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2024 Nonprofit Outlook by Amy Wong at Dot Org Solutions

2024 Nonprofit Outlook

Amy Wong, president, Dot Org Solutions

2023 was a wild ride for nonprofits. COVID-era funding programs ended, Interest rates shot up and the markets finished strong at year end. Yet while inflation seems to be cooling, consumers are still unsure about the economy.

Our 2024 Nonprofit Outlook offers some hope, some caution and some insight on what your organization can expect in the coming year. We selected the topics for this report because of their overall importance to the future of the nonprofit sector and their potential impact in the coming year. We’re providing links to more in-depth resources and offering some helpful advice on what you can do at your nonprofit based on these trends.

Our 2024 Nonprofit Outlook features:

  • Nonprofit industry giving performance and projections
  • Marketing and communications trends
  • Operations and HR considerations
  • Planning and strategy recommendations

Fundraising outlook

Donors are going to continue to be cautious with their spending, especially smaller donors who are still concerned about affording the basics. Even though inflation seems to be cooling and the Fed has indicated interest rate reductions in the coming year, salaries have not kept up with inflation, leaving many people without much, if any, disposable income.

There will likely be a small increase in giving. Many nonprofits are rebounding from a sharp decrease in giving in 2022 and lower giving (adjusted for inflation) in 2023. People may start to feel more generous in 2024, but nonprofits will be competing with political campaigns and political action committees for philanthropic dollars as it is a major election year.

Foundation giving will be mixed. The markets have been volatile in 2023. Foundations that calculate their distributions based on a longer rolling average will likely distribute about the same in 2023, while those who adopt a shorter rolling average policy may have less to spend. We’re also seeing foundations opting to change or narrow their giving scope.

Nonprofits will continue to be under the microscope. Now, more than ever, donors want to know how you are spending their contributions.

It’s a great time to push life income gifts like charitable gift annuities (CGAs). Interest rates are higher than they have been in more than 10 years, which makes CGAs and other life income gifts attractive to donors with philanthropic intent but a need for income.

Much of corporate giving will be driven by employees. Workplace giving and matching gifts are on the rise – and companies are supporting them. COVID restrictions for volunteering have eased as well, creating opportunities for corporate volunteer engagement.

The markets are set to grow. Investment banks are bullish on the markets for 2024. This is great for major donors who may have been holding off on gifts they would make from assets, not current income.

What can you do to maximize your 2024 fundraising opportunities?

  • Stay in front of your donors year-round. Make sure your fundraising and communications plans are aligned to ensure you are reaching people in the right way at the right time. You don’t always have to be asking, but you always need to be communicating.
  • Show impact. Develop short, easy-to-read impact reports that show how dollars are being used.
  • Encourage monthly giving. Subscription models are popular for so many things (streaming services, meal delivery, software and more). Why not philanthropy? Monthly giving helps with cash flow and allows you to continually build connections with your donors.
  • Make it easy to donate on your website. People shouldn’t have to look for information on how to give to you. Have donate buttons on every page and make your giving section include more than a donation page. Talk about why gifts matter and alternate ways to give – in-kind, stock, planned gifts, etc.
  • Diversify your revenue. If you rely heavily on foundations or events, start making plans to diversify your revenue. Successful nonprofits generate most of their philanthropic dollars from individuals.
  • Encourage planned giving and establish a program if you don’t have one. Higher interest rates are great for people considering charitable gift annuities and other life income gift arrangements. Local community foundations or a larger bank with an investment pool will often work with you to house and help manage planned gifts or a charitable gift annuity pool.
  • Lean in to digital. People are spending more time online than ever before. Have a digital fundraising strategy as well as a marketing one.
  • Develop corporate partnerships. This works especially well for organizations that have volunteer opportunities where company employees can do things as a team.
  • If you aren’t accepting stock, you’re missing out on some gifts. Your donors may be holding onto cash but have money tied up in highly appreciated stocks, which are great assets for giving. When handled properly, stocks provide tax and capital gain benefits for donors.
Key links and resources

 

Nonprofit marketing and communications trends

The way we communicate and receive information has shifted dramatically in the last three-to-five years. More people are researching nonprofits online, buying habits have changed (curbside pickup, anyone?), hybrid schedules have us using more technology and artificial intelligence (AI) is influencing many of our decisions.

What does this mean for the nonprofit community?

People are distracted. If you’re like me, you can get overwhelmed by the sheer amount of “stuff” you have to wade through daily - email, Zoom calls, Slack messages, social media and more. We tend to process what is in front of us (text, email, Slack, meetings, etc.) and read what is curated for us (social media, news feeds, etc.). You won’t be top of mind if you aren’t in front of people regularly.

Some interesting statistics:

  • The average time a person spends on online in 2023 dropped slightly from 2022, but most of us in the U.S. spend about six and a half hours a day online.*
  • The average internet user spends about two hours and 42 minutes daily on social media.*
  • According to Forbes, digital marketing experts estimate that most Americans are exposed to around 4,000–10,000 ads each day. A 2023 report from Siteefy states that the average person sees around 10,000 ads per day, though only a quarter of that or less will be relevant.

