Article at a glance:
With some 1.3 million organizations accounting for $350 billion in annual spending, the nonprofit sector is the third-largest contributor to the US gross domestic product. Its social, cultural, educational, and spiritual contributions are even greater. Yet at a time of government retrenchment, when even more is expected of the nonprofit sector, nonprofits face daunting challenges. Upward of 40 percent of these organizations are tiny, with budgets of less than $100,000. Many lack adequate organizational support, compete for the same funds, duplicate the efforts of others, and can't expand or replicate successful programs.
The take-away
Nonprofit managers and funders alike must take a new, long-term perspective. By developing transparent performance metrics focusing on outcomes and outputs, nonprofits can demonstrate their effectiveness. They will then attract more sustained funding, which in turn will allow organizations to invest in information technology systems and in management and staff-development capacity—and thereby achieve long-term results.