The nonprofit starvation cycle has haunted the nonprofit sector for years, but as the sector becomes more professionalized, it is now more important than ever for leaders in the sector to begin taking the steps necessary to overcome this vicious cycle. The unrealistic expectations that have been created through the nonprofit starvation cycle by donors only continues to rise as nonprofit efficiency is judged on financial ratios.

Nonprofit organizations love the idea of improving their infrastructure, and according to Stanford Innovation Review, organizations who invest the proper resources into infrastructure are more likely to produce efficient charitable outcomes in regard to their missions than those who don’t. If investing into nonprofit infrastructure will help advance organizations to that next level, then why do nonprofit leaders loathe the idea of putting any money into infrastructure? The answer is simple, the nonprofit starvation cycle and unrealistic donor expectations.

The first step nonprofit leaders can take in breaking this cycle is to begin working with donors on what investing in nonprofit infrastructure can do for their organization. Donors need to be educated on the harsh reality of solely judging an organization’s efficiency through financial ratios. The recommendations below are intended to help nonprofit leaders reflect on…

The COVID-19 pandemic has had a significant impact on nonprofits nationwide. Organizations that rely on donations and grants for funding are being forced to look at their revenue portfolios and determine whether their revenue streams will be sustainable in the foreseeable future. Experts are not sure when it will be safe to hold large gatherings again, which hinders nonprofits that rely on an events-based structure to generate donations.

The pandemic has impacted unemployment rates, thereby limiting household income available for donations to charity. A recent survey of Arizona’s nonprofits conducted by the Alliance of Arizona Nonprofits found that, as a result of fundraising and program cancellations due to the pandemic, Arizona nonprofits have lost an estimated $53 million in revenue. The survey also revealed that 25% of nonprofits indicated that they have had to lay off or furlough employees and 69 % reported a loss of critical program volunteers. Last spring, the ASU Lodestar Center found that 11% of over 400 nonprofits surveyed were not able to operate at all during the first months of the pandemic.

Nonprofits are reimagining funding models and will have to think innovatively to…

According to The Independent Sector, funding-related practices and relationships are one of the challenges that the nonprofit sector faces, and there are myriad reasons that funding-related practices and relationships are challenging for the nonprofit sector. These include the lack of funding and difficulty securing adequate funds, funding structures that incentivize counterproductive practices, strained relationships between funders and nonprofits, and shifts in funding models and strategy.

Mowrer’s Grant-seeking Challenges highlights that funder practices and requirements are considered one of the greatest challenges for grant-seekers. Foundations leaders need to recognize and understand how grantmaking practices can negatively affect nonprofit organizations and can lead to mission drift. Grantmaking foundations have the financial resources that nonprofit organizations need to accomplish their work. Nonprofit organizations are doing the work essential to further the grantmaking foundation’s mission. “The power and influence that flow from money, combined with the near absence of a negative feedback loop in philanthropy, result in potential manipulation of and control over nonprofit organizations,” Janice Pettey of Nonprofit…

Engaging board members can significantly increase fundraising efforts and yield greater results. While encouraging board member involvement for fundraising can be challenging, it's the right thing to do. Board members may be unaware of their potential contribution or the organization's fundraising strategies, or they just may not know where to start. However, it's important to recognize the value of board member involvement and reconsider any previous notions that it is unnecessary.

1. Make fundraising an integral part of the meeting agenda. Include a short session at the beginning of your meeting to discuss fundraising and the importance of everyone's attention and participation. Every board member should be willing to discuss this.
2. Make fundraising a pillar of the organization and more than just a discussion. You must ensure that every member of the organization is involved in fundraising from the very beginning. It has to be the air that your organization breathes.
3. Set clear expectations for board members. Laying out the specific fundraising needs of the organization is your first…

Public policy and the nonprofit sector

Public policy at all levels of government has the ability to threaten the work of all nonprofits (National Council of Nonprofits, 2019). At the federal level, we see this threat in tax, regulatory, and spending policies. Notably, about 32% of nonprofit funding comes from government contracts and grants. The effects of federal policy often trickle down to the state and local levels. This creates implications for an organization’s beneficiaries in regards to available resources and funding for programming.

Despite the importance of public policy to the nonprofit sector, there is a severe lack of engagement among nonprofits. According to the National Council of Nonprofits, “compared to the business and government sectors, nonprofits have been sitting silently on the sidelines.”

A missed opportunity

Many nonprofits see public policy engagement as a peripheral activity not central to their mission. In reality, however, it presents a significant opportunity to increase their impact. The National Council of Nonprofits as of 2019 has found that “nonprofits with the most extraordinary levels of impact do not focus exclusively on either policy advocacy or direct service – the highest…