Presented by Valerie F.

Leonard as a companion report for the

January 2, 2017 episode of Nonprofit U.

 Nonprofit "U" is an online forum where nonprofit

stakeholders can discuss the latest developments in
the sector and increase their capacity to serve their
clients and build sustainable communities.
Valerie F. Leonard, an expert in community and
organizational development, is the host. Topics
include nonprofit management, community
development, capacity building and organizational
development.
The show airs every Monday at 2:00 p.m. CST, from
www.BlogTalkRadio.com/nonprofit_u.
Copyright Valerie F. Leonard. All rights reserved.

Acknowledgments
I thank every organization that participated in this
informal survey. As a result of your participation,
we now have better insights into what some
nonprofit leaders in the Chicago Area are feeling
about the prospects for local organizations in 2017.
--Valerie F. Leonard

Copyright Valerie F. Leonard. All rights reserved.

Valerie F. Leonard is an expert in community

and organizational development with a mission
of strengthening the capacity of organizations
to make a positive impact on the communities
they serve through technical assistance,
specialized
workshops,
resource
and
organizational development and project
management. Valerie also teaches online
courses in nonprofit management with the
University of Illinois Certificate in Nonprofit
Management and is the host of Nonprofit "U"
blog radio talk show on BlogTalkRadio.com.
Valerie was recently appointed to serve as the
Vice Chairperson of the Social Capital
Committee of the Cook County Commission on
Social
Innovation
by
Cook
County
Commissioner Jesus Chuy Garcia. Valerie
has a bachelor of arts degree in economics
from Spelman College, and a master of
management degree in finance and marketing
from the Kellogg Graduate School of
Management.
Copyright Valerie F. Leonard. All rights reserved.

What does 2017 hold for the

nonprofit sector?

Copyright Valerie F. Leonard. All rights reserved.

U.S. Economic Outlook

Copyright Valerie F. Leonard. All rights reserved.

U. S. Economic Indicators
According to the Federal Open Market Committee, U.S. GDP growth will rise to 2.1
percent in 2017. That's better than the 1.9 percent estimated for 2016 and the same
as 2015's growth rate of 2.1 percent.
The unemployment rate will drop to 4.5 percent in 2017 and 2018. That's better than
the 4.7 percent rate in 2016, and the Fed's 6.7 percent target. If discouraged workers
were included the real unemployment rate is about 9%.

Overall, the U.S. Bureau of Labor Statistics (BLS) expects total employment to increase
by 20.5 million jobs from 2010-2020. The fastest growth will occur in healthcare,
personal care and social assistance, and construction.

Inflation will be 1.9 percent in 2017 and 2.0 percent in 2018. Both are higher the
1.5 percent rate in 2016, and the 0.7 percent inflation experienced in 2015
The FOMC first raised the Fed funds rate to 0.5 percent in December 2015
and raised interest rates again in December 2016 to 0.75 percent. It expects the
rate to rise to 1.5 percent in 2017
Long-term and fixed interest rates will rise in 2017 and beyond.
Source: Kimberly Amadeo of The Balance blog
Copyright Valerie F. Leonard. All rights reserved.

Disposable Income
Disposable Personal Income in the United States decreased to 14225.10 USD Billion in November
from 14226.50 USD Billion in October of 2016. Disposable Personal Income in the United States
averaged 4868.08 USD Billion from 1959 until 2016, reaching an all time high of 14226.50 USD
Billion in October of 2016 and a record low of 351.90 USD Billion in January of 1959.
(TradingEconomics.com)

Millennials, or those between the ages of 17 and 34, collectively are expected to spend
more than $200 billion annually starting in 2017 (Retail Leader)

Implications for Nonprofit Sector

While the economy overall is stronger, disposable income
decreased by less than 1% from an all-time high in
November 2016. Disposable income is expected to remain
strong in 2017. Individual giving should remain at about the
same levels.
Organizations financing capital improvements and working
capital will have to pay higher interest rates.
There will be growing employment opportunities for
healthcare and social service workers.
Higher inflation will raise the costs of operations for
nonprofits.
Millennials will be an increasing segment of the individual
donor segment, and they should be engaged through social
media (Advertising Age)
Copyright Valerie F. Leonard. All rights reserved.

Nonprofit Sector
There are over 1.6 million registered nonprofits in the U.S.
as of December 2016 (US Census Bureau)
In 2013 more than 1.4 million registered nonprofit
organizations employed over 14.4 million people,
accounting for 10 percent of the domestic workforce and
around 5 percent of GDP.
The Urban Institute conducted a survey of over 9,900
organizations and found that organizations reported gains
of $4.7 billion in gifts from new, upgraded current, and
previously lapsed donors
However, the gains were were offset by losses of $4.2
billion through reduced gifts and lapsed donors. Smaller
organizations experienced greater donor turnover than
large institutions.
Copyright Valerie F. Leonard. All rights reserved.

