Many small businesses and organizations face various types of challenges. Some of these challenges are broadly encountered, and some are industry specific. In this article, I will address challenges specifically related to nonprofits. These challenges are:
- Retaining and engaging donors
- Implementing IT infrastructure
- Attracting volunteers
- Creating brand awareness
- Recruiting board members
I will briefly discuss each of these challenges and their solutions.
Retaining and Engaging Donors
We all know that donors are the backbone of nonprofits. Without donors, a nonprofit will not survive. You should strive to make donors feel welcome, keep them engaged and make them feel that they are an important part of the organization. All these efforts will lead to future donations and support.
There are numerous ways to retain donors. They should be allowed to contribute through fun and unique ways. For example, you could arrange a charity sports tournament. This way, donors and players will be engaged in an activity while raising money for the nonprofit. It is a win-win situation for everybody involved. Here are some more examples:
- 5K Run/Walk
- 50/50 Raffle
- Bake Sale
- Bingo Game
- Charity Calendar
- Charity fashion show
- Gala events
Keep the donors engaged by communicating with them via an e-mail newsletter. Notify them about completed and upcoming projects and programs. Show them gratitude by thanking them for their donations. Offer a monthly donation option to improve the chances for retaining donors for a longer time.
Implementing IT Infrastructure
Today, a digital presence for nonprofits is not an option. It is a must! But implementing and maintaining an IT infrastructure comes with a high price tag. You need staff and money to implement these things. Under ideal circumstances, a professional IT services company should be hired for this task. They will assess your IT needs, create a road map for implementing the strategies and maintain the newly created IT dept.
But we do not live in an ideal world. Nonprofits are usually short on funds. Due to this, they put their IT needs on the backburner. But there are some resources available to nonprofits which will provide you with free or discounted hardware and services. These resources are:
The purpose of nonprofit marketing is to win support for their causes and to attract members and donors. This presents its own unique challenges. Here I will explain some issues related to nonprofit marketing.
Overcoming a Tight Budget
Tight budgets are a major issue for all nonprofits, but especially for small and local nonprofits. No organization can grow without marketing, but one with limited funds also cannot afford to get all the tools and manpower necessary to create this growth. To overcome this issue, you can market via e-mail to reach potential donors and to keep current donors informed about new developments at the nonprofit.
Focusing on a Target Audience
Another issue is understanding your target audience. It is very important to figure out what type of audience you are trying to attract. Keeping that in mind, make sure that your marketing campaign has a platform and language that best speaks to that audience.
Leveraging Social Media
Social media is everywhere! We cannot avoid it in the 21st century. Platforms like Facebook, Instagram and Twitter can be used to advertise your message and stay in touch with donors and attract new members. Potential donors who are interested in donating for a niche nonprofit will likely check out your nonprofit on social media. If these donors notice that the last update was many years back, they may assume that the organization is no longer in existence. Nonprofits need to stay active on social media and post relevant material in their niche. These platforms are also a wonderful resource for crowdfunding campaigns. Use some marketing templates to create ads and post them on social media. If your nonprofit is local, make sure your ads are targeting the right location.
Millennials are known for their online presence. They use social media platforms for almost every aspect of their lives. If you want to attract younger donors, a crowdfunding campaign is the way to go.
Google Ad Grants is another source of funds specifically for advertising. Nonprofits need to qualify for getting Google Ad Grants. Check out google.com/grants for further details.
Volunteers are crucial members of any nonprofit. Some nonprofits may have a couple of employees, but others totally depend upon volunteers. If your nonprofit is run entirely by volunteers, there may be inconsistencies due to a high turnover rate and problems related to marketing campaigns. However, if you can manage to hire even a part time employee/consultant, you should do it.
If hiring marketing help is not feasible due to a tight budget, you still have options. Schedule regular meetings with volunteers, keep them informed about the latest projects, and show them your gratitude. Additionally, SCORE is another source for volunteer help. It is a volunteer network of business experts sponsored by the Small Business Administration. They can guide your organization in creating a marketing strategy.
Creating Brand Awareness or your Nonprofit
Branding is the practice of establishing an organization’s image and reputation. Common examples of well-established brands in the nonprofit industry are the American Cancer Society, the Red Cross, Habitat for Humanity, and the Make-a-Wish Foundation of America. Most people think that the word ‘branding’ is reserved for large for-profit corporations and enterprises. However, branding is as important for nonprofit organizations as it is important for big and small businesses. This cannot be emphasized enough. The benefits of branding are making an organization stand out, increasing trust and loyalty among supporters and donors, and growing awareness for easier fundraising. All these factors lead to growth of the organization.
Before you start building your nonprofit’s brand, review your mission and vision statements and ask for feedback from the Board, volunteers, and donors. Focus on the target audience. Keeping their interests and motivations in mind should increase the conversion rate to donors and supporters. Keep brand elements consistent, such as your logo on the web, flyers, e-mails, brochures, etc. Community outreach will solidify your brand and help win the support of donors and the community. And last but not least, your branding should be able to touch the heart of your audience. If your audience can relate to your cause and mission, then it is very likely that they will become your donors and supporters.
No matter whether you run a well-known nonprofit or a local charity, fundraising will be one of your organization’s biggest challenges. We all know that fundraising is regulated by state laws. Make sure that your nonprofit has all the tax documents which should be made available to the public. Consult your tax accountant in case you need help with this. Fundraising can be challenging and lots of mistakes may happen in the process. There are lots of different approaches nonprofits use to increase fundraising. Here are some of those ways.
Encouraging Recurring Donations
Encourage your donors to give a recurring donation every month, regardless of the amount. With this approach, you can improve online fundraising performance, increase monthly revenue predictability, and retain donors for a longer period.
