Survey: Non-Profits Risk Losing Growth Due to Underinvestment in Key Areas

Common Impact, a nonprofit organization that is helping global corporations and local non-profits build stronger communities through employee engagement programs, announced today that a new survey shows most non-profits do not invest enough money in critical organizational areas such as IT, finance and marketing, leaving them vulnerable to stagnation and threatening their ability to serve their communities.

Operating budgets, volunteers fall short The survey of 132 social service organizations with revenues between $500,000 and $5 million shows that, unlike the corporate sector, which invests heavily in infrastructure and employee development, non-profits rarely have the resources to devote to organizational effectiveness. More than half of respondents spend less than two percent of their operating budgets on functional areas such as finance, technology, human resources, marketing and other functional areas. This is due in part to the fact that many donors prefer to see their dollars spent directly on program activities, rather than on the purchasing of systems, hiring of staff and upgrading of equipment that is key to helping any organization grow. Facing this challenge, many non-profits rely on volunteers, untrained employees or consultants to fill in the gaps, but only 33 percent of those surveyed say that nonprofit consultants deliver high quality work.

Employee engagement programs show promise As an alternative, some nonprofits have begun to see the benefit of engaging corporate employees in skills-based volunteer programs that focus on a specific operational need. However, according to a 2006 Deloitte IMPACT study, only 12 percent of nonprofits currently engage corporate employees to leverage their professional skills. "This survey shows what we have intuitively known for decades: non-profits, who are focused on delivering services and support to their communities, have to make tough budgetary choices that often compromise their long-term ability to grow," said Theresa M. Ellis, CEO and Co-founder of Common Impact. "The chronic underinvestment presents a huge opportunity for corporations and non-profits to unlock new resources through employee engagement programs that bring functional area expertise to non-profits, offer corporate employees new development opportunities and help weave a stronger community fabric for years to come." Common Impact estimates that $1.1 billion in net new nonprofit resources could be generated by the successful implementation of employee engagement programs. Key to the success of these programs is adequate investment on the part of the corporation and the employees: the survey found that projects must be carefully scoped and managed in order to ensure high-quality results. One respondent noted that a lack of understanding of the non-profit's operations and a "template" approach used by some consultants and volunteers was ineffective in supporting the organization's growth.