State of Illinois

Copyright Valerie F. Leonard. All rights reserved.

Illinois Economy
Growth in economic activity in the Seventh District slowed to a modest
pace in October and early November, but contacts expect growth to
return to a moderate pace over the next six to twelve months. (Federal
Reserve Bank of Chicago)
The Illinois economy is subject to the same economic pressures as the
rest of the country, and overall, the States economy is stable. However,
this is not the case for all communities in the State, and the population
is shrinking.
Illinois unemployment rate is 5.6% as of November 2016, as compared
to 4.6% in the U.S. for the same period.
The Economic Policy Institute analyzed third quarter labor data and
found that Illinois black unemployment rate stood at 14.2 percent.
Nationwide, unemployment for African-Americans was 8.4 percent.
Illinois population is shrinking. The state lost 37,000 people in 2016,
due to lower birth rates and people leaving for better economic
opportunity (Rob Paral and Associates 2016)

Copyright Valerie F. Leonard. All rights reserved.

Illinois Budget
The State of Illinois spends over $28 billion on contract services,
including contracts to nonprofits. A number of social service
agencies contracts were unilaterally terminated or reduced by
executive order when Governor Rauner took office in 2016.
Illinois has not passed a budget since Fiscal 2015, which started
July 1, 2014.
The budget deficit could reach approximately $5 billion in 2017,
compared to $1.6 billion in 2015 (Dave McKinney, Reuters).
Because there is no budget, some agencies have gone without
being paid by the state for nearly 2 years.
Illinois has a backlog of unpaid bills that exceeds $10 billion. This
is nearly double the backlog when Governor Rauner took office in
2015. (Chicago Sun-Times)
If there is no intervention, the backlog is expected to approach
$26 million by fiscal year end in June, 2017. (Chicago Sun-Times)
Copyright Valerie F. Leonard. All rights reserved.

Grants.Illinois.gov
The Grant Accountability and Transparency Act
(GATA), 30 ILCS 708/1 et seq., is landmark legislation
that will increase accountability and transparency in
the use of grant funds while reducing the
administrative burden on both State agencies and
grantees through adoption of the federal grant
guidance and regulations codified at 2 CFR Part 200
(Uniform Requirements). Pursuant to the Act, the Grant
Accountability and Transparency Unit (GATU) has been
established in the Governors Office of Management
and Budget.
GATU is charged with implementation of the Act in
coordination with State grant-making agencies and
grantees.

Implications for Nonprofit Sector

for Illinois
In addition to the implications for nonprofits nationally, Illinois
nonprofits should be especially mindful of the following:
There is a possibility that no budget will be passed in the state of Illinois
before the next election.
A number of organizations have closed their doors for good and have
terminated some services. Organizations that remain are expected to
pick up the slack.
Some organizations are considering merging.
The Illinois.Grants.gov system has increased accountability and raised the
bar for organizations wishing to receive state funds. Organizations will
need to increase organizational capacity in order to meet minimum
standards for receiving grants. In some ways the initial review process is
more stringent than the federal grants.gov system.
Lower population will lead to decreases in federal funding with formulas
that are dependent upon the Census. This includes Community
Development Block Grants, certain education funding and other
entitlements. There will be increased competition for public funds.
Copyright Valerie F. Leonard. All rights reserved.

Implications for Nonprofit Sector

for Illinois
Lack of a budget and reduction in tax receipts make it
difficult for state and local governments to meet their
obligations and address the growing need for social
services.
The inability of the State to pay nonprofits on time is
one of the greatest threats to the viability of the
nonprofit sector. (Donors Forum)
Nonprofits must diversify their funding streams to
include more individual donors, foundations and
income from fees, product sales, and social enterprise.
Copyright Valerie F. Leonard. All rights reserved.

Forbes Magazines 3 Nonprofit

Trends for 2017
Humanize Your Marketing
Storytelling will become one of the most important marketing
tools for us in 2017 because it provides a way to connect with
the emotions that help drive donor engagement and ongoing
support.
Live streaming video is a great way to tell these stories as
well, using Periscope, YouTube Live, and Facebook Live.
Another approach for this authentic storytelling is usergenerated content.
Influencer marketing will also take on a larger role, as we can
rally advocates of our nonprofit organization to endorse what
we are doing with their social circles. The result is that the
trust that these circles place in these influencers can move
them to act and become donors and volunteers themselves.
---Dr. Gloria Horsley, Founder of Open to Hope Foundation,
Member of the Forbes Nonprofit Council

Forbes Magazines 3 Nonprofit

Trends for 2017
Use Mobile Technology To Simplify Donations
More and more, emails are being opened on mobile
communication devices.
Organizations are integrating payment buttons directly
into emails to increase donations.
Another new trend is accepting payments through social
media platforms like Instagram, Facebook and Snapchat.

