⚠️Challenges in the Social Impact Market
Exploring Global Opportunities for Lasting Social Impact with FreedomCode
Last updated
Exploring Global Opportunities for Lasting Social Impact with FreedomCode
Last updated
Among the many contributing factors are lack of young donors, fundraising, member recruitment and retention, decision making and (largely) technology. Nonprofit organizations possess the profound potential to enact transformative societal change. However, they frequently grapple with impediments that inhibit their full efficacy. The global landscape is dotted with myriad entities such as charitable organizations, foundations, private initiatives, and corporate philanthropic enterprises, each varying in mission and scope.
Among the entities that possess substantial resources, their functionality is often hampered by complex bureaucratic systems. Individuals within these organizations commonly operate within their designated departments, gaining insights about the needs of their specific projects but remaining isolated from the broader context. This compartmentalization impedes the organization's capacity to holistically address the multifaceted challenges of societal aid.
The call of the hour is to adopt a more integrative and multifaceted approach, enabling large-scale organizations to effectively leverage the resources offered by eager volunteers and other contributors. Such a strategy ensures that the invested efforts and resources are directed efficiently and optimally toward their intended purpose.
In this context, organizations serve as the vital nexus between those in need and those willing to provide assistance, facilitating meaningful interactions that yield tangible results.
With an estimated 10 million organizations worldwide and a continuously expanding volunteer workforce of 1 billion individuals, the potential for effecting positive change is boundless. Our collective challenge, then, is to harness this potential in a manner that maximizes its impact for the betterment of society.
Nonprofits are a vital component of the US economy and society, as shown by data from the Urban Institute and National Center for Charitable Statistics. The US has over 1.5 million nonprofit organizations. According to the Bureau of Labor Statistics, the nonprofit sector employs over 12 million people in the United States, accounting for 10% of the country's private workforce. In many cases, nonprofit jobs offer competitive salaries and benefits, along with the opportunity to make a positive impact on society.
Nonprofits have become a critical source of employment in many communities, resulting in the generation of 5.7% of the country's GDP. With a total of $2.62 trillion dollars in 2016, we saw nonprofit revenue more than double when compared to its past decade . The growth of nonprofit organizations and their revenue illustrates the essential role nonprofits play in the economy and society by creating jobs, stimulating economic growth, and the increased demand for social services which the government alone cannot provide.
According to the article “25 Incredible Nonprofit Statistics [2023]: How Many Nonprofits are in the US?” written by Sky Ariella provides a snapshot of the nonprofit sector depicting where their revenue is derived from, portrayed in the illustration below:
According to the National Center for Charitable Statistics, about 50% of nonprofits are successful, and 30% will cease to exist after ten years. Despite challenges, nonprofits' revenue has continued to grow significantly, with a 7.989% annual increase in revenue from 2000 to 2016.
Nonprofits have become increasingly reliant on government grants, which represent 80% of their total revenue, and their dependence on these grants may leave them vulnerable to changes in government policies. In the report, there is an emphasis on the challenges faced by the sector, such as limited charitable giving incentives and governments not paying the full costs of services provided by nonprofits. The report argues that nonprofits should engage in advocacy to promote their mission, as they cannot compete with corporations and governments in terms of lobbying spending.
Nonprofits' strength lies in their numbers, with organizations in every community that understand the issues and can offer solutions. FreedomCode aims to serve these groups, connecting them with those that can elevate their objectives and provide them with the tools to comply with regulations while keeping governments accountable for the promises they make.Nonprofits & Technology
FreedomCode aims to streamline the process of technological adoption by providing a comprehensive solution that bridges the gap between organizations and the challenges they face. Nonprofit organizations in particular tend to face unique obstacles when it comes to embracing new technologies.
One significant barrier to adoption is limited resources, including time and funding, which can make it difficult to invest in new technologies. Additionally, nonprofits may be more risk-averse than for-profit organizations due to the need to satisfy multiple stakeholders.
Another factor hindering adoption is a lack of technical expertise among staff members. Without individuals who possess the necessary aptitude and experience, nonprofits may struggle to effectively implement and utilize new technologies.
Moreover, some nonprofits may perceive certain technologies as misaligned with their mission and instead opt for traditional methods, such as mailing out forms to homes. However, this slower adoption of technology can significantly impede the organization's ability to gather data and utilize it in an efficient and meaningful way.
FreedomCode provides the necessary tools and support to help organizations overcome these challenges and successfully integrate technology into their operations, paving the way to attract additional funding from donors, reach a wider audience and have a greater impact.
