Challenges and Sustainability: Reflecting on Trends in the Nonprofit Sector in 2024

As the year draws to a close, MCR program manager Ashley Johnson reflects on the dynamics impacting nonprofit success in 2024, and what two years in her role supporting nonprofit leaders has taught her.

Over the past two years of my work with MCR, I have seen many of the nonprofits that we work with experience similar challenges.

Both long-standing organizations and new ones that emerged during the pandemic are struggling for sustainability and resources, especially as ARPA and COVID relief funding dries up and the competition for grant dollars increases.

My role with MCR means I work closely with our nonprofit clients, and our positioning as an intermediary means that we can often identify, name, and respond to sector-wide trends as they arise.

In 2024, several themes impacting nonprofit success stood out:

1. Access to operational grant funding remains a challenge, leaving many nonprofits stuck in a scarcity mindset, straining their capacity to keep programming running.

No source of funding is more competitive than multi-year operational grants, and challenges lie in every part of the grant-seeking process. Organizations are struggling to find relevant grant opportunities, and even to identify contact information for foundation staff to initiate conversations. 

Complex application processes cause organizations to exhaust time and energy without any guarantees of receiving funds. This year, a founder of a volunteer-run nonprofit shared with me that they had applied to seven grants in 2024 and did not receive any of them.

Even after receiving a grant, organizations struggle to leverage relationships with funders to grow beyond securing a one-time grant to the next step of ensuring more sustainable, multi-year funding.

What MCR is doing about it: MCR continues to work to demystify fund development for our nonprofit clients, and to make grantmakers aware of widespread challenges.

Through our cohort development work and partnerships with foundations, we advocate for more accessible and transparent models of participatory grantmaking that are responsive to community input. We provide direct, thorough feedback to our nonprofit clients on grant proposals, and connect both selected and unfunded applicants to additional opportunities for funding and organizational development.

Recently, MCR launched the Funding Navigator through our Dovetail partnership. The Funding Navigator offers modules on different elements of fund development and strategy, and can help nonprofits determine which strategies are best to meet their funding needs.

Additionally, MCR leverages our position as an intermediary and sector leader to connect nonprofits with foundation staff, advocating for nonprofits' financial success and sustainability and speaking to their dependability as an organization. We share our knowledge of how to navigate a challenging system from our own experience as a nonprofit to illuminate a better path forward for the sector at large.

Pictured: Dovetail program director Heather Nugen showcases resources available through our Dovetail partnership to help nonprofits overcome systemic barriers to success.

2. Resources to enhance operational infrastructure are needed as nonprofit organizations grow.

Beyond the need for more funding, we are hearing a shared sentiment from many nonprofits that resources for expert support with strategic planning and staffing planning are crucial right now.

When starting out, many nonprofits are focused solely on their mission work and program delivery, often at the expense of the personal time, money, and well-being of the organizations' founders. As nonprofits gain their 501(c)(3) status and leaders transition from the role of executing programming to overseeing it, they are realizing the need for increased operational infrastructure to adapt and grow their organizations for future success and sustainability.

What MCR is doing about it: Our Resource Navigation team works to equip organizations with the tools they need to review and revamp their infrastructure toward growth.

Initially, we help organizations determine when an investment in their operations is needed, and we leverage our institutional knowledge around which resources are available to nonprofits.

Pictured: MCR Program Manager Adriana Walker meets on-site with Woodbridge Neighborhood Development Corporation staff.

We break down complex resources and processes to make them more digestible for clients.

If an organization has the resources to hire a consultant to help them complete a strategic plan or other operational planning, we can connect the nonprofit with vetted, trusted service providers through our Dovetail Directory.

Throughout the planning process, we support nonprofits by providing them with feedback and additional resources as necessary.

3. Transitionary boards pose a challenge for growing nonprofits.

Many organizations start with boards that are comprised of founders' friends, family, and neighbors. While boards of this composition serve their own purpose, many organizations have expressed a desire to strengthen their board to meet growing and shifting needs. For example, several nonprofits have shared that they recently have recruited or are looking to recruit an attorney to serve on their board as that skillset didn't yet exist in the founder's personal network.

Additionally, many nonprofit leaders have expressed a desire to set new standards for incoming board members by more clearly defining roles and engagement expectations.

For many nonprofit leaders, these transitions feel daunting because they are navigating deeply personal relationships.

What MCR is doing about it: An unexpected but crucial role of a Resource Navigator can be Validator and Cheerleader. Sometimes, our nonprofit clients just need to hear that it’s okay to have complicated feelings about their board, which may be comprised of loyal, passionate people that they are deeply connected to. And it is okay for their organization to need something different now or in the future to best carry out their mission work and ensure long-term success.

Pictured: MCR Co-CEO Shamyle Dobbs discusses fund development strategies with clients at a 2024 workshop, sharing her own experiences and challenges securing funding for MCR.

From there, we can work with nonprofit leaders to equip them to have tough conversations, set clear expectations, and be vulnerable with new board prospects.

Similarly to our support with growing operational infrastructure, MCR provides resources, examples, and expert guidance on how to create clear roles, expectations, and engagement with their board. We also help amplify organizations’ board recruitment efforts by leveraging MCR's network.

Looking Ahead: What shifts do we hope to see in 2025?

In 2025, I hope to see more support for organizations to create sustainable infrastructure that allows programming to grow and strengthen communities.

We need more intentional and creative approaches to grantmaking to resolve the problem of increasingly competitive grant dollars, and to increase the pool of operating funds available to nonprofits.

Funders can leverage their relationships and expertise to help nonprofits secure additional funds. Other strategies could include additional operating funds built into all grants or the creation of designated, multi-year grant funding opportunities separate from their programming grants.

There are also opportunities to provide education around federal funding and endowments. Something as simple as granting funds for a nonprofit to complete a fund development plan with an expert can change the trajectory of an organization toward long-term success and sustainability.

I hope that nonprofit leaders have the time and energy in 2025 to reflect on their organization’s structure and strengthen their operations. I hope they see the value in investing in their operations and how it may relieve stress from leadership or even allow them to take a break and rest.

I hope to see nonprofit leaders continuing to have difficult conversations that benefit their organizations. I hope they feel empowered and validated in their approach.

Overall, I hope to see a stable, sustainable community of nonprofits that are supported and know they are not alone in the work they do.

Ashley Johnson is a program manager on our Resource Navigation team, working directly with MCR's nonprofit clients. Her background in anthropology helps her to develop deep connections with nonprofit leaders, and to notice trends and challenges experienced across divides.