---Dr. Gloria Horsley, Founder of Open to Hope Foundation,

Member of the Forbes Nonprofit Council

Forbes Magazines 3 Nonprofit

Trends for 2017
Seek Fresh Perspectives And A Human Connection
Organizations are starting to look year round for board members
that can provide fundraising and networking expertise.
A growing number of organizations are looking to millennials and
Generation Xers who are focused on social causes and are wellconnected with others who are passionate about social good.
One place to look is networking sites.
Effective organizations combine technology with back-to-basics
approach, creating a culture that is in touch with human
emotions and is run by a skilled staff that is enthusiastic about
what we are trying to do.
Maintain personal contact with donors, including in person and
by phone, to make that human connection even stronger and
more authentic.
---Dr. Gloria Horsley, Founder of Open to Hope Foundation,
Member of the Forbes Nonprofit Council

Aly Sterling Philanthropy

Nonprofit Trends for 2017
TREND #1: YEAR-ROUND, PROACTIVE BOARD
RECRUITMENT
Many of our stellar community fundraisers are retiring or
burned out, and many of our tenured staff leaders are
retiring.
The good news is there are plenty of young and middle
professionals eager to make a difference in their
communities. These individuals, known collectively as
millennials and Generation X, are seeking to give, volunteer
and lead all good things.
The organizations that succeed in boosting their board
membership and bottom lines in 2017 are those that plan
for succession by systematically recruiting and training
these next generations to lead their missions.
---Jen Pendleton, vice president,
Aly Sterling Philanthropy

Aly Sterling Philanthropy

Nonprofit Trends for 2017
TREND #2: NEXT-GENERATION THINKING IN ENGAGEMENT
The millennial generation have outspent baby boomers for
the first time in 2016.
Gen Xers are set to inherit $40 trillion.
Just like cultivating new board members, engaging new
donors depends on a systematic process of recruitment and
training that is geared toward their interests. Technology,
proactive communications and hands-on opportunities are
key to connecting with Millennials and Gen Xers.
What does your millennial pipeline look like? Take stock
of how youre doing and make a plan to introduce more
young people to your mission in 2017.
---Jen Pendleton, Vice President,
Aly Sterling Philanthropy

Aly Sterling Philanthropy

Nonprofit Trends for 2017
TREND #3: BUILDING A CULTURE OF PHILANTHROPY
More nonprofit leaders are cultivating a culture of
philanthropy within their organizations.
Theyre reframing every interaction between every
person as an opportunity for increasing awareness
and support.
Theyre empowering front line staff with information and
tools to make connections. And theyre giving supporters
and board members more hands-on opportunities to get
involved in the mission.

In 2017, find more ways to involve everyone at every

level of your organization in selling (and living) your
mission.
---Jen Pendleton, Vice President,
Aly Sterling Philanthropy

Aly Sterling Philanthropy

Nonprofit Trends for 2017
TREND #4: BUILDING YOUR CASE AROUND TRUE PROGRAM
COSTS
In 2013, Pallotta kicked the hornets nest by suggesting our
preoccupation with administrative costs with overhead was
actually defeating our efforts. He had the gumption to say we
should be focused on impacts and paying for the leadership and
outreach needed to drastically increase fundraising to achieve
those impacts. He blew the lid off our thinking and pulled us out
of the cold, dark cave of scarcity wed been living in. He urged us
to think BIG.
Since then, conversation around the Overhead Myth has grown.
So too have ideas about how to make it operational. Curtis Klotz
at Nonprofit Quarterly recently wrote about the need to revision
the true cost of programs and communicate the importance of
strong organizational infrastructure. (A Graphic Re-Visioning of
Nonprofit Overhead, August 16, 2016)
---Jen Pendleton, Vice President,
Aly Sterling Philanthropy

Aly Sterling Philanthropy

Nonprofit Trends for 2017
TREND #5: GETTING BACK TO BASICS
Forget the Ice Bucket Challenge. Whats real?
Authentic relationships.
Skilled, enthusiastic staff.
Strong organizational infrastructure.

Reach out to your most consistent donors to grow your major gift program. Plan
to make contact with them via a variety of methods, including mail, email,
social media, phone or even lunch at lease 12 times throughout the year.
Invest in fundraising training for your staff. According to the report Mastering
Major Gifts, nonprofits that did saw a $37,000 increase in revenue for each form
of training.
Invest in quality IT and database systems. They will complement your best
efforts to cultivate and steward gifts.
The basics never go out of style! Build your 2017 fundraising program on a solid
foundation of authentic relationships and the training and technology needed to
support them.

---Jen Pendleton, Vice President,

Aly Sterling Philanthropy

How do Nonprofit U survey

respondents feel about 2017?

