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4 Ways the Nonprofit Sector Will Evolve in 2021

By December 28, 2020

Nonprofits in the United States alone account for 5-10 percent of the country’s economy and about 10 percent of U.S. employment. While the demand for nonprofit services has increased worldwide, the multiple crises and flux in our global economy this year have posed new challenges for the sector. Despite the obstacles and uncertainty of 2020, it’s inspiring to see how the nonprofit community seized the urgency of the moment and accelerated the world toward the next normal. 

As nonprofits inspired transformation within the communities they serve, many realized that in order to maintain and grow their impact in this new world, they needed to transform themselves – particularly when it comes to technology. 

In our most recent Nonprofit Trends Report, we found that there was a connection between organizations with high digital maturity and those with the most innovative and confident responses to change. In an increasingly digital-first world, nonprofits need to leverage data to inform decision-making, reach new audiences, personalize communications, and forecast fundraising income.

As we move into 2021, we anticipate four key trends that will require the support of a robust digital platform and strategy:

Two women looking at a computer in an office setting

Nonprofits in the United States alone account for 5-10 percent of the country’s economy and about 10 percent of U.S. employment.

1. Recovery From Crises Will Demand More Services

While we hope to see progress toward the next, better, normal in 2021, the unfortunate reality is that demand for support is likely to increase for a while. In 2020, food insecurity doubled, 70 million people were pushed back into poverty and, in a study by the CDC, 40% of respondents reported adverse mental health conditions related to the stress of the pandemic. Services that provide support and connection are vital to the recovery of our communities. As social distancing continues, nonprofits will need to continue to find ways to digitize services, increase staff capacity to expand support and to use data to understand and respond to the changing needs of the communities they serve.

The Center was able to respond to a 40% increase in demand for services when COVID-19 hit New York City in March. The organization, which provides health, wellness and community services to New York’s LGBT community launched a chat support option on their site, providing a new channel of communication for clients. 

We’ve seen these communication channels and online platforms offer a critical sense of connection.

2. Digital Experiences Will Remain a Strategic Initiative 

While we all hope to be in the same room at some point next year, the transition to in-person fundraisers and events will be gradual. Digital events have proven to be incredibly effective in reducing geographical barriers, and encouraging engagement from donors who might otherwise not attend. Further, the data generated from online interaction provides valuable insight into what is resonating, who is donating and how to plan for the future. 

Robin Hood discovered this when they reimagined their annual gala as a broadcasted benefit concert with Tina Fey. Not only did they raise $115M and gain new donors, they generated more data which is being used to tailor their messaging and create a better donor experience. 

Hybrid experiences might prove to be a viable option for those organizations that are eager to return to physical events. This could include live-streaming, curating content to leverage at smaller, regional events, or even live chat apps where attendees can participate from in the room or from home. 

3. Centralized Data-Management Will Create Efficiency and Transparency

Data creates powerful insights for planning, reporting, marketing and more. Unfortunately, many nonprofits are not set up to manage the overwhelming volume of data that was generated this year alone. In fact, 74% of nonprofits say that measuring and reporting on data is a challenge. To survive the challenges of today, and thrive in the future, every nonprofit needs a data strategy.

Open Door Legal created a knowledge-base to help them manage legal cases for marginalized communities by aggregating case files, documents, notes and deadlines. They also built a way to track outcomes and client feedback so they can analyze their impact and report back to donors.  With the additional transparency and efficiency, their team can more efficiently and effectively deliver legal aid to those who need it. 

The need for data management will only continue to grow as employees remain remote and donors seek to understand how their contribution is being used. Creating a centralized source of data enables cross-department collaboration, advanced audience segmentation for marketing, more efficient reporting and effective forecasting. Rather than focusing on time-intensive administrative tasks, an investment in data-management will allow for nonprofit staff to focus on driving their mission forward and building stronger relationships with the community.  

4. Grantmaking Will Become More Collaborative

Even prior to the pandemic, there was a shift occurring in the grants process. Grants are critical resources for nonprofits to fund and scale services to their communities, but the process was often laborious for both the grantee and grantor. In the last year, we’ve seen traditional grantmaking practices fall under increased pressure as the demand for funds escalated, and grantors scrambled to get grants out faster. 

What’s most impressive about this trend is that nonprofits and grantmakers didn’t just identify the challenge, but came up with a solution. Outbound Funds Module is an open source product that was built by the community to help organizations disburse funds quickly and easily. built Grants Management as a complement to Outbound Funds to drive further collaboration for grantors and grantees to help improve every aspect of the grants experience, from application, to distribution, to reporting.

The Malala Foundation uses Grants Management to record donor interactions and move supporters seamlessly through the funnel from initial contact to donation. This enables them to generate insights on each donor’s journey, personalize communications, and report back on the impact of their dollars.

Moving forward, we can anticipate a less transactional, more collaborative relationship between grantors and grantees, with more efficient processes, more transparency and a greater emphasis on feedback loops.

Accelerating to the Next Normal, Together

While we’re all looking forward to getting “back to normal,” the reality is that “normal” has irrevocably changed. The world will look completely different than it did before. In order to adapt and thrive, the nonprofit community needs to be prepared for what that will look like. We can’t replace the personal touch of a phone call with a donor, or the fun of an in-person fundraiser, but digital platforms will enable organizations to augment and scale their strategies to stay relevant, reach new supporters and support the changing needs of their communities.

Meeting these trends, and more, requires more than technology. It requires the support of a community. It’s inspiring to see the agility, creativity and innovation that was made possible by nonprofits coming together to share best practices and solve problems together. That’s why we hope you’ll join us for our Nonprofit Summit on April 21, 2021. Registration will go live in January.

We still have a lot of work to do, but the future is bright. Together, we have an opportunity to evolve, and come out even stronger. Let’s get to work!

Get more important nonprofit insights by downloading our latest Nonprofit Trends Report.

About the Author

David Ragones, SVP & GM, Nonprofit Cloud,

David Ragones
SVP & GM, Nonprofit Cloud,

Dave brings a deep passion and commitment to the nonprofit sector. Six years ago, he co-founded his own non-profit, Piedmont Makers, dedicated to support and inspire K-12 S.T.E.A.M. education in the East Bay, California and beyond. He also served on the board of the Piedmont Education Foundation, which raises over $3 million annually for the Piedmont Unified School District.