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AI IN THE NONPROFIT SECTOR

MATT THOMPSON NICOLE FRISINA

FINANCIAL ADVISOR, PORTFOLIO MANAGER
MANAGEMENT DIRECTOR YOUR PART-TIME COMPTROLLER, LLC
MORGAN STANLEY

A topic that I am discussing with all of my nonprofit clients is a term I call, “Mission As we look toward 2025, two significant challenges facing the nonprofit sector come to mind.
Alignment”. Is the mission of your organization reflective in all aspects of your agency? We The first is the decline in contributions, with some clients losing up to half of their funding in
all know that nonprofits are highly focused on their mission and are phenomenal at delivering recent years. This sharp decline has forced organizations to realign their program focus and
it to their clients. If they were not, they would not have survived the past couple of years. implement substantial spending cuts to manage the revenue loss. The second challenge involves
Now sophisticated funders (both corporations and private foundations) are looking at and staff turnover, particularly in executive positions. The process of searching for new leadership
asking about how the agency’s mission is reflected in all areas of the organization. Based is often costly and time-consuming, typically taking longer than anticipated, followed by the
on the question, I’m just going to focus on the financial side that affects most nonprofits, i.e. additional time needed to train new hires.
retirement plans and investment portfolios.
To help organizations navigate these challenges successfully, my primary recommendation is to
Here are a couple of basic examples of missing on Mission Alignment: develop a strategic plan.
• An agency that advocates and supports low income workers doesn’t offer their employees A strategic plan will ensure that the organization remains aligned with its mission while adapting
a 403(b) and if they do, they don’t make an employer matching contribution. to evolving challenges and opportunities. When creating this plan, consider the following
elements:
• An agency that advocates and supports environmental issues has their investment
portfolio in a mixture of low-cost index funds, one of which is an S&P 500 fund. This 1. Set SMART Goals: Establish Specific, Measurable, Achievable, Relevant, and Time-bound
means they are investing in many of the companies that they are advocating against. Or goals to track progress in program delivery, financial growth, and operational efficiency.
they are using ESG funds but are not aware if they are using positive or negative screens
which means they don’t necessarily understand the carbon intensity of their investments. 2. Emphasize DEI Initiatives: Prioritize Diversity, Equity, and Inclusion initiatives to ensure
that the organization remains accessible and equitable.
These are very basic examples of missing on Mission Alignment and easy for funders to
determine. When agencies are competing for funding with other similar organizations, Mission 3. Evaluate Financial Stability: Reassess the organization’s revenue streams—determine
Alignment, and being able to talk about it, could make the difference. I would also contend if revenue diversification is necessary and consider creating a multi-year budget to align
that it is the right thing to do for every nonprofit. All aspects of an agency should reflect their resources with strategic priorities.
mission and values, not just certain parts. 4. Assess Staff Strengths and Weaknesses: Take into account succession planning and
provide training and professional development opportunities.

5. Review Technology Infrastructure: Identify gaps in technology and determine what is
needed to stay current with advancing technology, including updating policies to enhance
cybersecurity and data privacy.
Implementing this strategic plan will help the organization lay the groundwork for resilience
in a challenging landscape. Additionally, it’s crucial to share the strategic plan with all staff
members. Doing so will help them align with the organization’s new vision and may foster a sense
of stability, thereby reducing unexpected turnover.