In 2023, nonprofits face many of the same issues that for-profit companies face. However, nonprofits may not have the business model for bringing in revenue the way for-profit companies do. Below, we’re discussing three more challenges nonprofits will likely experience this year.
Employee Retention Issues
While hiring employees is a time-consuming process, maintaining employees may be the bigger issue. The current job market has many opportunities, and nonprofits are competing with other businesses for those passionate, motivated individuals who can help with the overall mission.
Because of this, nonprofits may need to contemplate additional benefits to offer employees. Some examples include opportunities for remote work, additional insurance benefits or enhanced retirement plan options. Maintaining the status quo with employee benefits could lead to costly employee turnover.
Effects of Inflation
Inflation impacts both nonprofits and their employees. For this reason, nonprofits may need to consider salary increases to combat rising personal costs. Otherwise, employees may leave for better-paying jobs (which relates to employee retention).
But at the same time, nonprofits should consider how increased business costs are affecting their financial health. If your organization has donations or endowments that are the same each year, then rising costs could be a problem. Static revenues and increasing expenses are not a good combination! Because of the high costs that go along with inflation, a thorough financial analysis can help a nonprofit decide if it is weathering this economic storm.
Additionally, a financial analysis can help a nonprofit to understand its funding sources. During tough economic times when individuals and companies tighten their (spending) belts, donations will decrease.
Therefore, it is important for a nonprofit to fully understand its funding. Some nonprofits are funded by one or two large donors while others operate using many smaller donations. Regardless, today’s economic uncertainties could cause all donations and economic activity to suffer. Having a thorough understanding of how your organization is funded can help drive future funding efforts.
Bring Your Nonprofit Challenges to Morgan & Associates
If these challenges seem daunting, Morgan & Associates can help you. We have experience working with nonprofits…through good and bad economic times, and we would love the opportunity to work with your nonprofit too.