Economic headwinds, labor shortages and cybercrime challenge nonprofits.
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Nonprofit
HUB 2023 Outlook
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Setting the Scene
What to Expect in 2023
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Economic Viability
Vitality
Resiliency
Funding
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HUB Nonprofit
Setting the Scene
Enterprise risk management will strengthen resiliency.
Economic uncertainty and a looming recession will test nonprofits in 2023. Rising inflation will drive up operational costs, while an economic downturn will reduce endowments and government funding. But nonprofits with a solid risk management strategy will be better positioned to survive and thrive.
What to Expect in 2023
Labor shortages and inflation present challenges to nonprofits in 2023. Donor hesitancy, rising costs, cyber threats and falling endowments will further test organizations. In the face of such challenges, an enterprise risk management strategy will improve their resiliency.
Make a Plan
Download our 2023 Nonprofit Outlook and Insurance Market Rate Report to see what to expect in the coming year.
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Look at the big picture.
Give your employees the ability to personalize their benefits. The big differentiators are retirement benefits, mental health benefits, flex time, employee value proposition and a clear career ladder.
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Take a Total Rewards approach to your benefits.
Take a Total Rewards approach to your benefits.
Instead of looking for piecemeal approaches to address big risks like workplace violence, active shooter or supply chain disruption, ask your brokerage’s risk services consultants for a comprehensive plan. An organizational resiliency plan doesn’t have to be complex and expensive.
Look at the big picture.
Your broker can help you make objective, defensible decisions about coverage limits and how much risk to absorb through deductibles and self-insured retentions. Analytics goes well beyond benchmarking to take the guesswork out of your insurance coverage and give you actionable insights.
Leverage the power of analytics.
Leverage the power of analytics.
Be transparent with your broker.
Take a Total Rewards approach to your benefits.
Look at the big picture.
Be transparent with your broker.
Let your broker know what changes you’ve made to the organization throughout the year, so there are no surprises at renewal. Review exposures and insurance needs at least 90 days prior to policy renewal, allowing your broker extra time to identify the best options.
Take a Total Rewards approach to your benefits.
Look at the big picture.
Be transparent with your broker.
Leverage the power of analytics.
Meet the Experts
Practice Leader
Nonprofit Practice
Scott Konrad
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Barry Baird
Nonprofit Practice
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Michelle Dix
Nonprofit Practice
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Dan LaRock
Nonprofit Practice
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Nonprofit
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Organizations that align with complementary nonprofits will be better prepared to weather the inflationary environment, maximize their abilities and expand their pool of potential donors.
Increased demand and market instability will test organizations.
Coming out of the COVID-19 pandemic, nonprofits saw much greater demand for services, particularly for health and human services organizations. While some nonprofits saw a surge in revenue from increased public awareness of their missions, others faced funding challenges, and demand for their services is outpacing their finances.
With economic uncertainty and interest rate hikes, individual and corporate donors will be less likely to open their checkbooks. Inflation generated increased costs for transportation, goods and wages, pinching nonprofits’ bottom lines. Many organizations don’t have the financial flexibility to absorb higher costs.
With these pressures, the nonprofit sector is likely to see more consolidation in 2023.
2. BDO United States, “The Future of Health & Human Services: A Tale of Two Worlds,” May 20, 2022.
Funding
Resiliency
Vitality
Economic Viability
Funding
Resiliency
Vitality
Economic Viability
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However, volunteers have not returned in the same numbers. Fewer adults say they have time to contribute, and those who volunteer feel disconnected from their organizations because of a shift to virtual events. These challenges may force nonprofits to develop focused volunteer training programs that accommodate individuals’ lack of time.
Enhanced benefits will attract and nurture employees.
With increased competition in a tight labor market continuing through 2023, nonprofits are embracing a total rewards approach to care for their employees. By creating an employee value proposition supported by total rewards, nonprofits are expanding benefits beyond core health and disability coverages to include health savings accounts, retirement plans, professional development opportunities, hybrid work environments and additional personal time off.
Personalizing benefits to meet individual employee needs creates positive employee experiences — and a benefits strategy centered on delivering quality employee experiences (QEX) helps employers build a workplace that attracts and retains workers.
This approach also sets organizations apart
6. Northern Express, “Where have all the volunteers gone?" September 10, 2022.
Funding
Resiliency
Vitality
Economic Viability
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Using social media to share testimonials from real people whose lives were changed because of the nonprofit’s work will be one approach to drive this communication in 2023. Social platforms also will be leveraged to highlight how donors can further a nonprofit’s accomplishments.
But the increased use of technology brings cyber risks, which remain a significant concern for nonprofits. Cyber insurance rates will rise 20% to 40% in 2023, and safeguards — such as multifactor authentication (MFA), endpoint detection and response and background screening — will be imperative. Managing third-party vendor contracts with access to data can further offload risk and protect the organization in the event of a breach.
Enterprise risk management will help nonprofits remain viable.
Few nonprofits had adequate contingency plans to cope with a global shutdown and its aftermath, leaving many cash-strapped. However, the pandemic is prompting more organizations to adopt an enterprise risk management (ERM) approach to risk. ERM is a business strategy that uses methods and processes to identify and manage risks to an organization.
Whether it’s a disaster, violence, data breach or pandemic, recognizing threats to organizational resiliency and taking steps to mitigate those risks will be key for nonprofits’ longevity. This ERM approach should extend to donor communications. With scarce resources and fewer donors, nonprofits need to better convey their stories to the public, accentuating measurable outcomes that help them stand out from other causes.
