Page 8 - 2025 Nonprofit Industry Trends

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JEFFREY L. REYNOLDS, PH.D THERESA A. REGNANTE JAN FISHER LAUREN WAGNER

PRESIDENT/CHIEF EXECUTIVE OFFICER PRESIDENT & CHIEF EXECUTIVE OFFICER EXECUTIVE DIRECTOR EXECUTIVE DIRECTOR
FAMILY & CHILDREN’S ASSOCIATION UNITED WAY OF LONG ISLAND NONPROFIT WESTCHESTER LONG ISLAND ARTS ALLIANCE (LIAA)

Debates about executive compensation in the Suffolk County Legislature have highlighted huge As 2024 comes to an end, nonprofits are grappling with several challenges which are anticipated to Some of the most significant issues that the nonprofit sector has faced over a multi-year period will The arts sector is currently facing significant challenges that include funding gaps, audience
misconceptions about the nonprofit sector and we clearly need to do a better job detailing the carryover to 2025. These include: continue to impact the sector in 2025. Delayed procurement, late payments and underfunding of re-engagement struggles, and operational capacity issues. With major funders like the
critical roles we play in our community, the benefits we provide to government and taxpayers and nonprofit organizations by government partners over decades has become endemic. While contracting Ford and Mellon Foundations shifting their focus and public arts funding at historically low
the complex regulations that govern our operations. It may be time for us to re-think how we define • Funding Constraints: Philanthropic donations and government grants are strained due to economic between government entities and nonprofit agencies is essential to ensure that government mandated, levels, organizations are contending with critical financial shortages while also competing
ourselves. “Nonprofit” is a tax status, it’s not our business model, nor does it accurately describe uncertainties. Many donors are scaling back, leading to increased competition for limited funding. and other critical services are delivered, the current system continues to place nonprofits at- with various societal priorities for resources. Furthermore, many arts organizations are still
the life-saving work performed by our robust health and human organizations. The good news is • Increased Demand for Services: Economic instability and rising costs are driving higher demand for risk: significantly weakening nonprofit operations, sustainability and positive impact. The system in the process of rebuilding their audiences following the pandemic. Small and mid-sized
that Long Island’s nonprofits are more united than ever before, better able to respond to misguided services, especially in housing, food insecurity, and workforce development. perpetuates the imprudent and inefficient use of tax payer dollars. Adding to this is the overhead organizations are particularly vulnerable to these pressures, grappling with staff shortages
attacks on our sector and ready to take on 2025 with all of our energy.
• Technology and Data Management: Nonprofits are under pressure to adopt advanced technologies myth often embedded in the thinking and actions of many funders and philanthropists - the idea that and burnout that jeopardize their operational sustainability. However, there are opportunities
A willingness to continually evaluate programs, to modify, scale back or close those that aren’t for fundraising, service delivery, and data analytics to demonstrate impact and attract donors. a nonprofit’s worth is determined by how much it spends on core operating expenses. Overhead is an for growth. Advocacy-led initiatives, such as those spearheaded by Long Island Arts Alliance
meeting measurable goals will be even more critical in 2025. Like most agencies, we heavily • Equity and Inclusion: As nonprofits work to address systemic inequities we must also ensure diversity accounting term that includes vital activities that all businesses must incur, such as staff compensation. (LIAA), are instrumental in driving public policy efforts that seek to increase investment
subsidize government-funded programs where contract rates haven’t kept pace with the cost to and representation in our governance and operations. Insufficient allowable reimbursement for core operating costs combined with below market wages for in the arts. By gathering data, we hope we can enable organizations to demonstrate their
deliver services. That’s no longer sustainable and needs to be addressed with funders. We just can’t New York’s nonprofit workforce are at least partially responsible for the fact that more than one in five contributions to the local economy and community well-being, thereby enhancing their ability
keep adding golf outings, chicken dinners and 5K runs in attempt to fill funding gaps, while letting Nonprofits need to evolve in several ways to address these challenges: nonprofit workers live paycheck to paycheck; they can’t afford the basics: housing, child care, food, to secure funding and engage stakeholders. Additionally, cross-sector partnerships with
government circumvent its responsibilities to local residents. transportation, health care, technology, and taxes. industries like healthcare and tourism present new funding avenues and amplify the arts’
• Collaboration and Partnerships: We need to establish stronger networks with other organizations, impact. As community engagement becomes increasingly recognized as vital for resilience
Along those same lines, we need to continue to push for fair salaries, well-rounded benefits and governments, and private companies to share resources and enhance impact. Nonprofits, government, the business community, funders and board members must come together to and social cohesion, the potential to position the arts at the heart of Long Island’s cultural
workplace flexibility for our staff if we’d like to attract and keep them. Some of that is up to agency • Flexible Staffing Models: We need to continue to invest in staff well-being and create pathways for drive systemic change to ensure the smart investment of taxpayer dollars and philanthropic funding. fabric offers a promising path forward.
executives, but to the extent salaries and benefits are driven by funding, we need to amplify the professional development to address staffing shortages. This will benefit society as a whole.
voices of the staff who are performing life-saving services, sometimes to the detriment to their own Financial instability poses a significant threat to small and mid-sized organizations,
families. • Enhanced Advocacy: We need to advocate for funding to support our missions, especially in Recommendations particularly in the arts sector, where most of Long Island’s 450-or-so cultural nonprofit
disadvantaged communities. entities operate with budgets below $100,000. Many of these organizations, much like LIAA,
Despite having robust protections in place, I worry incessantly about cybersecurity, especially • Resiliency Planning: It’s always important to diversify funding sources to navigate economic 1. Support livable wages and reasonable fringe benefits for the nonprofit workforce. often rely on volunteer staff or a single paid employee, making it difficult to build financial
as I see better capitalized multinational corporations being hacked. The notion that we are small fluctuations. 2. Eliminate caps on administration and overhead. reserves, invest in infrastructure, or respond to unexpected crises. Furthermore, arts
enough to “fly under the radar” isn’t that comforting anymore. This should be top of mind for every • Diversification: Overreliance on limited funding sources can leave organizations vulnerable. organizations risk being overlooked in public policy discussions and economic development
nonprofit. Organizations need to diversify income streams through earned revenue, corporate sponsorships, 3. Pay nonprofits 50% upfront for contacted services. plans if they fail to effectively articulate their impact. This is especially true for smaller

Delayed contracts and payments from government have always been troublesome, but as interest and recurring donation models. 4. Reimburse nonprofit organizations for late payments. organizations that lack the capacity to advocate for themselves or gather data showcasing
their contributions. Additionally, without targeted efforts to address disparities, historically
rates have risen, too many charitable dollars are being spent to bridge the gaps. Government and • Workforce Challenges: We need to enhance employee benefits, create leadership pathways, and underfunded organizations and underserved communities will continue to struggle to receive
nonprofits should be working closely to make the process faster and more efficient. These are pretty emphasize mission-driven work to attract staff. Staff need to understand their career paths within
simple business processes that could be addressed through technology once we all get to the table. our organizations. the support they deserve, exacerbating inequities within the sector.
• Donor Fatigue: We need to engage donors through personal outreach, impact storytelling, and
Sure, I’m concerned about next 12 months, but I also know that our sector is led by folks with
immense intelligence, unwavering dedication, and an unrelenting commitment to justice. We got transparent reporting on the use of funds.
this. • Cybersecurity Threats: We need to invest in cybersecurity training, software, and audits to protect
organizational data.