There are many people in the world who are passionate about helping others by doing anything they can to serve mankind. Often these people come together to increase the effects of their efforts, such as forming NPO’s. A Nonprofit organization sounds to be a perfect concept, but whether that’s true or not can be seen through a SWOT Analysis for non-profits.
Nonprofit organizations basically are legal entities that are created to serve the public in regards to the various social issues they face. Although these are classified as organizations, they aren’t the same as other businesses because the money that they earn is solely used for paying off the expenses they have to operate and if they earn in excess, the amount is invested back into the organization.
Any extra money cannot go into the pockets of any private parties or owners whereas, in a traditional business, the purpose is profit generation. A nonprofit organization can take up any shape, such as politics, schools, churches, social clubs, etc. Nonprofit organizations can also be tax-exempt. They can file with the government to be granted an exemption from paying taxes however not every nonprofit goes through this process. Some NPO’s choose to pay taxes as well.
It is very important for NPO’s to be popular with the people because that is essentially how they earn money; people choose to spend for NPO’s when they believe in the kind of work that they do. They also earn through various sponsorships, personal investments, and government funding as well. They need money to be able to pursue their social work.
A SWOT analysis will help us in understanding the attractiveness of this industry in detail. Factors that add value for NPO’s and are beneficial for their success will be classified as strengths and contrary to these factors which hurt the well-being of the industry will be called their weaknesses.
Similarly, any and all factors which can be taken advantage of for future success and growth for the industry will be the opportunities, and all the factors which can harm the industry in any shape or form will be threats. We want to avoid threats at all costs. Before we move on, it is important to understand that strengths and weaknesses are internal factors whereas threats and opportunities are external.
Internal factors can directly be controlled by the organization but external ones are out of its influential sphere. Internal factors are therefore easier to work around as compared to external ones.
Let’s understand this using an example, people investing in NPO’s because of the cause it supports will be a strength for it because the NPO controls what and how to do it. However, if people are generally skeptical towards the authenticity of such organizations it will be a threat because an NPO cannot control someone’s beliefs. Now that we understand the details, let’s proceed with the actual analysis ahead.
What are the nonprofit industry’s major strengths?
NPO’s are very attractive for a lot of people to be a part of. Here are some of the biggest reasons why people are willing to invest their resources in a nonprofit.
People are always willing to be a part of a good cause as their way of “giving back” to society. Every type of NPO has some sort of a market of people to cater to meaning they save a lot when looking for workers.
People are willing to volunteer at such organizations with enthusiasm meaning that they will give it their best shot without expecting anything in return other than gratitude.
No Personal Liability
Starting an NPO also means protection in case it all comes crashing down should anyone choose to sue the organization. They will only have a claim over the organization, not any of your personal assets.
As we mentioned before, NPO’s can be exempted from paying any taxes. As nonprofits don’t exactly exist to generate huge sums of money, any mechanism of saving money is ultimately a huge strength for them.
Open to Funding
Private investors who share the same vision as the NPO can give as much amount as they want to. People also can donate to these organizations to make things easier for them.
In fact, the donations which are brought by people and other corporations are tax-deductible. This gives a very big motive for others to invest in an NPO.
An NPO can last as long as a cockroach does through a nuclear attack. In other words, NPO’s do not end if the owner passes away; they can simply be handed over to other people to run. The only condition is that whatever cause the NPO stands behind stays relevant and that they remain popular among the public.
What are some of the biggest weaknesses for nonprofits?
All good things have some difficulties associated with them as well. Here are some of the major weaknesses of being in this industry.
This industry is very expensive to get into. You need a lot of capital to start your operations for a nonprofit. It also requires a lot of filing work to be submitted to the government before it can officially commence.
Yes, having volunteers is a very big strength as mentioned above but it is a double-edged sword. Volunteers are free to quit and leave whenever they please; you can’t stop them.
Moreover, volunteers are not always the right fit for the organization in terms of their skillset and ability to work. So sometimes they can be difficult to deal with going forward.
Difficulty Finding Funding
There are many nonprofit organizations in existence already and new ones emerge 24/7. It becomes very difficult to stand out from the clutter of similar NPO’s to look for people and companies willing to invest in your cause.
