Asked to predict the near-term future of philanthropy in Northeast Florida, two local nonprofit executives said they believe 2024 will be a year for change and also a year for stability.
Established in 2002, the Nonprofit Center of Northeast Florida provides resources and counsel to more than 400 nonprofits, foundations and community partners.
Rena Coughlin, the center’s CEO for the past 18 years, said organizations are changing how they do business to adapt to the current economic conditions.
Wages have risen in the nonprofit sector by 12% to 18%, leading to salary inflation and more competition among organizations that need to hire people, Coughlin said.
“That can leave a nonprofit gasping for cash to keep up with expenses,” she said.
Coping with unplanned challenges is part of operating a nonprofit, just as it is part of operating any business.
“Every year, there is something. Three years ago, there was a global pandemic. Then came a 12% inflation rate. Most nonprofits are small businesses, so it’s good to get back to the basics and prepare for the ups and downs,” Coughlin said. By October, inflation was 3.2%.
Where to look for funds is another change that will need to be addressed in 2024.
“Local governments still have federal COVID recovery money and they have to get it out the door. Nonprofits need to know who has the money and how they plan to distribute it,” Coughlin said.
Leadership changes also will be part of the landscape for nonprofits.
In addition to retirements announced by Nina Waters, CEO of The Community Foundation for Northeast Florida, and Cindy Watson, CEO of JASMYN, the local nonprofit that supports teens and young adults in the LGBTQIA+ community, Coughlin is stepping down as CEO of the Nonprofit Center on Dec. 31.
“There are a lot of tired people who made it through the Great Recession and made it through the pandemic. It’s healthy to have change and a little disruption. We are more than happy for new people to take the reins,” Coughlin said.
Since 2005, the Nonprofit Center has regularly assessed the state of local nonprofits, including who is in leadership positions.
“It is about 85% white, 80% female and the average age is just under 60. That’s not the way the world looks anymore. The sector has got to start looking at change,” Coughlin said.
Need, opportunity intersecting
John Zell, vice president of development at The Community Foundation for Northeast Florida, said he believes establishing financial stability will be a significant theme for how 501(c)(3) organizations do business in 2024 and beyond.
“Nonprofits went through a lot of volatility during the COVID period. Some had to shut down and some had extraordinary demand for services. Then there were staffing problems and rapid inflation of labor costs. We are looking at where we’ve been, what we learned and where we are going,” Zell said.
The bottom line: Nonprofits and their boards are seeing the value of permanent endowments as part of their income portfolios to provide stability in the long term.
As it applies to a nonprofit, an endowment is a legal structure for managing and perpetuating financial, real estate or other asset investments for a specific purpose according to the will of its founders and donors.
A common practice is for an organization to annually spend about 5% of an endowment, based on assuming an 8% average annual return on investment, Zell said.
“You also have to increase contributions from new donors to sustain an endowment,” he said.
Demographics will play a historic role in helping nonprofits establish endowments in 2024.
“The transfer of wealth we have been waiting on for years is starting to happen. The older baby boomers are going on to their greater glory and their assets are being moved to their children, to charity, or a combination of the two,” Zell said.
The Community Foundation analyzed the anticipated transfer of wealth in Florida and determined that in the next 10 years, about $884 billion will be bequeathed to heirs and to charity.
“Wealth transfer is going to happen. The nonprofit sector has the potential to be a partial beneficiary of that transfer. That has the potential to give nonprofits the stability to do the work they are called to do.
“We have an unintended intersection of need and opportunity,” Zell said.