Utilizing Mobile Fundraising Methods
Mobile fundraising is a way to raise funds using mobile devices. Overall, nonprofits have been increasing their mobile fundraising efforts every year. This is generally achieved through methods including QR code promotion, text-to-give technology, and websites using a ‘Donate’ button. QR code stands for Quick Response code. It is a square, encoded image meant to be scanned by mobile devices to access a web link. It is very easy to create a QR code by using a website such as qr-code-generator.com. Text-to-give technology is also a common tool to raise funds for nonprofits. On your website you can also install a ‘Donate’ button to make it easier for the donors to give money. There are quite a few popular web apps and platforms which can be used for mobile fundraising, such as givelify.com and givelively.org.
Creating Powerful Imagery
Humans are visual beings. Most people like to look at things before they decide to buy them. To take advantage of this, create powerful and compelling images related to your brand. These images will also get attention from the donors and evoke emotions. When people connect on an emotional level with a certain cause and mission, they are more likely to donate.
Maintaining Data Security
Data security is paramount as it not only maintains the safety and privacy of your donors’ data, but also your reputation as an organization. Make sure your web site and all other online platforms for donations are secure. Consult your IT department to implement all the necessary steps to make the platform secure. Additionally, most donors do not like to fill long forms and give out private information. Create a simple donation form which requires the least amount of information from a donor.
It is a very nice gesture on behalf of a nonprofit to give something in return to the donor. Some examples include:
- Tote bag
- Wall calendar
- Camera case
- Water bottle
Giving merchandise to donors in return for their donation can not only further encourage them to donate in the first place, but also serve as an extra opportunity to promote your branding via a logo.
Maintaining Donor Engagement
Finally, create a way for donors to keep in touch. When donors give money for a certain cause, chances are they will come again some time to donate money. Suggest they opt-in to receive e-mail updates about your organization and future fundraising efforts.
Recruiting Nonprofit Board Members
Another factor for the success of an organization is having and retaining effective board members. Finding, vetting, and recruiting the ‘right’ board members is a challenging task, but it must be taken very seriously. Here are some tips which can be used by nonprofits for cultivating the right board members.
Choosing Board Member Qualities
You first need to figure out what type of board members are needed to advance your nonprofit’s mission. Do you need a board member with community connections or financial expertise or human resources management experience or simply prior nonprofit experience? Additionally, consider whether you want to require potential board candidates to work as volunteers for some time before taking the position. Some nonprofits take this approach so that both parties can decide whether they are a good fit for each other.
Appointing a Nominating Committee
Lots of nonprofits use a ‘nominating committee’ to recruit board members. This nominating committee should have devoted members who are focused on the organization’s mission and good governance. Its members should put some serious efforts in recruiting potential board members, working closely with the executive director in pursuit of this goal.
Setting Expectations for Future Board Members
Make sure you are up front with nominees regarding their future responsibilities, especially as they relate to fundraising. No one is happy if these types of expectations are not revealed before these board members join the organization.
Considering External Search Resources
Some nonprofits have started realizing that they need to use a search firm to recruit the right board members. Ask for recommendations for finding good search firms that focus on nonprofits. Generate a list of questions to ask the search firm about their background and experience in recruiting board members. Interview several of these firms before you select the right one. You can also use job boards for recruiting board members. BoardNetUSA.org helps nonprofits and board member prospects find each other.
Board composition reflects organizational values. It should also reflect the community you are serving. Having a diversified board both brings multiple perspectives to a cause and helps attract a wider swath of donors. Board members should be required to attend training on race and diversity issues.
A budget is a guide containing an estimate of income and expenses for a given period in the future. It is usually the budget committee’s responsibility to propose a budget and the board members’ responsibility to review that budget and provide feedback. The approved budget should be used as a guide for all the financial activities throughout the year. But budgeting also comes with its own challenges. Here are some of those challenges and how to manage them.
Managing Unstable Funding
Nonprofits may face instability in their revenue cycle. This instability may result from donors falling through on donations or foundations withholding grants. These types of challenges can occur at any time. To avoid these issues, your organization should always be looking for new funding opportunities. The best practice is to review the budget periodically as well as compare it to the actual cash flow and expenses. Sometimes it may be necessary to amend the budget during the year.
Diagnosing a Budget Deficit
There can be several reasons that a nonprofit may have a budget deficit. It may be related to income reporting requirements by Generally Accepted Accounting Principles (GAAP). According to GAAP rules, you may need to report a grant one year but receive the money next year. Another reason for a budget deficit can be due to a shortage of funds to pay bills. This type of deficit can be managed by adjusting payment terms with creditors and increasing additional fundraising efforts. Structural deficit is another possible type of deficit and can occur due to a long-term shortage of funds and decay of facilities. This type of deficit can indicate larger financial issues and requires serious assessment of the organization’s financial health.
Many nonprofits do not have staff who have proper knowledge about budgeting tasks and thus cannot put together a proper budget. This issue can be managed by implementing a budgeting tool such as planning software. Budgeting software automates the coordination of an organization’s financial resources and expenditures.
All these challenges for nonprofit organizations are not a comprehensive list. Countless complications exist in all business organizations and sometimes they can change without warning. But the main conclusion is to remain flexible and mission-focused to see your nonprofit grow.
Manjit Sahai is a staff accountant and virtual bookkeeper. She currently leads a bookkeeping practice named Every Penny Accounts. She has over 25 years of experience as a staff accountant and full-charge bookkeeper. She is a QuickBooks Certified Pro Advisor and Sage 50 Accountants Network member. Manjit has been working with nonprofits for the last three years.