How fed changes targeting nonprofits expose organizational weaknesses

As nonprofits continue to navigate through tumultuous budget cuts and reputational assaults, these challenges have put a spotlight on weaknesses that continue to plague the sector at large. From reducing unnecessary real estate costs, to encouraging widespread automation and diversifying funding streams amidst an increasingly volatile donor base – this year’s Nonprofit OpCon centered on adapting to both longstanding and unexpected challenges facing the sector. 

Held last Thursday at Hebrew Union College, the event gathered experts and leaders from nonprofits in various fields, representing a slice of nearly 18% of New York’s private workforce. 

“A capacity for change translates into the ability to adapt, the ability to be agile,” said panelist Shereen Santalesa, director of human resources of the Primary Care Development Corporation. “With everything that's coming down the pike and or that has already landed, there might be conversations of do we hunker down or do we attack? Do we accept what's there or do we strategize and figure out how to leverage it?” 

As organizations continue to adjust to the latest slew of executive orders from the Trump administration, panelists urged attendees to streamline processes and not waste resources. From utilizing free services such as webinars to directing nonprofits to more experienced organizations for tailored advice, organizations should invest in robust legal services to keep a pulse on rapidly changing policies. 

On the side of costs, flexible workspaces remain essential to attract and retain talent, as most of the city’s workforce has continued to adopt hybrid schedules since the COVID-19 pandemic. 

“What you're finding, especially coming out of COVID, is that people have somewhat of an albatross around their neck, called office space,” said panelist David Carlos, vice chairman and head of nonprofit, education & government practice at Jones Lang Lasalle. “They have a fiv year, 10 year, 20 year lease that is anywhere from 20% to 60% being utilized because of hybrid work, because of work flexibility, which is key to the nonprofit arena, because they typically can't pay as much as the for-profit world.” 

Burdened with underutilized office spaces, costing anywhere from half a million to $2 million a year, experts suggest that nonprofits should share these spaces with peer or partner organizations. In consolidating aspects of the sector, some of the city’s unused office space could be leveraged to create joint programs and collaborations. 

“I think a lot of partnerships and a lot of collaboration with the people in the room is going to be critical for many of the nonprofits that are here, to ensure they're here for the next five and 10 years,” said Carlos.

While more private businesses now heavily rely on automation to dole out administrative tasks, nonprofits are still further behind. “It’s not as fertile of a ground,” said Francesca Frederick, CEO and cofounder of Grantyd. From limited financial ability to purchase new tech and hesitancy from generational gaps across the sector, adopting new technology and AI has been slow. 

“A disconnect that's happening is people think AI is going to remove the human side of fundraising, and that is a fair feeling,” said Frederick. “I think that feeling needs to be voiced more, so that we can dispel it. Because what if AI and Tech was not there to remove the human side of fundraising, but was there to make space for it?” 

On the topic of fundraising, all organizations, large or small, could benefit from diversifying their funding streams – from moving away from a limited set of grants and donors, to expanding their network of revenue streams. In adapting to new changes, organizations should also assess what cultural and organizational factors continue to impede on their progress. 

“The bottom line for all of this is, we know we're in an environment as a nonprofit where we have to work harder than other business sectors because of the realities of our industry,” said Santalesa. “But if we don't look internally and think about our structural and cultural readiness for change, we stand to expose ourselves even more, which is a greater risk.” 

From identifying cracks in internal processes, nonprofit leaders need to stay attuned to all aspects of an organization and anticipate potential vulnerabilities. As strong leadership is especially vital in steering through unpredictable policy changes, mentorship and leadership development, especially among younger generations can also boost an organization’s long-term survival. 

As nonprofits invariably face shrinking operating margins, with layoffs and disruptions imminently impacting various sectors, some leaders are using this opportunity to examine their organization’s weaknesses – which have often flown under their radar. 

“It's been a gift for an organization like ours, and here's why, because many of us in this space have gotten comfortable. So we needed this time to wake us up,” said Tiffany Hamilton, CEO of the YWCA of White Plains & Central Westchester. 

“What that crisis did, it gifted me the opportunity to see how my board is going to respond to supporting me, but also on the leadership team,” Hamilton told attendees. “So you had to make that hard decision, because it exposed who needed to stay on the bus and who needed an exit.”