2014 Nonprofit Newsbits

by: Smith and Howard

August 12, 2014

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Timely tidbits of information regarding nonprofits, including online giving, “Pay for Performance” contracts, a new nonprofit model and the difficulties attached to government funding.

Online giving jumped 14% in 2013

A study from Nonprofit Technology Network and M+R Strategic Services found that donors made more online contributions to U.S. nonprofits in 2013 than ever before, with more than 5.5 million total gifts and nearly $325 million raised. Online revenues and online gifts increased by 14% last year. The average revenue per 1,000 fundraising messages delivered was $17, or 1.7 cents per message. Monthly giving accounted for 16% of all online revenue in 2013.

With so many donations flowing through the Internet, it’s critical that nonprofits implement appropriate controls to secure contributions and protect donor information.

States experiment with Pay for Performance

Illinois is following the lead of New York and a handful of other states in testing the waters of Pay for Performance (PFP) contracts with social services nonprofits. According to Crain’s Chicago Business, a coalition of Chicago-area foster care agencies and other providers of youth services will participate in the state’s first effort to pay for successful outcomes, rather than specific services. Private investors will fund the upfront costs of the program and receive a modest return on their investment from the savings the program is expected to achieve by, for example, reducing the number of youths who land in group homes or juvenile detention centers.

Silicon Valley launches new nonprofit model

The Silicon Valley “accelerator” Y Combinator is now leveraging its experience launching for-profit tech companies to help launch nonprofits involved in areas such as public health, microlending and education. Better known for launching for-profit companies like Dropbox and Airbnb, Y Combinator recently “graduated” its first class of nonprofits, including CodeNow, which teaches low-income kids how to write computer programming, and Noora Health, which offers health training to the family members of poor hospital patients in India. The Washington Post reports that the organizations will try to rely on their business models to survive, rather than on constant fundraising. The goal: Spend less on overhead and more on their core mission.

Studies highlight headaches of working with government

Studies released concurrently by the Urban Institute and the National Council of Nonprofits shed light on some of the problems experienced by nonprofits that receive government funding. The Council’s report provides real-world context to the problems identified through nationwide statistical data collected by the organizations in a joint survey.

For example, 72% of nonprofits surveyed said the government-reporting process was time-consuming and complex, and 45% had problems with late payments. Other problems include governments not paying the full costs of providing services and changing contract terms midstream.

For more information, call Marc Azar, Paul Atkinson, Sean Taylor, Sabre Linahan or another member of our nonprofit team at 404-874-6244.

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