Running a successful nonprofit organization can be a challenge in the best of times. When circumstances are less than ideal, many nonprofits struggle to adapt to changes. They often find themselves facing new challenges both in terms of meeting the needs of the groups they serve and in their own survival.
A 2022 report from Salesforce and the Nonprofit Technology Enterprise Network identified several barriers to implementing change that nonprofits frequently face. Time and budget availability were two of the most common challenges to effectively addressing change. Additionally, over 40% of nonprofits surveyed for the report cited their level of understanding of the challenges they need to address as a barrier they often face.
What Is Change Management?
The last few years have served as a crash course in change management in nonprofit organizations. Change management is just what it sounds like — the practice of developing a structured approach for an organization’s transition from today into the future.
Many internal and external factors can impact nonprofits and spur a need for change, including:
- A shift in the leadership of the organization.
- A change in the funding climate, such as new auditing requirements.
- Increased competition for funding from other nonprofits.
- Changes in the laws or regulations surrounding a nonprofit’s work.
- Rapid or sudden growth within the organization.
Embracing change management can help nonprofits adapt with minimal disruption.
4 Areas Where Nonprofits Need to Grow and Change
Nonprofit organizations need to rethink how they operate to survive and thrive in a changing world. Here are four key areas where many are focusing their efforts.
1. Organizational Structure and Leadership
A nonprofit’s organizational structure should reflect the world it wants to see. Change comes from the collective actions people take in response to the issues they face in their own lives — a community approach is vital.
In years past, many nonprofit boards have taken a leadership role in the communities they serve. However, board members are not always in the best position to see how their day-to-day work relates to the organization’s overall mission. Change can come slowly due to the distance between board members and the issues directly affecting communities. Because of that distance, some nonprofits even end up undermining the social movements they set out to support.
Many nonprofits are reframing their roles and their concept of leadership to adapt to changing community needs. These nonprofits are taking an active part in developing leaders within the communities they serve. With this approach, community leaders make decisions based on shared vision and values while the organization’s board and staff take a supportive role. The nonprofit organization and the community they serve share an open flow of resources, ideas, and people working toward a common goal.
Burnout is common among nonprofit employees, especially founders and those in leadership positions. Internal collaboration and shared responsibility are crucial to easing the workload and keeping organizations running as smoothly as possible.
Internal collaboration is shifting within many nonprofit organizations. With staff members working in different places, organizations need effective tools to communicate and share updates. Digital workflows and collaborative tools are available to lighten the load, but many nonprofit organizations have yet to complete their transformations. In a 2022 survey of chief information officers, Forbes found that nearly half of businesses are still restructuring their workflows for the digital age.
Beyond internal communications within their organization, nonprofits can benefit by taking a more collaborative approach to serving their constituents. Many nonprofits have begun collaborating with other organizations to work through joint distribution models, sharing capacity and personnel.
3. A Pivot to Digital Service Delivery
The rise of digital services has had a lasting effect on nonprofits. Many people rely on virtual services, so nonprofits must continue to provide them while navigating the laws and regulations associated with doing so. For example, nonprofit organizations in the health care sector face unique privacy concerns when offering virtual services to patients.
The pivot to digital service delivery has been in the works for the last several years, but many nonprofits are reluctant to change when their existing systems seem adequate for the time being. In a 2019 study by Salesforce, 85% of nonprofit organizations said they believed technology was critical to their success. However, by the following year, only 16% of the surveyed nonprofits were digitally mature.
Now is an ideal time for nonprofit organizations to invest in technology and use all the tools they have available as digital service delivery becomes a norm.
4. Data Collection and Usage
Most nonprofits collect data, from how many people visit their websites to the demographics of top donors. A 2020 Nonprofit Technology Enterprise Network report found that more than 60% of nonprofits frequently or always use data for goal-setting, yearly planning, and regular decision-making.
Deciding what data to collect and how to make the best use of that data can present a few challenges. It can be helpful for nonprofits to ask two questions when collecting data:
- How will the information prove that our organization is making a difference?
- How can we use this data to see where we need to make changes?
Once a nonprofit has the data it needs, it also needs to ensure that it has the internal factors to let it make the most of the information.
Some organizations may find that they need more time and personnel to track and analyze data. Their current software might also be contributing to inefficiency, especially if they’re storing and organizing their data with multiple programs. In response to these challenges and the need for adaptability, many nonprofits are turning to software that tracks various types of data and offers tools for analysis.
Request a Demo of Software That Grows With You
At MIP Fund Accounting®, we account for your future. We serve nonprofits with an all-in-one software platform for all your financial needs, including managing books, navigating potential budget scenarios, and creating reports. MIP® is mission-driven and built for nonprofit organizations. With features like unlimited budget forecasting, a robust reporting suite, and scalable modules to grow along with your organization, our platform helps you do more with less.
Request a demo today to see how our fund accounting software works and how it can play a role in your nonprofit change management efforts.