It’s no secret that running a nonprofit isn’t always easy, especially if you don’t know what challenges await you in the coming months. Luckily, we’ve put together a list of the five most common challenges for nonprofits in 2024. These challenges include financial issues, data security compliance, and talent retention problems.
Let’s look closer at the challenges nonprofits will face in 2024–and how to solve them!
1. Financial Sustainability
For nonprofits, financial sustainability means the financial security to cover expenses and advance your mission. Unfortunately, many nonprofits struggle to find–and maintain–financial sustainability.
One of the most common reasons for nonprofit financial insecurity in 2024 is the increase in expenses in the past several years. Higher costs affect nonprofits on two sides:
- Higher overall expenses for the nonprofit itself
- Lower revenues from decreased donations
Say you run an animal shelter. The cost of cat and dog food is going up, so your expenses are higher to feed the animals in your care. At the same time, your regular donors are cutting back on charitable giving because their personal expenses are increasing as well. This leaves your organization with higher expenses and lower revenues.
How Nonprofits Can Maintain Financial Sustainability in 2024
While rising costs may make it more difficult for nonprofits to find financial sustainability in 2024, it’s not impossible. Try these strategies to help your organization maintain financial stability in 2024 and beyond:
- Diversify your revenue streams with new programs, donation initiatives, and fundraising events–so long as you can implement them efficiently.
- Try fundraising hacks like doubling efforts for successful fundraising initiatives.
- Review your nonprofit budget and cash flow data to find areas for improvement.
- Increase your chances of successful grant applications by understanding the do’s and don’ts of grant writing.
2. Compliance with Evolving Regulations
Nonprofits are no strangers to regulatory and compliance issues. 2024 will be no different. Your organization will need to keep up with current regulations and prepare for upcoming changes, especially related to:
- The use of AI in your organization
- Fundraising solicitation and donor privacy
- Funding from foreign sources
- Political activism and election-year initiatives
- Employee categorization versus independent contractors
Keeping up With Changing Nonprofit Regulations
The key for your organization to stay in compliance with regulatory changes is to stay up to date on them. Of course, this is easier said than done when you have a nonprofit to run!
Consider assigning an employee or forming a task force committee dedicated to monitoring regulatory changes that could affect your organization. Having a dedicated team working on regulatory issues reduces the chances of you missing something as you focus on other parts of your organization.
You may also want to reach out to professionals who can help guide your organization. For instance, working with a nonprofit accountant, like The Charity CFO, can help you reduce your risk of financial non-compliance.
3. Nonprofit Technology Integration and Data Security
One of the best things you can do for your nonprofit is to start leveraging data. Data-driven decisions improve the efficiency and effectiveness of your organization from daily processes to fundraising efforts.
However, it can be difficult to choose the right nonprofit tech stack to fit your organization’s needs. And once you do implement technology into your organization, you have to be careful to keep patron, employee, volunteer, and donor data safe from digital threats.
Data from the Identity Theft Resources Center suggests that 69 nonprofit organizations faced direct data compromises in the first three quarters of 2023. On top of that, over 1,300 nonprofits faced indirect data compromises due to breaches from suppliers or vendors. As you integrate data into your organization, you must take steps to keep it safe.
Strategies to Leverage Data and Keep it Safe
There are several ways to use technology while also ensuring data security. Consider these three tips to help you start leveraging data without compromising user data:
- Use cloud-based accounting and customer data software like QuickBooks Online.
- Implement staff and volunteer training on security best practices.
- Audit and adjust technology and data practices based on current cybersecurity best practices.
4. Donor Retention and Engagement
Building positive donor relationships is an integral part of nonprofit management. Many nonprofits rely on donations as a significant portion of their revenue. If you don’t keep donors happy and engaged, you could see a drop in your finances.
As we mentioned before, rising costs could already be affecting a donor’s willingness or ability to make contributions to your organization. That makes it even more important that you build and nurture relationships with existing and new donors.
Ideas to Help Strengthen Donor Relationships
As everyone feels the strain of increased costs in 2024, it’s more important than ever to make sure donors are recognized. You can make donors feel special by adding personalized messaging to donor communications.
Another way to improve donor relations is to focus on sharing stories and highlighting their impact. For example, use impactful storytelling in your newsletters or on social media to let donors know where their money went and how it helped your mission.
5. Talent Acquisition and Retention
Nonprofits thrive when their employees are talented and invested in the mission. However, nonprofit employee recruitment can be an ongoing challenge. Many nonprofit organizations struggle to attract and retain top talent, whether from limited budgets or stigmas from job seekers.
In 2024, nonprofits have to further compete with for-profit businesses that may be better equipped to offer highly competitive compensation packages, such as well-funded startups.
How to Attract and Retain Qualified Talent
The good news is there are great employees out there just waiting to connect with your organization. In addition, the shift to remote work is making it easier for nonprofits to offer competitive compensation by reducing in-person office costs.
A few ways you can help attract qualified employees for your organization include:
- Improving the visibility and brand perception of your organization.
- Creating a comprehensive benefits package for employees–even if you can’t offer the highest salary compared to for-profit businesses.
- Offering professional and personal development and training for employees.
- Cultivating a positive workplace environment and culture.
Need Help Facing Nonprofit Accounting Challenges?
There are many challenges nonprofits will likely face in 2024–from expanding fundraising efforts to ensuring donor data privacy. While it may feel overwhelming, these strategies can help you proactively address challenges and keep your organization running smoothly.
But what if you need extra help setting up your nonprofit accounting tech stack or recording donations correctly? That’s where The Charity CFO can help! As a nonprofit-specific accounting firm, we know your organization’s unique challenges. Our team of qualified nonprofit accounting experts can help you better understand your financial situation and create a plan to overcome challenges head-on.
Contact us today to learn more about nonprofit accounting services.
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