TechSoup, a technology provider for non-profits, published a report indicating that many non-profit organizations are encountering difficulties in keeping pace with technological advancements, putting them at a disadvantage of being left behind in an ever-evolving digital environment. The report recommends that nonprofits need to allocate resources towards acquiring new technologies and upskilling to bolster their operations and serve their communities more effectively.
A Forbes article “How Technology Can Help Nonprofits Prove Their Value To Donors”, written by Sevetri Wilson states, “nonprofits often don’t take advantage of the digital tools at their disposal that would help them… Sophisticated data collection and analysis resources are more accessible and affordable than ever, but despite the size and influence of the nonprofit sector, it lags behind other sectors in adopting new technology.”
Nonprofit organizations are often bogged down by administrative and bureaucratic processes or altogether antiquated philosophies, placing unnecessary limitations on their efficiency and effectiveness.
Furthermore, nonprofits are often criticized for their high overhead costs and low program spending. A study, Nonprofit Overhead Costs: Breaking the Vicious Cycle of Misleading Reporting, Unrealistic Expectations, and Pressure to Conform found that, of the top 100 nonprofits globally, the average expenditure on overhead was 35 to 40%. The claim made in their executive summary is that ”It’s a badly kept secret that overhead costs in the nonprofit sector are most often much greater than what’s visible in financial reports and fundraising literature. But misguided expectations and actions—on the part of funders and nonprofits alike—fuel a vicious cycle that keeps the pretense going.”
One possible explanation for the high overhead costs among nonprofits is their tendency to operate like bureaucracies. The organizational structures and processes of many nonprofits can be complex and inefficient, leading to slower decision-making and wasteful resource allocation. To address this challenge, nonprofits could benefit from adopting more agile and flexible approaches that prioritize innovation and impact over bureaucratic procedures.
Jonathan Meer of Texas A&M University, USA poses the question in his aptly titled article, “Are overhead costs a good guide for charitable giving?” stating that ”Donors rely on overhead costs to evaluate charities, but that reliance creates disincentives for charities to hire skilled workers.” This supports the idea that the adoption of blockchain will benefit nonprofits, or at the very least help identify where they can improve.
Many donors also rely heavily on overhead cost metrics when deciding where to donate. However, there is evidence that this focus on overhead costs can lead charities to underinvest in important functions, particularly skilled workers, and therefore, diminish their effectiveness.
Essentially we are looking to improve upon a broken system.
The report highlights the pros and cons of using overhead cost ratios as a metric to rank charities. On the one hand, overhead cost ratios are easy to compare across charities, and many third-party rating agencies rely on them when evaluating them. Additionally, donors often exhibit a strong distaste for high administrative costs, making overhead cost ratios an important factor in their giving decisions.
According to the Bureau of Labor Statistics, the nonprofit sector is a significant employer in the United States, with the majority of employees working in education, healthcare, and social assistance. Nonprofits employ a considerable number of volunteers, who also contribute significantly to the sector's impact. As stated on the UN Volunteers website in an article titled “Volunteers count. Their work deserves to be counted. | UNV”
“Global estimates place the number of volunteers worldwide at 970 million. Considering the hours they contribute, we are talking about the equivalent of over 125 million full-time workers – according to a study published by John Hopkins University. ”
This research indicates that around 1 in 4 volunteers offer their time and expertise through non-profit organizations, while others engage in informal volunteering, helping their neighbors and communities. Women predominantly engage in volunteer work, with 57% contributing to formal volunteering and 59% to informal volunteering, typically as an adjunct to unpaid care work.
Our global workforce is enormous and Freedomcode looks to the future of improving reporting and lowering the turnover of professionals in the nonprofit sector with the solution we offer.
Nongovernmental organizations (NGOs) and nonprofit organizations (NPOs) are often seen as similar types of entities, as both aim to serve the public and promote positive social change. However, there are some key differences between the two.
NGOs are typically smaller and focused on a specific issue or region, often related to human rights. They may be involved in advocacy work or political activism and operate internationally.
NPOs, on the other hand, tend to have a broader focus and tend to be more formalized, with a board of directors and shareholders. They typically provide services and are not operated for profit, relying on government grants or donations from individuals to fund their operations. Any profits are reinvested into the organization to meet expenses, achieve social goals, and pay staff.
