5 marketplace risks nonprofits face

August 31, 2015       The NonProfit Times      

Growing pressures to compete in the marketplace have cropped up a new wave of risks that nonprofits now face.

In his book, “The Resilient Sector Revisited,” Lester M. Salamon reviews five new risks nonprofit managers must consider in the sector’s changing landscape.

* A wide array of challenges and considerations are leading to a burnout problem among nonprofit managers. Managers today must balance the interests of stakeholders such as clients, staff, board members, donors, regulators and government officials while also keeping abreast of the developments in policy and technology that affect their organization. In the meantime, they must also compete with for-profits for board members, customers, contracts, grants, visibility, influence and volunteers.

* Nonprofits are challenged with the growing tension between the market character of services provided and the character of the organizations providing them. For example, market pressures are impacting nonprofit arts and cultural organizations in ways that are reducing their attention to art in favor of an increased focus on market demands.

* Organizations that rely on fees for services risk a “mission creep.” What might start as a sliding-fee scale designed to cross subsidize beneficiaries has to potential to be skewed toward clientele that are capable of paying when capital is needed. Moving services toward the marketplace could create pressures to move services away from those who need them the most.

* Piggy-backing on the move of nonprofits toward the market, smaller organizations face the risk of being placed at an ever-increasing disadvantage. Successfully adapting to market pressures requires advances in technology, marketing and fundraising. Such necessities place not only the question of advantage versus disadvantage on smaller nonprofits, but one of sustainability.

* Persistent public misperception has the potential to evolve into public mistrust. Many members of the public continue to perceive nonprofits as collections of do-gooders that are primarily supported by charitable gifts. With little being done to readjust these perceptions toward the realities of the complex, commercially-engaged methods of nonprofits, organizations run the risk of losing public trust while succumbing to market pressures.