Problems experienced by NPOs::Nonprofit organization


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Problems experienced by NPOs Capacity building is an ongoing problem experienced by NPOs for a number of reasons. Most rely on external funding (government funds, grants from charitable foundations, direct donations) to maintain their operations and changes in these sources of revenue may influence the reliability or predictability with which the organization can hire and retain staff, sustain facilities, create programs, or maintain tax-exempt status. For example, a university that sells research to for-profit companies may have tax exemption problems. In addition, unreliable funding, long hours and low pay can result in employee retention problems. During 2009, the US government acknowledged this critical need by the inclusion of the Nonprofit Capacity Building Program in the Serve America Act. Further efforts to quantify the scope of the sector and propose policy solutions for community benefit were included in the Nonprofit Sector and Community Solutions Act, proposed during 2010.

Many nonprofit organizations find it difficult to create consistent messaging that resonates with their various stakeholders as marketing budgets are minimal or nonexistent. Marketing is in many cases a taboo word that NPOs or others don't like to associate with such community benefit organizations. There are strategic ways in which nonprofits can leverage their access to various community stakeholders to get their name and cause recognized by the public, but it is imperative to have an outreach strategy which includes a financial plan to execute that outreach/marketing strategy, particularly if the organization has plans to rebrand or expand their initiaives.

Founder's syndrome is an issue organizations face as they grow. Dynamic founders with a strong vision of how to operate the project try to retain control of the organization, even as new employees or volunteers want to expand the project's scope or change policy.

Resource mismanagement is a particular problem with NPOs because the employees are not accountable to anybody with a direct stake in the organization. For example, an employee may start a new program without disclosing its complete liabilities. The employee may be rewarded for improving the NPO's reputation, making other employees happy, and attracting new donors. Liabilities promised on the full faith and credit of the organization but not recorded anywhere constitute accounting fraud. But even indirect liabilities negatively affect the financial sustainability of the NPO, and the NPO will have financial problems unless strict controls are instated.<ref>Audit Guide for Small Nonprofit Organizations</ref> Some commentators have also argued that receiving significant funding from large for-profit corporations can ultimately alter the NPO's functions.<ref>Edwards, M. and Hulme, D. (2002) NGO Performance and Accountability: Introduction and Overview. In: Edwards, M. and Hulme, D., ed. 2002. The Earthscan Reader on NGO Management. UK: Earthscan Publications Ltd., Chapter 11.</ref><ref>Brought to You by Wall Street, CORY MORNINGSTAR, CounterPunch, 17 May 2013</ref><ref>The Climate Wealth Opportunists, CORY MORNINGSTAR, CounterPunch, 14 March 2014</ref>

Competition for employees with the public and private sector is another problem that Nonprofit organizations will inevitably face, particularly for management positions. There are reports of major talent shortages in the nonprofit sector today regarding newly graduated workers,<ref>Chertavian, G. Nonprofits Need to Compete for Top Talent.</ref> and NPOs have for too long relegated hiring to a secondary priority,<ref name="auto">Maw, L. Winning the Talent Game</ref> which could be why they find themselves in the position many do. While many established NPO's are well-funded and comparative to their public sector competetitors, many more are independent and must be creative with which incentives they use to attract and maintain vibrant personalities. The initial interest for many is the wage and benefits package, though many who have been questioned after leaving an NPO have reported that it was stressful work environments and implacable work that drove them away.<ref>Becchetti, Castriota, & Depedri. Working in the For-Profit versus Not-For-Profit Sector: What Difference Does it Make?</ref>

Public and private sector employment has, for the most part, been able to offer more for their employees than most nonprofit agencies throughout history. Either in the form of higher wages, more comprehensive benefit packages, or less tedious work, the public and private sector has enjoyed an advantage in attracting employees over NPOs. Traditionally, the NPO has attracted mission-driven individuals who want to assist their chosen cause. Compounding the issue is that some NPOs do not operate in a manner similar to most businesses, or only seasonally. This leads many young and driven employees to forego NPOs in favor of more stable employment. Today however, Nonprofit organizations are adopting methods used by their competitors and finding new means to retain their employees and attract the best of the newly minted workforce.<ref>Cohen, R. Nonprofit Salaries: Achieving Parity with the Private Sector</ref>

It has been mentioned that most nonprofits will never be able to match the pay of the private sector<ref>Coffman, S. Nonprofits Can Compete with Employee Benefits</ref> and therefore should focus their attention on benefits packages, incentives and implementing pleasurable work environments. Pleasurable work conditions are ranked as being more preferable than a high salary and implacable work.<ref name="auto"/> NPOs are encouraged to pay as much as they are able, and offer a low stress work environment that the employee can associate him or herself positively with. Other incentives that should be implemented are generous vacation allowances or flexible work hours.<ref>Fox, T. How to Compete with the Private Sector for Young Workers.</ref>

Nonprofit organization sections
Intro  [[Nonprofit_organization?section={{safesubst:#invoke:anchor|main}}_Objectives_and_goals_|{{safesubst:#invoke:anchor|main}} Objectives and goals ]]  Functions  Problems experienced by NPOs  Articles of association (examples)  Other information  Conclusion  See also  References  Further reading  External links  

Problems experienced by NPOs
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