It’s no secret that nonprofit organizations find themselves squeezed between declining income and increasing demand these days. 

Straitened finances during the Great Recession produced cuts in federal and state grants as well as smaller checks from individual donors. Record low interest rates mean that foundations don’t have as much money to give, while requests have burgeoned.

In her talk at a statewide forum for nonprofits this fall, Linda Lytvinenko emphasized that organizations will need to adapt to survive what is probably the new normal economic climate. Lytvinenko, executive director of the Cape Fear Literacy Council, said she told the audience at the conference in Durham that 2008 and 2009 were the worst years in decades in terms of charitable giving. 

Although the economy has improved, challenges remain because donors’ expectations are changing, area nonprofit officials said.

“There is a focus on results, which is a new thing for nonprofits,” said Edgar Villanueva, director of Quality Enhancement for Nonprofit Organizations (QENO), a partnership between University of North Carolina Wilmington and funders, civic leaders and other community organizations to help build the capacity of nonprofit organizations and increase philanthropy in southeastern North Carolina. “It’s an outcomes framework where you have to be in a focused area and show results.”

As an example, Villanueva said that two organizations might offer after-school tutoring – one serving 50 students and the other 25. “We need to ask: ‘Are the students’ grades improving?’ It might be that the smaller program is actually having a larger impact because it can document that its efforts are actually making a difference.” 

Villanueva added that the funding community also influenced nonprofits’ behavior in this regard.

“If there has not been expectation from donors for organizations to step up to a certain level of quality or show impact, they will not necessarily step up to do it,” he explained. “Nonprofits will have to be more innovative and strategic and will have to demonstrate impact.”

In her talk at the conference, Lytvinenko outlined steps Cape Fear Literacy Council has taken to improve three areas of focus: the quality of its services, the effectiveness of its board and the stability of its finances. 

“No more ‘This is how we do/have done it,’” she said. “Now it’s ‘How can we make it happen?’”

United Way of the Cape Fear Area also has made some basic changes to the way it approaches funding, said its president, Chris Nelson.

“We changed the process about five years ago, following a national ‘impact’ model,” Nelson said. “We know from national marketing and input from volunteers here that donors really want to see their money have as much impact as possible. They’re excited if that dollar can turn into $5 or $10 – if it can be leveraged. They want accountability and measurable outcomes. 

“While it’s still important that that homeless person be fed one or two meals a day, donors are increasingly asking ‘What are you doing to make this person non-homeless? Can I use my dollar to change this person’s life?’ We are seeing government grants looking at the same thing now – so are foundations.”

As a result, Nelson said, rather than funding the same agencies year after year, United Way organizations increasingly are setting priorities and funding programs that address those priorities. There’s also an emphasis on programs that result from multi-organization collaborations.

He cited an effort by DREAMS of Wilmington, Kids Making It, Brigade Boys & Girls Club and New Hanover County Communities in Schools to work together.

“By working together and sharing data, they enable kids to eat, succeed in school, develop skills and have a safe place to be,” Nelson said. 

“It’s a great example of take a dollar, leverage it, become accountable and have it make significant impact. Together, they have gone three or more levels beyond the old days. The old impact wasn’t bad, but this collaborative approach has so much more impact.”

The Wilmington area’s nonprofit sector is weaker than that of some other metro areas of the state, Villanueva said.

“Something like 85 percent of organizations only have a one- or two-person staff, and there is a lot of talk about duplication of services,” he said. “It’s easy to start a nonprofit without having a business plan in place or a market analysis to see how your idea may be related to what other organizations are already doing.”

Much philanthropy in Wilmington is “transactional” – people writing a check in support of a charity they favor. Villanueva compares this traditional way of giving to a results-oriented, more engaged attitude of the donor.

“It’s a strategic, catalytic philanthropy … that the donor takes on, in which the organization is more responsible for outcomes,” he said. “If you are a capital investor, don’t just write a check, because you are going to share in the results. Make sure strong leadership is in place.”