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6 Nonprofit Trends Impacting Organizations in 2023

April 18, 2023
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Nonprofits face many of the same challenges as traditional for-profit businesses, yet they also have unique hurdles. This year, some of the top nonprofit trends reflect those of the business community as a whole, while others are isolated to the nonprofit sector.

In this piece, we’ll share the top six trends our nonprofit experts have witnessed in the field. We’ll also address how automating financial operations can help nonprofits stay on top of related challenges.

1. Donors Want Digital Donations

McKinsey reports that 82% of Americans conducted a digital payment in 2022 – up from 78% in 2021. This includes in-store checkout using a mobile phone (via platforms like Apple Pay) and person-to-person payments (via platforms like Venmo).

Donors expect the same convenience when donating to your organization. Making it simple for them to donate using their mobile phone through efforts like social media fundraisers and one-click giving via QR codes can potentially raise your annual budget.

Additionally, accounts payable (AP) automation software can help nonprofit financial departments map each donation’s journey through the business, easily generating reports for donors and board members.

2. Nonprofits Face Workforce Shortages

With unemployment at a historic low of 3.6%, organizations of all types are struggling to hire skilled employees. Nonprofits are hit especially hard, with 79% telling the National Council of Nonprofits that salary competition impacts their ability to hire. Due to financial constraints, many nonprofits can’t offer competitive compensation.

In 2022, 42.3% of nonprofits had job openings for more than 20% of their positions, according to the National Council of Nonprofits. When faced with stretched teams, many of these organizations turn to automation to reduce manual tasks and allow existing employees to focus on strategic, mission-driven projects.

3. Cybersecurity Remains a Concern

Data privacy issues are frequently making headlines, so donors and nonprofits may have concerns about the security of their payment information. Nonprofits should adopt technology to ensure donor data is protected.

Automated financial processes eliminate paper, which reduces the security and fraud risks associated with traditional payment methods like paper checks. E-payments are safer for both donors and nonprofits as they pay vendors.

4. Communities Need Nonprofits More Than Ever

In a recent survey by the National Council of Nonprofits, 26% of responding organizations said they have a waiting list for services more than a month long. Another 21% of respondents said they don’t have a waiting list because they are unable to accept any new clients or referrals.

In times of inflation, nonprofits see a surge in demand for services according to the National Philanthropic Trust. This year, nonprofits are challenged to do more with less.

Automation technologies help lighten the load for your workforce so they can focus on responding to the increased needs of those you serve.

5. Event Costs Rise Dramatically

Many event service providers went out of business during the pandemic, creating an imbalance of supply and demand. According to the Global Business Travel Association, in-person event costs rose 25% between 2019 and 2022.

As organizations resume normal operations following COVID-19, including travel and large events, nonprofits must decide whether to re-invest in these types of outreach or double down on video conferencing and other media that gained traction over the course of the pandemic.

Either way, budgets for outreach are increasing. Financial automation tools help organizations cut costs so they can allocate more funds to connecting with donors.

6. Organizations Need More Time to Focus on the Mission

With so many challenges facing nonprofits today, it can be difficult to keep intent on your mission. A number of issues fight for your employees’ attention as resources continue to stretch.

Automating time-consuming back-office work can free employees to spend more time on mission-critical work like serving your community and attracting and retaining donors.

AP Automation Benefits for Nonprofits

Nonprofits will experience significant improvements by adopting AP automation software, especially in their financial departments. Finding one that integrates with your existing accounting software is crucial to maximizing benefits, including:

  • Time savings: AP automation handles tedious manual processes so your team can do more strategic work. This includes automatic syncing for batch processing and automated payment processing.
  • Cost savings: AP automation software helps nonprofits save more than $7 per invoice on vendor invoice processing. It also reduces labor costs in AP departments.
  • Better security: Automated electronic payments are more secure than traditional paper-based payments. Plus, user permissions allow for deeper controls and custom workflows ensure data is accurate.
  • Increased visibility: Nonprofits get insight and transparency into data flows between systems and real-time insights 24/7 with automation.

AvidXchange is now integrated with the MIP Fund Accounting platform to help nonprofits bring automation into their financial operations. Read more about how they work together to streamline your organization’s financial processes.

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