Competition is at the root of what makes a free marketplace work. It leads to the survival of the fittest when it comes to business success. Yet in the nonprofit arena, with so many organizations vying for dollars, competition is leading many charitable organizations to survive on fewer funds.
From 1991 to 2001, the nation went from having 516,554 registered 501-C-3 organizations to 865,096. Needless to say, the competition for funds is getting steeper, and in the end, it will strain local resources.
Add to this the decreasing amount of funds coming from state, local, and federal governments, and this leaves several nonprofits to balance government funding with what they can raise from local donors.
Of course budget deficits aren’t just on the rise for nonprofit organizations; they’re also affecting the companies and individuals they’re tapping for the dollars because of increased layoffs, cutbacks, and downsizing. In short, nonprofit organizations are asking for money in an already tight economy, and there isn’t much room to budge.
In addition, with unemployment on the rise, the drain on human service organizations is escalating. Health care wait lists are growing for individuals without insurance, food banks are stretched to their limit, and shelters are filling up.
According to recent research, 2002 marks the second consecutive year there’s been a decrease in charitable giving in the United States. As for increased competition, nonprofit organizations are attaining fewer new donors and often seeing existing donor income decrease because of the economic downturn, talk of war, threat of terrorism, and a lagging stock market.
Stocks are also affecting foundations that rely on investments for their charitable efforts. Plus, foundations are becoming maxed out by this increased demand, which often means less money for social service agencies.
So how can nonprofits stay ahead of the game? How can the problems caused by increased competition be answered locally? By deciding what’s really important and looking at the big picture. Nonprofit organizations and businesses alike need to diversify, collaborate, market, and persevere.
As a community, we need to look to where dollars and resources are needed the most. It’s a free marketplace when it comes to fundraising, and the competition is getting fierce. We need to make certain the limited charitable dollars are going to programs and services that have the greatest impact on our community. IBI