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Funding
Resiliency
Vitality
Economic Viability
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administration. Shrinking government funding — due to static contract amounts and budget cuts — will further affect organizations, despite increased demands for services.
However, nonprofits will be able to lean on technology to operate more efficiently and create additional giving opportunities. For example, nonprofits that leverage their donor data can identify the most involved benefactors and find new ways to target those donors and increase engagement with the organization.
Reduced government funding, endowments and donations will affect financing.
Continued high inflation in 2023 will hurt nonprofits’ finances, regardless of whether the organization relies on government funding, endowments or donations. While 2020 was a record year for giving, overall charitable donations in the U.S. were flat in 2021 and college endowments dropped 10%. With fears that inflation will further erode giving, nonprofits that rely on philanthropic donations may struggle to stay within their budgets while continuing to offer the same level of services.
With government contracts set at rates that don’t account for inflation and seldom cover an organization’s full indirect costs, nonprofits relying on those agreements will struggle financially as costs skyrocket for transportation, operational expenses and
8. Indiana University, “Giving USA: Total U.S. charitable giving remained strong in 2021, reaching $484.85 billion,” June 21, 2022.
HUB can help develop a strategy that will protect the bottom line, support your workforce and build resiliency for 2023.
Here are some initial considerations:
HUB can help develop a strategy that will protect the bottom line, support your workforce and build resiliency for 2023.
Here are some initial considerations:
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Leverage analytics
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3. Forbes Advisor, “Recession Tracker: Are We In A Recession?” September 22, 2022.
4. ABC News, “Inflation hits nonprofits’ services, ability to fundraise,” April 8, 2022.
5. Stanford Social Innovation Review, "Buy to Build: Nonprofit M&A as an Impact Enhancer,” February 28, 2022.
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Employment in the nonprofit sector fell by 1.6 million positions during the COVID-19 pandemic.
7. Independent Sector, “Health of the U.S. Nonprofit Sector,” October 2021.
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9. Bloomberg, “College Endowments Post Biggest Losses Since Financial Crisis,” August 9, 2022.
10. BDO, “How tech & culture support sustainability,” June 30, 2022.
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1. Dunham+Company, “Donor confidence falters in light of economy and inflation,” June 20, 2022.
3. Forbes Advisor, “Recession Tracker: Are We In A Recession?” September 22, 2022.
4. ABC News, “Inflation hits nonprofits’ services, ability to fundraise,” April 8, 2022.
5. Stanford Social Innovation Review, "Buy to Build: Nonprofit M&A as an Impact Enhancer,” February 28, 2022.
6. Northern Express, “Where have all the volunteers gone?, September 10, 2022.
6. Northern Express, “Where have all the volunteers gone?, September 10, 2022.
8. Indiana University, “Giving USA: Total U.S. charitable giving remained strong in 2021, reaching $484.85 billion,” June 21, 2022
9. Bloomberg, “College Endowments Post Biggest Losses Since Financial Crisis,” August 9, 2022.
2. BDO United States “The Future of Health & Human Services: A Tale of Two Worlds,” Mary 20, 2022.
3. Forbes Advisor “Recession Tracker: Are We In A Recession?” September 22, 2022.
4. ABC News “Inflation hits nonprofits’ services, ability to fundraise,” April 8, 2022.
Coming out of the COVID-19 pandemic, nonprofits saw much greater demand for services, particularly for health and human services organizations. While some nonprofits saw a surge in revenue from increased public awareness of their missions, others faced funding challenges, and demand for their services is outpacing their finances.2
With economic uncertainty and interest rate hikes,3 individual and corporate donors will be less likely to open their checkbooks. Inflation generated increased costs for transportation, goods and wages, pinching nonprofits’ bottom lines. Many organizations don’t have the financial flexibility to absorb higher costs.4
2
3
4
6. Northern Express, “Where have all the volunteers gone?, September 10, 2022.
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8. Indiana University, “Giving USA: Total U.S. charitable giving remained strong in 2021, reaching $484.85 billion,” June 21, 2022
9. Bloomberg, “College Endowments Post Biggest Losses Since Financial Crisis,” August 9, 2022.
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63%
of donors say the projected economic decline has made them more cautious with their giving.
1
from others in their search for qualified workers. Employment in the nonprofit sector fell by 1.6 million positions during the COVID-19 pandemic, though the sector was on target to return to pre-pandemic staffing levels by mid-2022.
10%
In 2021, college endownments dropped
1. Dunham+Company, “Donor confidence falters in light of economy and inflation,” June 20, 2022.
Expert
Chad Larsen
Nonprofit Practice
Linkedin Profile
1
their search for qualified workers. Employment in the nonprofit sector fell by 1.6 million positions during the COVID-19 pandemic, though the sector was on target to return to pre-pandemic staffing levels by mid-2022.
However, volunteers have not returned in the same numbers.6 Fewer adults say they have time to contribute, and those who volunteer feel disconnected from their organizations because of a shift to virtual events.7 These challenges may force nonprofits to develop focused volunteer training programs that accommodate individuals’ lack of time.
9
10
6
7
2
3
4
5
HUB
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Nonprofit Practice
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Scott Konrad
Nonprofit Practice
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Barry Baird
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Dan LaRock
Nonprofit Practice
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Michelle Dix
Nonprofit Practice
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Nonprofit Practice
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Scott Konrad
Nonprofit Practice
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Barry Baird
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Dan LaRock
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Michelle Dix
Nonprofit Practice
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Scott Konrad
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Scott Konrad
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Nonprofit Practice
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Scott Konrad
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2. BDO United States, “The Future of Health & Human Services: A Tale of Two Worlds,” May 20, 2022.
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