Mission Competition

There is absolutely no question that nonprofit mission competition is now a reality.  In crunching the numbers freshly released from Giving USA, a simple comparison between the growth of the nonprofit sector and the growth/contraction of giving in just the last four years tells a compelling story.  Though there is debate over the giving estimate for 2009, what has been left out of much of the discussion is the impact of the growth of the sector.  When the growth of the sector is simply compared to the growth of the population for the last 10 years, the number of prospects per nonprofit drops by over 15%.  Using Giving USA figures, when giving over the last four years is compared to the growth in nonprofit organizations, contributions per nonprofit has dropped by over 10%—increasing each successive year.

Competition does not only arise from within the sector, there is an increase in competition from the for-profit sector.  We have for-profit hospitals and institutions of higher education.  Google recently created a $1B seed fund to support social entrepreneurs.  And in May, McKinsey&Company released “Shaping the Future:  Solving Social Problems through Business Strategy:  Pathways to Sustainable Value Creation.”  The report concludes:  “Businesses are increasingly expected to address social and environmental issues...  In order to sustain value creation, businesses must be proactive on social issues...  Business has the power to shape the future and move us toward sustainable value creation.”  Are we ready for business to lead?  Are we ready to lead?  Are we even prepared to collaborate?

Add to this equation, the fact that donor expectations are changing.  Younger donors are surfing the web looking for value.  As for major gifts prospects, Berkeley economist Emmanuel Saez notes: “Top income earners today are the working rich, highly paid employees or new entrepreneurs who have not accumulated fortunes comparable to those who accumulated during the Gilded Age.”  This new type of donor expects value and impact.

Nonprofits that succeed in this new environment need to have trusted, recognized cause-brands; proven quality and impact; a strong band of believers; and nimbleness that allows them to respond to donors, trends, and the new marketplace within which we live.

Are we ready?