Business-as-usual came to a screeching halt in early 2020, but the need for nonprofit services did not. Many nonprofits quickly pivoted to virtual and hybrid operating models so they could continue to serve their communities. Since then, need has only accelerated—34% of nonprofits have a more than 30-day wait time for their services—as has the competition for funds.
Cranking the pressure valve even higher is a widespread struggle to attract and retain nonprofit workers, in a larger landscape of tight talent availability and rising compensation. Nearly four in five nonprofit leaders say the need to compete with private-sector wages poses a serious challenge, a Chronicle of Philanthropy study found.
Rather than belt-tighten any further, many nonprofits are seizing this moment as an opportunity to future-ready their technology infrastructure.
“As nonprofits now have fewer resources, these organizations can help their people thrive by investing in technology that helps them focus on the mission. It’s about optimizing the workforce,” says Michael Merino, vice president of advisory services for Collaborative Solutions.
Though no one can say for certain how the future might unfold, industry leaders and nonprofit experts are quick to weigh in on the trends and opportunities that may have the biggest impact on the field—and what steps today might best prepare nonprofits for tomorrow.
1. To Maximize Mission Impact, Nonprofits Look to Digital Transformation
From social services to symphony orchestras and healthcare systems to public media outlets, nonprofits all share one thing in common: They exist to deliver impact—to improve the lives of the people and communities they serve. But for too many nonprofits, legacy systems have hindered their ability to deliver on that mission.
“These cobbled-together systems are so highly customized that only a few people at an organization can do anything with them, which places a tremendous and unsustainable burden on the organization and hinders its ability to change, grow, or make good decisions,” says Tim DeMagistris, national director, nonprofits, Workday.
According to a 2022 Workday study, 51% of nonprofit organizations are concerned that their enterprise resource planning systems lack the flexibility to meet the business needs of today and the future. And while only 12% of nonprofits consider their organizations digitally mature, nearly 75% view digital transformation as essential, according to a global survey by Salesforce and independent research firm Reputation Leaders Ltd.
Little by little, nonprofit organizations are turning the page on legacy systems by investing in digital transformation. “Nonprofits know they need to change so they can focus on their mission rather than babysitting their systems,” says Merino.
One such nonprofit is Boston Symphony Orchestra (BSO), one of the largest orchestras in the United States. During the pandemic, BSO closed for 18 months and lost 50% of its revenue.
“Even before the pandemic, it was clear that we needed to upgrade our financial systems. Most everything was on-premise, and we weren’t in the cloud at all,” says Evelyn Barnes, former CFO of the BSO. “Like many nonprofits, we’d preferred to spend our money on the real mission and lagged with infrastructure and technology.” Since then, BSO has deployed a cloud-based enterprise management system, including business planning.
Historically, nonprofit organizations have spent very little on technology or cybersecurity due to budget constraints. Then came the 2020 ransomware attack on cloud computing provider Blackbaud, which heavily impacted the nonprofit sector around the globe. It was a wake-up call to many nonprofits that they needed to do more to protect their sensitive financial data.