1. Government Regulations and Tax Reforms
For many businesses, not-for-profits included, a leading area of concern both within and outside is the impact of changing government regulations and taxation schemes. From changing administration to the amendments of tax codes, nonprofits can find it hard to fit into the ever-changing business environment. As such, they find themselves working hard to catch up and end up facing many challenges. The leading concerns are whether the increase in the tax deductions can reduce the likelihood of donors giving money and whether the changes in legislation and regulations will affect service delivery.
Funding is a major challenge to many nonprofit organizations. This has even been worsened by the governments’ increased search for ways of cutting costs which have ended up holding nonprofits back. The increase in the number of nonprofits has also impacted funding due to increased competition for donors. Such competition has led to problems particularly due to the reduced attraction to new donors. Competition for donor money and resources creates an unending risk to the operations of a not for profit as they may not find adequate money for their operations.
- Inadequate resources
In the current economic climate, inadequate resources have become one of the leading challenges for nonprofits just like all other businesses. However, many players in this sector have resorted to connecting with similar nonprofits to pool resources, and that has proven to have been beneficial. The more partners you connect with the more the resources your nonprofit can pool. However, resource pooling is still a challenge as it is difficult to find a partner who shares the same values and belief system. Despite the collective efforts by the nonprofits, they still face resource constraints which end up affecting their operations in the end.
4. Staffing and recruitment
Strength of a nonprofit depends on dedicated and highly motivated employees. However, recruitment and retention remain the biggest challenge for many leaders in this sector. For upper and middle nonprofits, for instance, there is a rising employee satisfaction levels which include demand for higher compensations, and demand for skilled personnel. Due to the increasing demand for skilled labor, high employment numbers, rising wages and increase in office time, finding employees who match the expectations or even volunteers has become a huge challenge.
- Member recruitment and retention
Recruiting and retaining existing members is a unique challenge which modern nonprofits have to contend with in the competitive landscape. The entry of new nonprofits makes it hard for the already existing ones to retain its donor base due to new requests introduced to the environment by the new players in this sector. For instance, incorporation of technological aspects makes it increases competition and can make it harder for organizations to retain members. Those who want to retain members or recruit new ones must prove their value and what the future holds for donors.
From the above challenges, it is clear that nonprofits must be aware of their environment as this allows them to see the new challenges and address them accordingly by coming up with an appropriate action plan. Such will result in sustainability even during tough times and unfavorable climate.