Study: Most nonprofits plan to expand fundraising efforts

Written on Jul 20, 2017

More than three-quarters (76%) of nonprofits say they are at least somewhat likely to expand fundraising efforts during the next 12 to 18 months in order to remain viable, according to a new study.

The Nonprofit Finance Study – Managing Growth also revealed that 84% of nonprofits anticipate seeking out new grant funding opportunities while organizations are at least somewhat likely to pursue partnerships with other organizations (72%), provide new services that will bring in new revenue (69%), and engage in corporate sponsorship (67%).

The study, conducted by nonprofit and association software firm Abila, depicts a sector full of organizational leaders looking to beef up in a variety of ways. “Growth” is defined anecdotally in the survey as expanded revenue, staffing or programming, but is not broken down statistically.

Nearly all (98%) of the study’s 301 responding financial professionals stated that growth as an organization is at least somewhat important – including 81% who define it as very or extremely important. Four out of five (80%) of representatives expect for their organizations to grow to some extent in the next 12 to 18 months while only 5% expect some level of contraction.

Nearly half of respondents (44%) said that organizational growth will be good for organizational relationships with major funders while relationships with the organizational board (38%) and employee morale (33%) are also seen as benefits.

This desire to get bigger dates to the recession, according to Justin Morrow, co-author of the study. After a few years of decreased funding, organizational leaders came to the realization that they needed to diversify for their organizations to grow. Now several years into recovery, organizations are at a crossroads. Organization leaders are optimistic, but they are also seeking revenue streams and launching programs that are completely new to them.

Morrow predicts that the number of organizations will continue to increase for the next decade. Tools such as social media and online fundraising platforms are breaking down barriers that existed years ago. Leaders at small and medium-sized organizations see plenty of opportunity ahead while those atop large organizations probably expect to grow, Morrow said, but will see more competition than before – potentially leading to more partnerships and mergers. One in seven (14%) of study respondents said that it was at least somewhat likely for their organization to merge or acquire another organization.

Ambition to expand is also met with some concerns about challenges that might follow. Seven out of 10 (70%) respondents reported that expansion would be a moderate or major challenge from a budgeting perspective while training new staff (65%), ensuring compliance around new staff (62%), and growing sustainably (58%) are other concerns.

Risk management is another consideration with 62% of respondents stating that they believe managing risk will grow harder as their organizations grow – just 12% believing that it will become easier. One in three (33%) believe that growing opens the organization up to much or somewhat greater risk of fraud or accusations of fraud.

In both cases, fears of risk and fraud grow with the size of the organization. Concerns of managing greater risk is shared by 54% of respondents in offices of fewer than 50 employees, 65% of respondents in offices of 50 to 500 employees, and 75% of those in offices with 500 or more employees. Similarly, a quarter (25%) of respondents in organizations with less than $10 million in annual revenue believe that the risk of fraud is somewhat or greatly increased by expansion. That figure jumps up to 42% among those in organizations with greater than $10 million in annual revenue.

Additional findings:

  • Nearly two out of three (65%) of respondents are at least somewhat confident that they will receive the grant funding that their organizations will need during fiscal year 2018 – including 10% that are extremely confident. One in five (20%) are at least somewhat concerned that they will not receive necessary funding.
  • Government grants are, on average, the largest single funding source among surveyed organizations at 30%, followed by program and service revenue (24%), individual contributions (8%), and foundation support (6%).
  • While one in three (33%) of respondents believe that growth will be good for morale, over half (51%) believe that growth will have a mixed or negative impact on morale.

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