Marketing becomes redundant and people are already supporting some cause that is very alike to your own so they are not willing to divide their cash.
NPO employees get paid less than other jobs because the amount of profit coming in is spent mainly on the expenses and operations. Smaller NPO’s don’t hire many people because they have a tight budget which puts the entire burden on the select few making it very cumbersome.
It is not the most promising career choice for people who need to make money hence it becomes hard to find dedicated employees.
What are some of the opportunities facing nonprofits?
Everything can be made better by taking advantage of the right opportunity at the right time. Here are some important things NPO’s can do to grow stronger and further.
Data Analytics/Machine Learning
Technology is the future for every industry including NPO’s. It is anticipated that with the use of evolving technological methods made possible by data mining and machine learning, NPO’s will be able to reach even bigger markets to find both people needing help and those willing to provide it.
This will also allow NPO’s to better customize their message and communication to reach out to willing investors.
If nonprofits can compete with profit-generating organizations in terms of treating their employees with more benefits they can surely get more and more serious people to sign up.
Once employees are willing to work in NPO’s for the long term, they can even become better candidates for successors once the owner steps down or passes away.
It is anticipated that with the widespread use of software such as Alexa and Siri, NPO’s are looking at a future where they can make donating to their cause as simple as the donor asking one of these pieces of software to do it for them.
NPO’s can have their details ingrained into either applications or something else to make them compatible with the software on people’s cell phones.
Most of the support pool of nonprofits includes older people. NPO’s are looking at a very promising future ahead should they choose to capitalize on the emerging youth.
Younger people are very different from their predecessors so they will have to be convinced in a different light.
What are the major threats that NPOs face?
NPO’s are equally as prone to threats as other businesses, if not more. Let’s see which major threats are looming over this industry at the moment.
NPOs are the types of organizations to rely heavily on people and their funding. They have intel on their sensitive information which included their addresses and contact info. Should a hacker get into their system, many people will be compromised.
Most NPOs are not big enough to invest in foolproof cyber security systems as is, so cyber-attacks are a very big threat to their safety.
Lack of Trust
People are often very skeptical when it comes to NPOs’ authenticity. It is not unusual for many such organizations to be a front for some other illegal activity or the money earned going to fill private pockets.
Smaller and newer NPOs that do not have a history behind them find it difficult to find loyal investors, funders and volunteers. Many people overlook this industry because they have trust issues.
Lack of Investors
Most business people are only interested in investing when they see a potential of a big return and as we know NPOs do not return anything. This is why they find it very hard to find heavy investments causing them to rely more on donations by the public.
There is an NPO under every rock you choose to pick up and they continue to be formed every day. Some of them are very big with many loyal people and corporations supporting them.
The amount of competition in this industry is severe and though the goal is not to make money from the market, it is to raise enough capital to fight your battles. The barriers to entry here are quite high.
Nonprofits SWOT Analysis: Final Thoughts
Congratulations to you if you have made it all the way down over here, reading your way through to the end. Now you know where the NPO industry stands at large within the market.
There were a lot of insights in this article to make you better aware of how the four major factors of the analysis affect an NPO. We know that there are many strengths for the people in this industry to be happy about.
There are amazing opportunities as well for NPO’s to focus on. Technology is an amazing avenue to help further escalate the popularity of nonprofits. They surely are looking at a bright future ahead.
The threats however cannot be ignored. Cyber-attacks need to be curbed away because NPO’s are already low on the trust factor with people. Better and stronger investors can take care of this problem by funding elaborate security measures.
Overall, NPO’s are not disappearing anytime soon because they are needed by many communities around the world.
A SWOT analysis helps one in understanding an entity be it a business, organization, or even a country at large in a better way.
Knowing the four core factors and how they affect the status of the existence of the said entity is very important and can help in making important decisions for the future, both for investing or improving. This is why it is very useful to know how to do a SWOT on your own.
If you are new to the concept, you can take a look at the various examples out there to know how it works. If you want, you can also take help from a template to make your first SWOT easier and less intimidating.
In fact, there is a SWOT analysis in table format which can further simplify the process because you can compile and present your findings in a much more clean and concise format. So get to work and draw out your first SWOT! Good luck to you!