Regulation, Legislation Top Executive Worries List

Two-thirds (63 percent) of nonprofit leaders polled by BDO cited regulatory and legislative challenges as a top pain point this year, especially changes to the federal tax code, data privacy regulations and new guidelines for financial reporting and recognizing revenue.

    The results are part of BDO’s annual Nonprofit Standards benchmarking survey. Some of the top results include:

  • Organizations are at a growing risk of falling into the starvation cycle: underfunding necessary infrastructure — new technology, employee training and fundraising expenses — in favor of high programmatic spending. The majority of organizations surveyed (72 percent) allocated 80-100 percent of their spending to program-related activities in the past fiscal year.
  • At the same time, nearly two-thirds (63 percent) of nonprofits maintain reserves equivalent to six months or less of operating costs. While the right level of operating reserves varies by organization size and sector, it’s important for nonprofits to establish an appropriate financial safety net.
  • Investment in technology is a priority, but not without a clear return on investment (ROI). Nearly two-thirds of organizations surveyed are planning to invest in new technologies this year. However, with limited financial and human resources, nonprofit organizations are gravitating towards technology tools that allow them to do more with less, like management platforms or software, including those that assist with tasks like fundraising or social media (66 percent); data analytics (56 percent); and automation (33 percent).
  • Mission and compensation has an impact on employee satisfaction. While compensation remains the most widely-cited employee satisfaction challenge for organizations, with 78 percent rating it a high or moderate challenge, compensation alone does not guarantee employee retention. Nearly one in four organizations ranked ‘disconnect from mission’ as a high or moderate issue for employees. This is particularly relevant for organizations that may be dealing with financial concerns—more than a third of organizations operating at a net loss rank mission disconnect as their top employee challenge.
    Other top findings include:

  • Nearly half all organizations surveyed increased salaries between three to four percent.
  • Employee training and development is another top issue, with 68 percent of organizations considering it a moderate to high challenge.
  • The majority of organizations don’t consider flexible work to be a significant challenge. Some 63 percent offer flexible work schedules and nearly half either offer flexible work arrangements or the option to telecommute.
  • Only 22 percent of all nonprofits meaningfully expanded the scope of their work this year, possibly due to concerns and uncertainty around funding and economic growth. And nearly all organizations (96 percent) communicate the impact of their programs outside of their organization, but nearly half of organizations say a quarter or more of their funding sources requested additional information on outcomes and impacts during their last fiscal year.