Nonprofit Sector Facing Shortfalls
Pro Bono Consulting Could Provide $1.5 Billion in Services to More than 200,000 Nonprofits Nationwide.
San Francisco-November 6, 2008 –Nonprofits today are often ill-equipped to make the decisions necessary to operate efficiently and effectively, according to a new study conducted by the Taproot Foundation, the national leader in strengthening nonprofits through pro bono consulting services. Despite facing a severe crisis of reduced funding and increasing demand for services, only 50% of nonprofits surveyed have a strategic plan, and less than 40% spend any time on tactics critical to strategic execution, such as analyzing competitors or potential partners, evaluating earned income opportunities, or identifying risk mitigation approaches.
Strategy management–a range of management activities that foster decision-making and resource allocation to maximize the intended organizational outcome–is crucial to the long-term health of nonprofits, particularly during economic crisis. When nonprofits have the capacity and expertise to make strategic planning a priority, they consistently report a significant positive impact on their performance, an impact that can make a crucial difference in a tight economy. However in the 2001 recession, according to the Nonprofit Finance Fund, more than 40% of nonprofits experienced operating deficits that lasted for several years, signaling in part the lack of clear strategic direction and execution.
Opportunity to provide $1.5 billion in pro bono consulting
Nonprofits cite limited resources as the primary cause of their in attention to strategy planning and execution. In times of constrained budgets, nonprofits often feel compelled to focus on fundraising simply to sustain operations.
The Taproot Foundation’s research identified an approach to significantly close the gap between need and execution in nonprofit strategy management: pro bono strategy support. Pro bono consulting projects that leverage the skills and expertise of professionals in the community have been proven an effective resource in other areas, including legal assistance, marketing support and HR programming.
For strategy management, the Taproot Foundation identified more than 200,000 mid-sized nonprofits that could benefit from pro bono services. This segment, composed of organizations with revenue of at least $250,000, includes the majority of the nation’s social services agencies. The need for pro bono support is greatest in this segment, where organizations typically cannot support staff resources or afford paid consultants for strategic management activities. Nonprofits welcome this support-87 percent of those surveyed indicated that there is at least one strategic management problem for which they would immediately seek pro bono support.
With up to 2 million business professionals that have the skills needed to support nonprofits with pro bono strategic management consulting, and assuming very conservative billing rates and average hours of service, the total opportunity is estimated at $1.5 billion in available services. This $1.5 billion, a funding stream greater than the annual combined giving of the 20 largest community foundations, could significantly strengthen the nonprofit sector.
“This is a challenging time for nonprofits facing pressures on funding but increased demand for services.” said James W. Shepard, Jr., co-author of the report and COO and VP of Programs of the Taproot Foundation. “In today’s environment strategy management and execution is not something that can be put off until tomorrow – it’s essential to the nonprofit’s ability to survive. Pro bono consulting is an efficient, effective way to give nonprofits the support they require as the safety net for our communities in need.”
Pro bono consulting has a positive impact on nonprofits
Strategy management tools give nonprofits the ability to:
- Understand the true costs of operations so they can see where they can cut costs, strategically trim programs or staff and operate more efficiently.
- Identify opportunities to merge or align with others so the total impact to the community is maximized and protected.
- Leverage data to inform decision-making regarding program focus, targeted execution and impact measurement.
- Track and analyze trends in the external environment –including client base, competitors or potential partners, political and fundraising challenges–to gauge appropriate, proactive responses.
For example, in a recent engagement, a pro bono team helped a San Francisco Bay Area organization that provides donated surgical services to the area’s uninsured to clarify and call out key strategic priorities. Management’s data-heavy approach was powerful in day-to-day operations but muddied long-term strategic thinking; by isolating the most important metrics in a quarterly scorecard, the management team could better understand what the data was saying about their mission, strategies, tactics, and performance indicators. As the ranks of the uninsured grow, improved communications between staff and board will help push the organization’s most important initiatives to the fore.
Ready to participate in this initiative to provide $1.5 million in pro bono services? Begin give or recieve pro bono support today.
About the research
The report, made possible by a grant from Deloitte, was conducted by the Taproot Foundation and the views expressed in it are those of the Taproot Foundation and not necessarily those of Deloitte. The Foundation’s research included a national survey with 225 responses, and interviews with more than 60 strategy management and consulting experts, including David La Piana, La Piana Associates; Bob Searle, the Bridgespan Group; and Greg Dees, Duke’s Fuqua School of Business.
The report includes an assessment of the need in the nonprofit sector, recommendations for developing pro bono best practices, warnings about the top reasons why pro bono engagements fail and a skills map showing where the skills of for-profit professionals can make the most impact on a prepared nonprofit.