It's worth noting that the terms NGO and NPO are often used interchangeably to refer to non-profit organizations that are focused on achieving social or charitable objectives. However, some people may use the term NGO specifically to refer to organizations that operate independently from government involvement, while NPO may be used more broadly to refer to any type of non-profit organization.
Following Data Source: Research Gate USAID
There are an astonishing 10 million nonprofits worldwide, with approximately 1.5 million nonprofits based in the United States! That means the US makes up about 15% of the world's nonprofits, but accounts for about 25% of total donations. In fact, US nonprofits have doubled over the past decade to a Total Annual Revenue of $2.62 Trillion, comprising almost 6% of the US economy by GDP.
It's interesting to note that different age groups tend to give to charity at different rates. According to researcher Sky Ariella of Zippia, individuals aged 56 to 75 are the most giving generation, with 60% of baby boomers donating to charity. Meanwhile, 57% of individuals aged 18 to 24 also donate to charity. Overall, about 56% of people in the US donated to charity in 2021, marking the sixth consecutive year of growth for US nonprofit donations. Some of that growth is likely due to the recent pandemic. (Accessed Dec 2022)
Additionally, a significant percentage of people worldwide are enrolled in monthly giving programs. In fact, 45% of donations are subscription-based, which provides a sense of stability for these organizations. It's also worth noting that governments are a major contributor to nonprofits. In the US, about 80% of nonprofit revenue comes from government grants or contracts and an additional 4% comes from foundations.
Of the 10 million NPOs in the world, around 40,000 are NGOs, which are eligible to be classified as such when their operations cross country borders.
National Satellite Accounts: Contribution of Nonprofit to GDP
It is challenging to compare the nonprofit sectors of different regions directly, as the size and scope of the sector can vary significantly between countries.
In the United States, the nonprofit sector is quite large and well-developed, with many organizations focused on a wide range of issues including education, health, the arts, and social services. The sector is supported by a combination of charitable donations, grants, and earned income.
In Europe, the nonprofit sector is also significant and includes a diverse range of organizations working on issues such as environment, human rights, and social justice. The sector is supported by a combination of government funding, grants, and donations from individuals and foundations.
In Asia, the people of the nonprofit sector are becoming more and more limited by an increase of ambiguous regulations. Recent regulations imposed around receiving foreign funding, restricting 20%, and cultural differences.
Assuming that the figures accounting for overhead are approximately 40% as reported for the top 100 nonprofits, when applied globally to the $2.3 Trillion dollar sector, the overhead cost to the nonprofit industry per annum is a staggering 800 Billion Dollars. This is a number that could only be calculated top down as precise figures are hard to find if not purposefully hidden, but they are a conservative estimate given that smaller nonprofits are more prone to inefficiency by the very nature of being a small business, for-profit or not.
NGOs And Charitable Organizations Global Market Report 2022
FreedomCode strives to simplify the process of adopting technology by offering a comprehensive solution that addresses the unique obstacles faced by nonprofit organizations. Embracing new technologies can be particularly challenging for nonprofits due to various factors.
Withstanding the effects of heavy economic friction has been a major challenge for many organizations seeking long-term success. In an ever-evolving economic landscape, factors such as market fluctuations, rising costs, funding limitations, and economic downturns can create significant hurdles that organizations must overcome. FreedomCode addresses these challenges by providing a comprehensive platform for enhanced financial planning, resource management, and diversified revenue streams. Through our app, organizations gain visibility into their financial health, optimize costs, and track expenses. With tools for fundraising initiatives, organizations can engage with donors and supporters, showcasing their value and attracting sustained support. By fostering transparent communication, building strong relationships, and forging strategic alliances, our platform empowers organizations to maximize the impact of their available resources, and create a resilient network capable of weathering economic challenges.
Limited resources, including time and funding, pose significant barriers to technology adoption, hindering an organization's ability to invest effectively. Additionally, nonprofits often exhibit greater risk aversion than for-profit organizations, given the need to satisfy multiple stakeholders and responsibly allocate resources. Recognizing these challenges and imposed constraints, we help nonprofits navigate this landscape by providing a reliable, localized recommendation engine that connects and broadcasts initiatives globally on our platform.
In the nonprofit sector, the lack of technical expertise among staff members presents a proficiency gap that hinders progress and prevents organizations from fully harnessing the potential of innovative tools. To address this challenge head-on, our platform provides nonprofits and users with the power of automation, woven into the background of an intuitive, simple user interface. FreedomCode holds the answer to nearly eliminating the time and energy required to obtain the technical skills and empowers our users to navigate the technological landscape with ease. Through our expert guidance and unwavering support, we enable nonprofits to overcome these barriers and put the solution and transformative power of advanced solutions in their hands.
