As demand increases, nonprofits look for additional sources of funding

Effects of the moderate domestic economic growth haven't exactly trickled down to nonprofit organizations. As a result, charities are searching for alternative methods of processing donations in wake of little financial relief.

According to the Nonprofit Finance Fund's "2014 State of the Nonprofit Sector Survey," 80 percent of the more than 5,000 nonprofits surveyed reported an increase in demand for their services in 2013 - the sixth consecutive year such sentiment was recorded. Eighty-six of respondents looking toward the remainder of 2014 also felt that their services were likely to increase in the near future. Conversely, only 11 percent of respondents felt that 2014 would be easier for their organizations and the communities they represent. 

A likely change in tactics
A rise in demand for nonprofit's services is not as glum as it sounds, though. Most organizations would describe themselves as up for the challenge, but a new obstacle has to be overcome: increased funding. 

The advent of Web transactions has enabled charities to accept online donations as a primary mode of fundraising. However, just as the online donation form was a novel idea years ago, the industry's next big thing has yet to be discovered. Large corporate donations are a home run, but swinging for the fences every time is a good way to ensure a lot of strikeouts and a lower batting percentage, too. On the other hand, smaller, repeated donations are good when funding has already been established, but the nonprofit equivalent to a single doesn't do a whole lot of good when there aren't runners in scoring position.

Funding growth can be difficult, especially for newer organizations. According to the Stanford Social Innovation Review, the average founding year for the 10 largest U.S. nonprofits is 1903. With that amount of time, any organization can optimize the most successful forms of fundraising and build a successful business model off of it. But even the largest charities predict that they will have to amend old practices to adapt and keep up with increasing industry competition.

The Nonprofit Finance Fund's study revealed that 31 percent of respondents plan on changing the ways in which they both raise and spend money in 2014. An additional 26 percent will pursue an earned income venture, while 20 percent expect to seek funding other than grants and contracts. A continually growing nonprofit marketplace driven by fluid donor needs and expectations will likely be a driver in a shift in the gift-giving paradigm in the near future.

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