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By Dennis C. Miller
America’s 1.8 million nonprofits play a crucial role in our society by addressing important community needs such as healthcare, education, affordable housing, food insecurity and many other important social issues. The work not only meets immediate needs but also contributes to the overall well-being of society. The sector employs approximately 12.8 million people, representing about 12% of all private-sector employment. Nonprofits are a significant economic force, contributing about $1.4 trillion to the economy during 2023, roughly 5.2% of the nation’s gross domestic product.
Yet data from the National Center on Charitable Statistics reveals that approximately 30% of nonprofits fail to exist after 10 years, and according to Forbes, more than half of all nonprofits are destined to fail or stall within a few years.
Most nonprofits fail or never reach their full potential for the following five reason:
- Lack Of Competent Leadership. As the sector has grown and dramatically changed during the past few decades, executives now need to be visionary thinkers, have an entrepreneurial spirit, a high level of emotional intelligence, be relationship builders, collaborators, brand builders and inspirational motivators. They need to know that nonprofit is their tax status not their business plan.
- Stale Or Uninspiring Vision Statement. A vision statement should be an articulation of the destination toward which your organization should aim, a future that in many important ways is better, more successful, or more desirable than its present. It should inspire enthusiasm, encourage commitment, set standards of excellence, be ambitious and realistic but most importantly be measurable. You should be able to discuss at least on a quarterly basis how your organization is progressing toward achieving your vision.
- Boards That Are Not Trained Or Engaged Properly. Beside providing fiduciary responsibility and strategic advisory services to your organization, your board and CEO must create a strong partnership, sharing a sense of ownership, asking the right questions, putting forth new ideas and challenges, and continually refreshing and renewing your organization.
- Indistinguishable Brand Identity. Whereas building an effective brand was once limited to large corporations such as Microsoft, AT&T, etc., today nonprofits must build a strong brand identity that identifies and distinguishes the organization from others. Nonprofits need to “tout” their achievements, successes and the positive impact they are having on those they serve, whether locally, nationally or global. An organization with a unique brand identity has improved brand awareness, a motivated workforce who feel proud to be working there, and active board members and engaged donors.
- Inadequate Revenue Sources. Relying on state or federal grants or support from your fundraising gala is not sufficient to provide the financial resources your organization is going to need to succeed. This most important strategic initiative is to create a culture of philanthropy where your CEO, board members and development officer all work together as partners seeking donors to invest in your success, not give to your organizational needs.
These reasons could easily have been expanded but these are the five most crucial strategic initiatives to address if you want your organization to succeed, not just survive. By solving these five major causes for nonprofit failure, the odds of successfully beating the failure rate will be much higher for you.
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Dennis C. Miller is CEO of Dennis C. Miller LLC., providing consulting and coaching to nonprofit CEOs and board leaders. He is the best selling author of six books, a motivational speaker and retreat facilitator. His email is dennis@denniscmiller.com