Copyright Valerie F. Leonard. All rights reserved.

2017 Nonprofit Outlook

Tuesday, January 03, 2017

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Methodology
The purpose of the survey was to get a sense for how local nonprofits
were feeling about the nonprofit sector going in to 2017. I developed a
questionnaire on Survey Monkey and sent surveys to 435 people on my
In the Loop newsletter email distribution list, and posted links on
Facebook and Twitter.
It should be noted that my email distribution list and social media
contacts consist of people from diverse backgrounds, and not every one
is a nonprofit practitioner. Of the 435 people who were sent emails, 34
responded, for a response rate of 8%. One person completed the
survey through a Facebook link, for a total of 35 respondents. Everyone
who responded is from the State of Illinois.
While the results of the survey are not scientific, they do provide
insights into whether or not some nonprofit leaders in my network are
feeling optimistic or pessimistic about the 2017 outlook for the
nonprofit sector. The survey also provides a glimpse into the types of
actions organizations are taking to position themselves for the changes
in the nonprofit environment.
Valerie F. Leonard
Expert, Community and Organizational Development
Copyright Valerie F. Leonard. All rights reserved.

Q1: I would describe the outlook for the nonprofit sector for 2017 as
follows.

Answered: 35

Skipped: 0

Survey respondents are generally more pessimistic about the prospects for
the nonprofit sector in 2017, with just under 89% believing that 2017 will
be the same or worse than they were in 2016.

Q1: I would describe the outlook for the nonprofit sector for 2017 as
follows.

Answered: 35

Skipped: 0

Q2: Our organization will

Answered: 35

Skipped: 0

While respondents are generally pessimistic about the 2017 prospects for
the nonprofit sector, only 11.43% plan to reduce staff.

Q2: Our organization will

Answered: 35

Skipped: 0

Q3: We expect our funding to

Answered: 35

Skipped: 0

In spite of a general feeling of pessimism about the 2017 outlook for

nonprofits, over 91% of the respondents expect their funding to increase or
remain the same.

Q3: We expect our funding to

Answered: 35

Skipped: 0

Q4: We expect to do one or more of the following:

Answered: 34

Skipped: 1

Most organizations are reportedly engaging in activities that will increase efficiency
and suggest anticipation of future growth, including investing in technology, expanding
existing facilities and rehabbing existing facilities. Sadly, one of the responding
organizations has indicated that they will be closing their doors (in the category
Other. A summary of the responses is on the following page.

Q4: We expect to do one or more of the following:

Answered: 34

Skipped: 1

Q5: Our organization will utilize the following strategies to diversify

income sources.
Answered: 35

Skipped: 0

Most responding organizations intend to diversify income sources by developing

new products and services, approaching more private funders and generating
income through consulting. A summary of the responses is on the following page.

Q5: Our organization will utilize the following strategies to diversify

income sources.

Answered: 35

Skipped: 0

Q6: Our organization will invest in the following capacity-building

activities.
Answered: 34

Skipped: 1

Responding organizations will take a more comprehensive approach to capacity

building and will engage in a number of activities to strengthen their organizations,
including finding new funding sources, enhancing communications, building strategic
alliances, board development, etc.

Q6: Our organization will invest in the following capacity-building

activities.
Answered: 34

Skipped: 1

Q7: Organization Budget Range

Answered: 34

Skipped: 1

Responding organizations ranged in budget size from start-ups with no funding to

$10,000,000-$25,000,000. Most reported budgets in the range of $0-$100,000.
The second largest category of respondent indicated budget ranges of $1,000,000$5,000,000, followed by organizations with budgets in the $100,000-$250,000
range.

Q7: Organization Budget Range

Answered: 34

Skipped: 1

Q8: Nonprofit Subsector

Answered: 35

Skipped: 0

Respondents reportedly provide services in a number of nonprofit subsectors,

with education/youth development, social services and community planning
and development being the top three named categories.

Q8: Nonprofit Subsector

Answered: 35

Skipped: 0

Conclusions
Responding organizations are generally pessimistic
about the prospects for the nonprofit sector in 2017,
but their actions suggest that they are taking steps to
position their organizations for change and to be
sustainable over the long term.
In spite of their apparent negative outlook, a number
of organizations are investing in technology, hiring new
staff, and expanding or renovating existing spaces.
Organizations will also be engaging in strategic planning
and generating alternative streams of revenue from
introducing new products, services and programs.
Valerie F. Leonard
Expert, Community and Organizational Development
Copyright Valerie F. Leonard. All rights reserved.

Questions?
Questions regarding this report may be sent to

Valerie F. Leonard
Expert, Community and Organizational Development
Consulting@Valeriefleonard.com

Copyright Valerie F. Leonard. All rights reserved.