Does not-for-profit mean not-competitive?

Working, living and giving within the not-for-profit context is changing at a rapid pace.  Communities across the globe are experiencing many social problems ranging from poverty and homelessness, to drug and alcohol abuse, to drinking and driving, to mental illness, and to environmental devastation. However, not-for-profit organizations (NPO) are facing increased demands from those in need while simultaneously dealing with reduced government funding.  Essentially, the not-for-profit sector is being tasked with meeting greater demands while accessing fewer resources.  The result is a global, national, provincial and local environment characterized by increasing competition for funds, talent and volunteers.

In 2008, there were approximately 2 million NPOs operating across the globe (Daw, Cone, Erhard, Darigan-Merenda, 2011).  According to the World Giving Index, the United States outranks all other nations as the most giving nation in the world and almost 1.1 million NPOs and foundations choose to locate in the United States.  In addition, other countries such as England, Australia, New Zealand, the Netherlands and Ireland boast robust not-for-profit sectors increasing the global competition for funds and talent (Charities Aid Foundation).

In Canada, 165,000 NPOs contribute $80.3 billion to Canada’s economy, approximately 7.1 % of gross domestic product (Quarter, Mook,  & Armstrong,  2009).  It employs over 2 million people and coordinates approximately two billion volunteer hours, equal to approximately one million full-time positions. (Quarter, et. al,  2009)  At first glance, it seems that NPOs has access to vast financial and human resources.  However, in 2006 Imagine Canada conducted the National Survey of Nonprofit and Voluntary Organizations in Canada casting some light on the reality for NPO funding.  1% of NPOs in Canada receive 59% of the revenue generated by the sector. (Imagine Canada, 2006) Put another way, the largest 1650 NPOs in Canada are competing for 60 cents of every funding dollar and the remaining 163,350 smaller compete for the 40 cents of every funding dollar creating an incredibly competitive environment.  The result is an environment where NPOs, regardless of size, are in fierce competition for funds, volunteers, and talent.

Provincially, according to the National Survey of Nonprofit and Voluntary Organizations for Alberta the competitive trends continue with 1% of NPOs in Alberta receiving 47% of the revenue generated by the sector.  Even more dramatic is the competition for talent and volunteers.  Although, Albertans are generous with their time, volunteering approximately 449 million hours (234,000 full time positions) to an average of 3 organizations (Holmgren, 2009), the volunteer market is limited by Alberta’s local population of 3.5 million (Government of Alberta, 2012).   Alberta has approximately 19,000 non-profit organizations and with rough calculations this amounts to 184 Albertans per NPO.  184, although small, matches the general pattern small and medium sized NPOs experience as they mature.  Although there are exceptions, NPOs are founded by an individual or core group of energized and passionate people that are intimately connected to the social mission.  For example, a person that has experienced mental illness may choose to found an NPO to provide support for homeless people battling mental illness.  From the core group of a few, the mission and passion ripples out to their immediate network where a larger group of 100-150(184) people add their energy to the social mission, where it plateaus.    However, if the NPO would like to wield more influence and gather more support and expand its impact, it will need to enlarge that group beyond 184.  So the question becomes; how does an NPO differentiate itself from the clutter of NPOs in the market for funding, volunteers and talent? How does an NPO become chosen by the constituent amidst a growing list of social missions and NPOs?

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About Darcy McDonald

Searching for ways that the not-for-profit sector can leverage the lessons learned by the for-profit sector.

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