacity. And, because these organizations are large, we are able to try solutions with them that we can share with the broader nonprofit field when the grants are final.

In addition to supporting the large cultural assets in Kansas City, the Foundation has also been working to learn more about approaches that can help more nonprofits. We started by strengthening intermediaries that serve as the backbone of capacity support for other nonprofits. We completed a landscape analysis to better understand the needs and how the organizations are being supported. As such, in late 2017, the Foundation used a competitive process to award additional support to a small group of human services and educational organizations, allowing them to improve both long-term sustainability and capacity to serve youth and families. We will learn more about these targeted investments in the next two years and will share what we’ve learned with nonprofits and funders interested in building our sector’s capacity.

We are at the start of this journey, listening and working with nonprofits to get a better sense of how to support the field now and for the future. As we learn more though these approaches, and as the field continues to evolve, we’ll evolve strategies to meet the needs of those who deliver services to our community.