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By Jack Murray, HoganTaylor Lead Nonprofit Partner

Everywhere you look these days, it seems you see challenges, opportunities or both.  In states with heavy reliance on the energy industry, state governments are proposing major cuts to all agencies of the government.  These cuts directly or indirectly, affect nonprofit organizations.

While certainly not a new concept, an enterprise risk assessment is a practice that is becoming more prevalent for nonprofit organizations.  Understanding the strengths, weaknesses, opportunities, and threats (SWOT Analysis) of an organization allows them to address weaknesses and threats to ensure they have the right strategy in place, rather than reacting to changes in the environment they operate.

Organizations that provide services to developmentally or physically challenged individuals, elderly, homeless, those suffering from mental and substance abuse issues, among other services are seeing appropriations cut significantly at a time when the need for these services are rising.  Even organizations that are not reliant on government funding are seeing their donor bases challenged due to reduced income from the energy price fall or smaller investment returns from a volatile stock market.  Large fund-raising projects that are seeing significant donors have to allocate their resources often means that some other organizations may see a decline in their charitable giving that they rely on for a significant part of their operating budget.  On top of that, we are in the midst of another presidential election cycle that is turning into one unlike anything we have seen in many years.  Elections often cause uncertainties over fiscal and tax policies that impact all aspects of nonprofit organizations.

One of the characteristics of successful nonprofits is the ability to stay on top of changes occurring in their environment in order to adapt to the challenges affecting them.  Below is an example of how one segment of the nonprofit sector has had to change and adapt over a long-term period.

Staying current on developments at the local, state and federal level that will impact your organization is imperative.  Over 20 years ago, there was a landmark case in Oklahoma that essentially decided that institutions for the developmentally challenged were an archaic way of treating the needs of this segment of the population.  The case created a new breed of nonprofit organizations, or a change in services for existing nonprofits, to serve these individuals in a group setting as opposed to an institutional environment.  Those organizations that followed the case and engaged in dialogue with state agencies were on the forefront of this change for the better for these individuals.  Current changes in the health care reimbursement processes have the potential for significantly impacting these organizations and the individuals they serve.  Understanding if the reimbursements will shift from the organization to the individual, how reimbursement rates for the various services will change and how to navigate the complex maze of billing and collecting are critical areas that you do not want to be caught unaware.   Associations of organizations serving this population can help reduce the costs of staying informed, and discussing how other organizations plan to address these changes can help each organization make changes for the long-term success of each organization.

While this is an example specific to one segment of the nonprofit industry, it demonstrates that the environment all nonprofits operate in is constantly changing.  Sustainable organizations are always evaluating what they need to do to stay in front of or change certain aspects of their organization to better fulfill their mission.

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