In a recently published article, we considered the importance of businesses reimagining work in ways that allow them to make money and be profitable. This reimagining is essential post-COVID because of the disruption that has been caused to the relationship between work, the workplace, and the workforce.

In reimagining how work is performed, one question remains the same. How does the business make money?

Making money is no longer just an exercise in rampant capitalism. How companies make money in today’s economy and society involves closely aligning an organisation’s purpose with environmental, social and governance (ESG) considerations.

While not-for-profit organisations have a service priority rather than a profit or money-making goal, they are still faced with the necessity of reimagining work post-COVID.

In many ways, this question is more challenging for not-for-profit organisations. For-profit businesses ask, “how do we make money?” The question for not-for-profit organisations is more nuanced because there are two aspects not-for-profit organisations have to consider;

1. How do not-for-profit organisations provide a service that meets client’s needs 
2. How do NFP organisations remain financially viable?

HOW DO NOT-FOR-PROFIT ORGANISATIONS PROVIDE SERVICES THAT MEET CLIENT NEES AND ENABLE THE ORGANISATION TO REMAIN VIABLE? 

The term not-for-profit is a misnomer because organisations that have a not-for-profit status must still make a profit to enable them to continue to function and provide a service to their client base.

Hence, in re-imagining how to provide a profitable service to meet client needs while remaining financially viable, there are several unique factors not-for-profit organisations must consider.

THE ONGOING ISSUE OF FUNDING

As not-for-profit organisations do not charge for the services they provide, they rely on grants and donations.

THE CHALLENGE WITH GRANTS AND CONTRACTS

In 2022, revenue from the Australian Government to the not-for-profit sector was $88.8 billion which accounted for 50.4% of the total revenue to the sector. 

The number of organisations accessing this government funding rose from 37% in 2019 to 47% in 2020 to 49 165 charities.

While revenue from the Australian government to the charitable and not-for-profit sectors is essential to assist organisations in meeting complex needs within the community, it does present challenges to organisations receiving grants and contracts from the government.

1. INCREASING REGULATORY BURDEN

With increasing government spending in the sector, there is often an increasing regulatory burden on organisations to demonstrate that the money they are receiving is being used for the purposes it was provided for.

While organisations need to be accountable to both the government and the community to show that tax-payer funds are being used for the benefit of the community, accountability must be balanced with an increasing regulatory burden that often means employing additional administrative staff to meet these requirements.

2. TIME-LIMITED CONTRACT PERIODS

The other challenge with government grants and contracts is that they are generally time-limited to three or five years. While some grants and contracts may be rolled over, in many cases, organisations must re-apply for funding.

This introduces an element of uncertainty for organisations as continuity of funding is not guaranteed. Changing governments and changing priorities can result in organisations being defunded and contracts awarded to other organisations.

As governments seek to reboot economies impacted by COVID, rising interest rates and inflation, accessing government grants will become more difficult for many not-for-profit organisations.

THE CHALLENGE OF ACCESSING DONATIONS

Accessing philanthropic donations is often just as challenging as receiving government grants, particularly for small to medium-sized not-for-profit organisations. In small to medium-sized organisations, staff are involved in frontline service delivery. Consequently, they do not have the time to invest in the relationship-building often required to attract substantial donations from individuals or businesses.

How do not-for-profit organisations reimagine the services they provide when they must also reimagine how to access and secure funding to provide the services?

In considering this question, there is another area that not-for-profit organisations must consider.

SERVICES AND STAFFING

During COVID, many for-profit businesses were able to pivot and provide services through innovative use of technology. 

While the use of technology within the not-for-profit sector is greater now than in pre-COVID, most not-for-profit organisations still provide face-to-face services for clients. 

As with funding, there are several factors that are impacting the delivery of face-to-face services post-COVID.

STAFF AND EXHAUSTION

Many people are experiencing an ongoing exhaustion post-COVID that they often do not verbalise. The prolonged uncertainty and anxiety many experienced during COVID continues to be felt as exhaustion. In the haste to return to some level of normality, this exhaustion gets denied or, if it is felt, is not acknowledged because we are afraid of appearing weak.

Yet, exhaustion is a reality for many, particularly staff in the not-for-profit sector. The rapid changes they had to adjust to, the sense of uncertainty and the increasing complexity of client issues mean that staff are exhausted.

Reimagining how services can be provided is virtually impossible when staff are exhausted because it requires two things absent in states of exhaustion. These are:

1. Energy
2. Creativity

Reimagining requires energy—the energy of creativity and the power to implement what the creativity has created. When staff are exhausted, they do not have the energy to reimagine a different way of doing things.

TALENT DRAIN

The exhaustion many staff feel also contributes to the talent drain within the not-for-profit sector. Staff leave because they think they have nothing left to give. They also leave because, with rising interest rates and inflation, they can no longer afford to remain in the not-for-profit sector.

When people leave the sector, not only is talent lost, but knowledge and history are also lost. Given that the not-for-profit sector is heavily people based when knowledge is lost, people are unaware of the lessons and the history that previous staff members have learned.

At the beginning of this article, we asked the question.

How do not-for-profit organisations provide services that meet client needs and enable the organisation to remain viable?

As we have outlined, not-for-profit organisations face unique challenges in reimagining this future. However, despite the challenges, we need to start carving out time to reimagine what the future could be. As indicated above, we are often so focused on clients’ needs and daily demands that we don’t have the energy or time to reimagine what could be.

Yet, just as for-profit businesses have to carve out the space to reimagine the future of work, we have to carve out the space to do the same. Otherwise, we run the risk of being left behind and providing services that are no longer fit for our clients.