Nonprofits relying on traditional methods like mailing out forms may limit their data collection and utilization, impeding informed decision-making and meaningful impact. At FreedomCode, we challenge the perception that certain technologies are misaligned with nonprofits' missions. We encourage nonprofits to harness the full power of data and analytics, propelling them toward data-driven decision-making and driving impactful outcomes. We champion the integration of innovative technologies, rejecting the notion that tradition should hinder progress. By breaking free from conventional constraints, nonprofits can efficiently gather and utilize data, unlocking their full potential for informed decision-making and greater outcomes. Join us as we lead the charge toward a future where technology and social impact seamlessly converge, driving lasting change for communities and the world.
The ongoing COVID-19 pandemic has significantly disrupted volunteering efforts worldwide, leading to the suspension or limitation of traditional volunteer opportunities in schools, hospitals, and community centers due to necessary social distancing measures. This has resulted in a decline in volunteering rates as individuals are unable to engage in their usual activities.
However, amidst these challenges, the pandemic has also presented an opportunity for nonprofits to adapt and leverage technology to meet the evolving needs of the community. Certain areas, such as food banks and meal delivery services, have witnessed an increased demand for volunteers. Many organizations have responded by introducing virtual or remote volunteering options, thereby enhancing accessibility for individuals who are unable to participate physically.
While the impact of the pandemic on volunteering rates varies across different locations and types of volunteer work, it is evident that the demand for volunteers in critical areas, supporting vulnerable populations and essential services, has grown. As the pandemic continues to unfold, the volunteering landscape will continue to adapt and transform.
Based on a survey conducted by The Answer Company, it is observed that nonprofits utilizing technology during the pandemic have achieved greater impact. This underscores the importance of nonprofits embracing digital solutions to enhance their operations and effectively address the evolving challenges presented by the crisis.
Our platform, FreedomCode, recognizes this new digital reality and provides nonprofits with the necessary tools and support to leverage technology for maximum impact. By facilitating virtual engagement, streamlining operations, and empowering nonprofits to connect with volunteers and donors in innovative ways, FreedomCode enables organizations to navigate the pandemic landscape successfully and drive meaningful change in their communities.
With our comprehensive digital solutions, nonprofits can effectively adapt to the changing volunteering landscape, attract additional support from donors, and make a lasting impact, even in the face of unprecedented challenges.
Nonprofits Leveraging Technology Achieve Greater Impact During Pandemic (The Answer Company Survey) (900 Nonprofits)
The Global Nonprofit Market to reach $377.34 Billion by 2029, nearly $4 Trillion.
According to Nonprofit Organizations Market: Global Industry Analysis and Forecast 2022-2029, the global nonprofit organizations market is projected to grow at a CAGR of 4.53% through 2021 to 2029, reaching US $377.34 Billion by 2029. The market has grown at a CAGR of 3.6% since 2015, with strong economic expansion in developing countries and an increase in customer disposable income driving growth.
While government restrictions on funding sources and an oversupply of social agencies have made it tough for nonprofits to develop efficient marketing strategies, increased corporate social responsibility, growing environmental awareness, and greater use of mobile technology for donations are expected to drive future growth. However, factors such as geopolitical tensions, strict regulations, and the ongoing pandemic could also slow down market growth.
To take advantage of opportunities, nonprofits are recommended to focus on partnerships with corporations, leverage predictive and descriptive analytics, expand operations in emerging markets, increase visibility through high-performance websites, and use mobile technology to communicate with supporters and generate donations. The nonprofit organizations market is expected to continue growing, with an emphasis on corporate social responsibility and new technological developments.
Nonprofit organizations have the potential to bring about significant positive changes in society. However, they often face obstacles that hinder their effectiveness. There are various entities worldwide, including charitable organizations, foundations, private initiatives, and corporate philanthropic enterprises, each with its own mission and scope. Unfortunately, not all of them have the necessary financial and human resources to provide optimal assistance to those in need.
Even some organizations that do have substantial resources may face challenges due to complex bureaucratic systems. Employees within these organizations typically work within their designated departments, gaining knowledge about the needs of their specific projects but remaining disconnected from the larger context. This compartmentalization can limit the organization's ability to address the complex challenges of societal aid holistically.
Therefore, it is crucial to adopt a more integrated and multifaceted approach to aid people effectively.
