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Top nonprofit industry trends for 2021

November 27, 2020By
nonprofit-industry-trends-2021

We recently sat down to reflect on 2020 and the incredible year it’s been for the nonprofit industry, our country and frankly the entire world. Who would have predicted that face masks would be a thing, kids would be doing virtual schooling and going to the grocery store would feel like an exciting “outing”? Definitely not us. But in this “year of the pivot”, and with so much uncertainty and challenge, we continue to find hope and opportunity.

Here are the major nonprofit industry trends for 2021:

Continued market uncertainty and increased consolidation

Despite a partial recovery, we’ve still seen approximately 1M jobs lost and particular sub-sectors continue to struggle, especially health care, education, the arts and social assistance. We also know that one-in-three nonprofits will likely close as a result of this crisis.

Certainly some dire news, but we also know that the industry grew at crazy rates—20% growth in the last 10 years compared to 2-3% growth for the for-profit industry. As a result, consolidation of some organizations could prove to be significant in improving efficiencies across all areas.

Unprecedented resilience

We’re certainly a hardy and tough bunch, right? People don’t go into the nonprofit sector for the money, and I believe our unique combination of grit, determination, hard work and compassion have been invaluable in ensuring that we can change, evolve and survive.

We’ve seen many organizations adapt in creative ways, all while staying purpose-driven and committed to their mission and values. This resilience is not unique to the nonprofit industry, but is certainly critical to our survival.

We need to rebuild our companies, organizations, and ultimately ourselves to be successful in this new digital future.

The past is gone. It’s not coming back. Now is a be here now moment. We need to rebuild our companies, organizations, and ultimately ourselves to be successful in this new digital future.Marc Benioff, CEO Salesforce

Investing in innovation, responsiveness, and embracing change

For an industry that’s historically struggled with change and evolution (think oil tanker!), it’s been inspiring to see the acceleration of real change within our industry. Stronger, smarter, faster are all now critical as many organizations reimagine everything.

Now is the time to focus on real systems change. The idea of addressing root causes and long-term opportunities that'll have a lasting impact, is exciting and could have a profound impact on the future of our industry.

It’s time for us all to 'get out of our lanes' and reinvent our organizations to have an even greater impact.

The national reckoning on racial justice has created opportunities to focus on advocacy, mobilization and human agency. It’s time for us all to “get out of our lanes” and reinvent our organizations to have an even greater impact across our communities and society as a whole.

Big gifts and big impact

Despite the long lines we see at food banks and other social services, the wealthy are getting wealthier. Thankfully, many are stepping up to address the growing needs that have been highlighted by the COVID-19 pandemic and racial equity issues that have been at the forefront of our society since the death of George Floyd.

In fact we’ve seen approximately $3.7B flow in for each of those causes. Certainly, there has been remarkable generosity from average Americans—millions raised through smaller gifts have been crowdfunded on the Internet—but the biggest impact has been from the substantial generosity of corporate America.

For example, Bank of America just gave $1B for racial equity, individual donors, such as Jack Dorsey, CEO of Twitter, announced he was donating one third of his $3.6B estate to racial equity and Mackensie Scott, former wife of Amazon CEO Jeff Bezos, gave $1.7B for social justice. We’ve also seen incredible generosity through Foundations, such as the Gates Foundation, who just donated $70M to COVID relief and vaccine distribution, and through the growing area of Donor Advised Funds (which work like personal charitable savings accounts).

The incredible generosity has been inspiring but has also led to concerns about wealth inequality as a result of the “K shaped economic recovery” and the consolidation of wealth and power.

Prioritizing digital transformation

We’ve all been talking about transforming to a digital-first organization for some time, but it seems that COVID has been the impetus for change for many organizations and finally forced us to fully embrace the opportunities of this evolution.

Digital transformation is all about constituent centricity and creating a personalized and customized engagement experience. With the push to virtual everything (from Zoom walks to virtual galas), we’re now seeing more nonprofits focus on the opportunities to improve engagement and evolve how they’re supporting their constituents—across fundraising, marketing and mission.

The best experience anywhere is the expected experience everywhere.

Today, 'the best experience anywhere is the expected experience everywhere'. Meaning we’re all now held to the same benchmarks as Amazon, Starbucks and other for-profit companies.

Now is our time to up our game and develop creative ways to leverage content expansion, including online fundraising opportunities, social media, tools like SMS texting and gamification, to attract not just your current donors and supporters, but also engage Millennials that are now stepping into significant wealth and influence across our industry.

Promoting stewardship and engagement

Finally, no list of nonprofit industry trends for 2021 would be complete with the one trend that we all know and love but yet seem to often take for granted. We’ve talked for years about the need to move from “transactional fundraising” (think P2P and direct mail, a call and response sort of engagement) to “relationship-based fundraising” (think ongoing engagement, high touch fundraising, personalized automated touch points throughout the year, etc.).

We need to strengthen our connectivity with existing donors and build strong relationships to pave the way for the next 'next' normal.

As a result of these trends, we’ve doubled down on our focus around donor retention and donor loyalty so we can maximize the lifetime value of our donors. Now more than ever, we need to strengthen our connectivity with existing donors and build strong relationships to pave the way for the “next next normal”.

We all know that the retention rate in our industry is not what it should be—at 44% we’re working much too hard to stay flat (think about that: ten donors last year and only 4 or 5 are coming back this year...no wonder we are all so exhausted!). This sort of attrition would never be tolerated by successful for-profit organizations. And with this crisis firmly in our midst, now is the time to double down and focus on donor loyalty. Retained donors are more likely to give more than new donors, so the value proposition is simple: work harder to keep your existing donors and you’ll see more fundraising success.

Time to focus

I believe that with a focus on donor loyalty and connectedness (isn’t that what we are all really craving now?), we’ll come out of this crisis even stronger and better as individual organizations and as an industry.

In the midst of every crisis, lies great opportunity.Albert Einstein

We recently sat down with Kelley Stewart, EVP of Client Solutions at Pursuant, to discuss the top nonprofit industry trends of 2021 and the need to focus on donor loyalty. To hear our recent conversation on “The Year of the Pivot”, please check out the recording of the session here.

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