Nonprofit organizations play a vital role in addressing societal needs and making the world a better place. These organizations are established to serve the public interest and do not operate for the purpose of making a profit. Nonprofits provide essential services that are not adequately met by the government or the private sector. In addition, they make a significant impact on the community and the economy.
In this article, you will learn what a nonprofit organization is, the impact they have on the economy and society, some common challenges they face, the benefits an executive search firm can provide to a nonprofit organization and various ways you can support one. Our hope is that you will gain a greater understanding of these organizations and the vital role they play in everyday life.
Nonprofit vs. Not-for-profit
To begin, let’s define what a nonprofit organization is. The US Chamber of Commerce provides a good definition: “A nonprofit organization is one that qualifies for tax-exempt status by the IRS because its mission and purpose are to further a social cause and provide a public benefit.” Nonprofit organizations include universities, hospitals, charities and museums.
Although similar, a not-for-profit organization is different from a nonprofit organization. A not-for-profit is created for a select group of people without the interest of generating profits. All money earned through business activities or through donations goes right back into running the organization. Some examples of not-for-profit organizations include sports clubs, associations, foundations and community service groups.
Our focus, in this article, is nonprofit organizations; those that provide a benefit to the public, as opposed to clubs, cooperatives, etc. that are formed solely to benefit their members.
Nonprofit Organizations and Our Economy
The impact of nonprofit organizations on the community and the economy is significant. According to a study conducted by the Johns Hopkins Center for Civil Society Studies, the nonprofit sector contributes $985.4 billion to the economy annually and employs over 12.3 million people. The study also found that nonprofits play a crucial role in community building and social cohesion.
You will see in the graph below, based on data from the Johns Hopkins Center, that nonprofits are the third largest workforce in the country behind only manufacturing and retail.
Additionally, nonprofits also provide a significant return on investment to society. A study by the National Council of Nonprofits found that for every dollar invested in nonprofits, they generate $3 in economic activity. Furthermore, because nonprofit organizations provide essential services that would otherwise fall to the government, their work saves taxpayers billions of dollars.
Nonprofit Organizations and Their Social Impact
In addition to their economic impact, nonprofits play a crucial role in promoting social justice and equity. Nonprofits advocate for policies that promote equality and access to resources. They also work to empower marginalized communities. Nonprofit organizations often serve as a catalyst for social change which can lead to a more just and equitable society.
Through data and through general observation, it is obvious that nonprofit organizations are necessary for healthy communities. This is just one of the reasons Centennial feels so strongly about helping nonprofit organizations find and hire great leaders. To continue their impact, nonprofits must have leaders who are dedicated, skilled and passionate. It’s a powerful and rewarding experience to introduce a nonprofit organization to someone who meets all those qualifications.
Aid Provided by Nonprofit Organizations
Some of the most pressing issues that nonprofits address include poverty, hunger, homelessness, healthcare, education and the environment. Nonprofits provide critical services to underserved populations and help bridge the gap between those who have access to resources and those who do not.
For example, food banks and homeless shelters provide meals and shelter to those who are experiencing homelessness or struggling to make ends meet. Nonprofit organizations like Doctors Without Borders and Mercy Ships provide critical medical care to people in countries where healthcare is scarce or inaccessible. Educational nonprofits like Teach for America and Girls Who Code help to bridge the opportunity gap by providing educational resources to disadvantaged communities.
Challenges of a Nonprofit Organization
Despite their many contributions, nonprofits face significant challenges. One of the biggest challenges is funding. Because they rely heavily on donations and grants, nonprofits often struggle to make ends meet. This can make it difficult for them to plan for the future and invest in long-term solutions. This means that without sufficient funding from donors, nonprofits can struggle to continue operating effectively and provide quality services in their respective fields.
Another challenge facing nonprofits is regulation. There are a lot of rules and regulations that nonprofits must comply with, which can be costly and time-consuming. Lastly, because most nonprofits operate on tight budgets, they may not be able to offer competitive salaries or benefits packages. This creates hiring challenges.
Finding solutions to hiring challenges is an area that Centennial has decades of experience with. The task of hiring great people can be overwhelming to a nonprofit that is already stretched thin. However, Centennial’s network and experience uniquely equips us to find someone who is motivated, passionate and competent to lead nonprofit organizations.
To overcome the funding challenge, Centennial has extensive experience finding people who are talented and creative fundraisers. Finding a development person who can refresh the funding efforts can make a world of difference. And that is what nonprofits strive for – making a difference.
How Have You Benefited from a Nonprofit Organization?
Every person in the United States benefits from the work of nonprofits in some way, whether they realize it or not. Because the benefits don’t always fulfill a direct need and personal need, the benefits can go unrecognized. However, if a nonprofit helps to provide a cleaner and healthier community, you are receiving a huge benefit that may be overlooked until it is no longer there.
Here are some examples of common areas of need that nonprofits meet:
- Local food banks provide meals for those in need
- Affordable housing is made available for families who may not qualify for traditional mortgages
- Childcare centers make it possible for parents to work
- Animal shelters rescue unwanted or lost animals
- Nonprofit art performances provide entertainment
- Museums or zoos offer educational opportunities
- Scholarship funds enable students to get a good education
- Youth development organizations equip kids with life skills
- Literacy programs help people of all ages to master reading and writing
- Hospitals provide healthcare from birth
This helpful infographic from the National Council of Nonprofits spells out numerous ways that your life may have been directly touched by a nonprofit organization.
Giving Back to Nonprofit Organizations
Now that you’ve seen the economic, societal and personal impact of nonprofit organizations, you may be curious how you can provide support. Is it just a matter of writing a check? It can be, but it can be so much more.
Based on a survey of more than 2,000 Americans, 56% of people in America donated to charity in 2021. Individuals aged 56 to 75 are the most giving generation, with 60% of baby boomers donating to charity. But Gen Z isn’t far behind, with 57% of individuals aged 18 to 24 making charitable donations.
These statistics are slowly climbing after taking a sizable setback during the Covid pandemic. The graph below, from Zippia, depicts the percentage of Americans donating to charity during 2019, 2020 and 2021.
In addition to financial donations, there are numerous ways to support nonprofit organizations. Some options enable you to really become a vested part of the mission and other options are quick but effective ways to provide additional support.
- Volunteer your time or services
- Engage with the organization on social media to help extend their online reach
- Forward the nonprofit newsletter to a friend who may want to get involved
- Buy tickets to an event they are hosting
- Plan a fundraiser
- Leave a favorable review
Nonprofit Organizations Looking to the Future
In conclusion, nonprofit organizations play an invaluable role in our society. They provide essential services that benefit underserved populations while contributing significantly to job growth and economic development through their operations. Even so, these organizations often face significant challenges when it comes to fundraising and hiring top talent.
Despite these difficulties, however, nonprofit organizations remain essential components of our communities thanks largely in part to their dedication towards helping those most in need. With continued support from both individuals and corporations alike – whether through donations or volunteerism – we can ensure that these important institutions continue serving us long into the future!
We are honored when a nonprofit chooses Centennial as its executive search partner. Filling a key leadership role at a nonprofit brings a special kind of fulfillment, knowing we’ve just equipped an organization to continue making a difference in our world.