People want (and need) to hear from you regularly. Yes, people are distracted. But that doesn’t mean you shouldn’t continue to communicate with them. The challenge is giving them content that is interesting, relevant and concise.

Investments in communications and marketing are critical. You cannot skimp on quality communications and marketing. Technology and trends are changing too fast. Unfortunately, many nonprofits don’t invest enough in these areas and expect a small or unexperienced team to carry the load. Investing in experienced personnel or outsourced services is just as important as investing in your financial and legal counsel.

Paid AND organic digital is essential to effective communication. Digital is more than just social media and email newsletters. Unfortunately, many nonprofits shy away from optimizing digital and using other digital tools because they find them expensive or don’t have staff trained in the complexities of digital marketing.

Website optimization, content creation, SEO and paid media will be critical drivers of traffic for nonprofits. New tools built into our browsers are starting to serve AI-generated content based on our preferences and content available online. If you don’t have a strong digital presence already, you will be missing out on AI finding you and serving your content to users.

Emailing to Google and Yahoo email accounts is going to be tougher – unless you follow the updates. Google and Yahoo recently announced new requirements for email authentication, consent and engagement. These requirements are meant to help reduce spam and will take effect in February 2024. Nonprofits who do not update their email authentication methods, provide easy unsubscribe links and keep their spam rate low will be penalized with their root sending domain being blocked from Gmail and Yahoo.

Video content is a must. Video is the way of the future, with people interacting with video at significantly higher rates than written and static graphic content or photos. Videos don’t have to be long. In fact, shorter is better. Also, all video doesn’t need to be expensive. Simple videos of your nonprofit doing its work can have impact and are great for organic social media. Professionally produced video is a great complement to your website and special marketing/fundraising campaigns and is extremely effective in building engagement.

Embrace AI tools but use them correctly. AI is here to stay, whether we like it or not. Nonprofits should embrace this fast-evolving technology as an asset, not a threat. Tools like Chat GPT and Anthropic are great for ideation, sketching out plans and helping with writer’s block. But they are not a substitute for quality content. You still must do the work. Donors and your other constituents will see right through AI-generated content that hasn’t been adapted to your voice.

Key links and resources

 

Nonprofit operations, HR and planning

Operating a nonprofit continues to be difficult. Cash flow is challenging; inflation has driven up costs, pandemic-era programs have ended; donations have been flat or reduced; and debt service is more expensive. Job openings, increased demand for services and navigating hybrid work schedules add to the mix.

Organizations need to adjust finances to make up for increased wages. Higher starting salaries commanded by new hires in recent years need to be paid for somehow. Flat giving in 2022 and 2023 strained cash flow, and there is little room to increase fees for services at many nonprofits. The strain on cash will likely be mitigated by reduced benefits or employees sharing more benefit costs. Organizations will likely leave positions unfilled and even consider layoffs to stay in a good financial position.

More long-time leaders will announce retirements. This issue has been trending for several years now, and it is likely to continue through 2024 and beyond. Many nonprofits are led by baby boomers, and that generation is retiring in record numbers. Projections show that retirements will continue to peak even as far as 2030. This will leave a large void as founders, executive directors and senior leaders step down from their roles, as there aren’t enough experienced leaders to fill those roles.

You may hear more talk about nonprofit mergers. Retiring leaders, staffing shortages, duplication of services and funding challenges will drive many nonprofit boards to consider merging with, or acquiring, other organizations.

Investments in professional development will pay off. Keeping good people is worth the investment. And giving them opportunities to learn and lead will benefit nonprofits long-term. Set a budget for professional development and create learning/leading plans for your best performers. This approach may help with succession planning for retiring leaders.

The time is now for strategic planning. Many organizations had to conduct emergency strategic planning to survive the pandemic. But now that things have settled down and new routines and procedures have been established, many will reengage in strategic planning to shape their next three-to-five years.

What can you do?

  • Get a handle on cash flow, shop your vendors, create a realistic budget and invest in revenue-generating activities.
  • Start succession planning and look for ways to elevate your high performers through professional development.
  • If cash flow, staffing and operations issues are plaguing your organization, you may want to assess whether a merger or acquisition of a complementary nonprofit would be the best for your organization and the people it serves.
  • Invest in strategic planning.

Key links and resources

Summary

There is certainly work to be done in the nonprofit sector, but we believe 2024 will reward those organizations who properly manage their finances, invest in their people, take an updated approach to marketing, diversify revenue and stay connected to their donors. Nonprofits play such an essential role in our communities and continue to respond to needs as they arise. We’re ready to put 2023 behind and see what 2024 will bring.

 

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Amy Wong, president, Dot Org Solutions

Amy Wong, president, Dot Org Solutions

Amy believes the world is a better place because of the special work that nonprofits do for our communities for making them better places to live, work and raise families. And as president of Dot Org Solutions, she is a champion for small businesses for the role they play in creating jobs, delivering important products and services, and keeping the economy strong.