Nonprofit organizations will continue to navigate economic uncertainties into 2024, as workforce challenges, the need for proactive crisis management, and strategic planning become paramount for their survival and sustained impact.

Amidst tumultuous global events, nonprofits face a confluence of challenges—from dwindling financial support and governmental funding to staffing shortages—that threaten the ability to fulfill their missions. The key to success in 2024 lies in organizational resilience, enabling nonprofits to confront emerging risks while navigating the familiar hurdles of ongoing uncertainties.

Financial Challenges and Adaptive Strategies

Securing funding remains a huge hurdle for nonprofits. As many as seven out of 10 organizations [PDF] anticipated a decline or stagnation in charitable donations through 2023. Similarly, nearly the same proportion foresaw a reduction or plateau in their donor base.

The financial strain on nonprofits is aggravated by cuts in government funding and escalating labor costs. Moreover, the sector anticipates grappling with more frequent and severe natural disasters, coupled with inflated prices for goods and services critical for fulfilling their missions.

Higher insurance costs have resulted in an average premium increase of 5 to 15 percent. Despite many nonprofits expressing confidence in their preparedness for risks, according to HUB’s survey, a mere 18 percent feel adequately covered to accomplish their mission-critical organizational goals.

Within this challenging economic landscape, nonprofits are augmenting their sustainability by cultivating agility. Many are proactively forging strategic partnerships with other nonprofits or even for-profit entities. This collaborative approach not only widens their outreach but also opens doors to enhanced funding opportunities, amplifying their societal impact.

Thinking innovatively and having a strategic roadmap in place not only fosters resilience but also propels nonprofits towards a future where they are well-positioned to thrive.

Retain the Best Talent

A tight job market stresses the charitable sector, with 75 percent of organizations reporting difficulty filling positions. Remarkably, over half of these nonprofits face a surge in job vacancies unseen in the past five years. This rise in demand for talent amplifies concerns surrounding employee retention, the foremost worry for 73 percent of respondents in HUB’s nonprofit survey. Following closely are concerns about talent recruitment (63 percent) and compensation (62 percent).

Salary emerges as a critical challenge, echoing the sentiments of nonprofit survey participants. Balancing higher costs while striving to compete for talent tempted by better wages in the private sector strains the budgets of these organizations. Rising healthcare expenses further compound the financial burden, especially when nonprofits rely on benefits quality to offset comparatively lower salaries.

Personalized benefits tailored to address individual employee needs and well-being can be a potent tool to recruit and retain talent, even amid salary constraints. Initiatives such as wellness programs, retirement plans and mental health services curated to resonate with each employee’s distinct needs can become standouts in nonprofit recruitment and retention.

Nonprofits operating with sharply constrained financial resources might consider such options as narrow health network plans, health savings accounts, and emergency savings funds. Additionally, offering free or reduced-cost access to financial education and wellness platforms, coupled with guiding employees toward personal risk solutions, can enhance employee well-being despite financial limitations.

Keep Reputation at the Forefront

Charities notably hold a higher level of public trust compared to other institutions, with 70 percent of individuals citing trust as their foremost consideration when making donations. However, accusations of abuse within the organization, transgressions by the board, financial misconduct, or a cybersecurity breach jeopardizing personally identifiable information can trigger severe reputational damage or even lead to legal action against a nonprofit organization.

A nonprofit’s response to a crisis can spell the difference between rebuilding public and donor trust or facing an irreparable fallout, potentially jeopardizing its survival.

Crisis management becomes paramount, enabling nonprofits to swiftly respond to incidents. Just 57 percent of respondents in HUB’s nonprofit survey report being prepared to address events that could tarnish brand or reputation, highlighting a significant gap in readiness.

An effective crisis management plan extends beyond leaning on board members for help. Initiating contact with insurers or brokers immediately after an event is vital – both to leverage resources and to satisfy insurance policy conditions. Nonprofits can tap into their insurer resources such as crisis management support, legal counsel or digital forensics.

Foster Organizational Resilience Through Risk Management

HUB’s 2024 Outlook Executive Survey revealed that only 30 percent of nonprofits have successfully cultivated a culture focused on risk awareness, preparedness, and mitigation. The remaining 70 percent desperately need to step up their risk management programming to avert potential vulnerabilities.

Enterprise-wide risk management is the cornerstone of organizational resilience and an effective antidote to catastrophic risk. ERM dismantles traditional organizational silos to promote a holistic, cross-functional approach through which key stakeholders identify, evaluate, triage, and resolve risks -- with ultimate emphasis on the handful of genuinely existential threats. Commercial insurance tends to focus on everyday hazard and operational risks, while ERM also considers financial and strategic risks that can cripple the organization.

Integrating robust risk management within the organizational framework and ethos offers multifaceted benefits. Not only does it position the organization as a more attractive commercial insurance applicant, helping to control premiums, but it also serves as a linchpin to mitigate potential liabilities and fortify overall resilience.

Navigating the complexities of 2024 demands a proactive and adaptive approach from nonprofits. Embracing resilience, innovation and strategic planning will empower these organizations to weather uncertainties and continue their crucial societal contributions.