🔒Nonprofits must prepare for the worst

There is no industry more rigid, more entrenched and more archaic than the nonprofit sector.

There, I said it.

Of course that’s a wild generalization, but I defy anyone to tell me that the majority in the nonprofit sector are nimble, innovative and forward-thinking.

Evidence the recent shock by nonprofits at the loss of top-level executives from United Technologies Corp., as well as their fear of the possible loss of the state of Connecticut’s annual $25 million grant program that supports social-service agencies as part of Gov. Ned Lamont’s “debt diet.”

The Hartford Business Journal June 24 article, “With UTC’s pending merger and HQs relocation, nonprofits eye charitable-giving impact,” heralded what possible impact the company’s merger and move might have on their philanthropic giving.

It quoted a number of well-known, knowledgeable people regarding the possible loss of corporate and individual gifts. The question the article posed was whether or not this would happen.

The bigger and more important questions are: What are nonprofits doing to insure themselves against such market and economic changes? What are they doing to mitigate the potential losses and gains not only from corporate geographic moves, but changes in mission interest and giving guidelines from corporate leadership? What are nonprofits doing to balance their philanthropic revenue streams and create fluidity in shifting their approach as the ground moves before them?

I have worked with many nonprofits that are unprepared — yes, even dismissive — of their need to create a stable, diversified and sustainable funding base.

I can’t always blame the executive directors, as too often this comes from the top — the governance directives of the board. Short-sighted and fearful reliance on one strong funding partner (such as the Hartford Foundation for Public Giving and state of Connecticut) has no good outcome.

The lack of investment in the continuous development of a pipeline of new donors creates a choked-off income stream. Overreliance on corporate giving (which nationally makes up only 5 percent of all charitable giving) sets a weak foundation for the organization, one that is at risk of being undermined by exactly the types of decision-making UTC has deployed.

According to the Giving USA report, nationally nonprofits received over $410 billion in 2017 through philanthropy. Over 70 percent of that came from individuals, not corporations. Another 16 percent came from foundations and 9 percent from bequests. This report tracks decades of giving trends.

And yet even with this data, clearly defining the widest pipeline of donors as individuals, nonprofits time after time first think of corporations in their appeals. It’s mind boggling and one of the biggest frustrations of our client work.

Yes, it’s a concern when corporate funders leave, change their giving directives, or choose to place their investments elsewhere. And yes, we should be concerned. But nonprofits should also be prepared by having already established a diverse funding strategy, having a strong funnel for acquiring new donors consistently, and having reasonable expectations of the shelf life of all corporate gifts.

As the American author Zig Ziglar so eloquently said: “Expect the best. Prepare for the worst. Capitalize on what comes.”

Sondra Lintelmann Dellaripa is president and principal consultant of Harvest Development Group in Middletown, a nonprofit consulting firm.