Storm brewing for nonprofits

As if surviving and thriving in the charitable marketplace already were not tough enough, the skidding economy promises to make nonprofit work even tougher.

So nonprofits need to be smarter about doing business, and foundations need to be smarter about helping nonprofits strengthen their operations.

Signaled by a growing number of economic indicators, the recession the U.S. economy is entering simply will deepen the growing scrutiny of nonprofits by the partners they count on for the resources they need to run their shops.

Those partners, including grantmakers, individual givers and government, increasingly have asked that nonprofits show they mean business by quantifying the results they expect from the resources they seek, and then measuring the impact on their clients.

To do that, nonprofits need to be smarter about managing their organizations, delivering services, gauging results, developing resources, and engaging supporters and other partners.

Now, they need to be even smarter.

In addition to looking for ways to curb or cut costs, nonprofits need to be more innovative in operating their business, developing new revenue streams, involving their boards and givers, and shaping public policies that affect their organizations and clients.

For years, fighting efforts to toughen rules and policing of charitable organizations and giving in the face of growing concern about excess, abuse and arrogance in the charitable world, many nonprofits and foundations have claimed they can and will clean up their act, both as individual organizations and as a sector.

And parroting philanthropically-correct sermons preached by big foundations, and by the consultants and nonprofit trade groups that depend on foundation support, many nonprofits have devoted a lot of time talking about the need for innovation, collaboration, transparency and diversity, without actually changing the way they do business.

With the economy tanking, nonprofits only will be asked to do more with less.

Rather than spouting empty words, nonprofits truly need to be more innovative, collaborative and open, and to better reflect and engage the diverse constituencies they serve.

And instead of pumping out more sermons, foundations need to invest more of their resources in helping nonprofits address the critical organizational challenges they face so they can more effectively address the urgent and escalating social problems our communities face.