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Charities and nonprofits are businesses that often improve the livelihood of individuals. Although many believe these organizations are reliant on donations, many functions like any corporation. They have budgets, events, and employees — more or less depending on the size of the charity.

And like any other organization, charities are susceptible to external factors, particularly political, economic, social, technological, legal, and environmental influences. In this PESTLE analysis for charities, you’ll learn how each of these six factors impact, impede, or enhance charities.

Political factors: Susceptible to a volatile political landscape

Charities feel the heat whenever a new government party is in power. The government can change, adjust, or continue pre-existing with taxation laws. These laws impact whether charities can expect to have tax deductions for everyone. They may decide to reduce or even retract federal funding, which plays a huge role in the survivability of many charities. If the funding is reduced, these organizations must adjust planning and budgets as needed.

While most charities are typically exempt from engaging in political activities, it depends on the type of organization they are. For instance, organizations filed as 501(c)(4) are called social welfare organizations. They have some leeway in political activity, but it can remain limited.

Economical factors: An ally to the economy

The economy influences charities. When the Great Recession hit twelve years ago, charities and nonprofits took a hit. Since everyday people were worried about job security (or attempting to secure a new job), they were less likely to donate. Most people had to focus on surviving before helping others. As such, charities suffered too. For some, donations are the driving force behind a charity’s success; without it, the organization could wither. Resources will be drained, funding lost.

On the flip side, when the economy is on the rise, nonprofits benefit from it like any other organization. Budgets can increase, allowing for more activities. Additionally, if people feel more secure economically, they are more likely to donate to the causes they believe in.

We also can’t forget how nonprofits impact the economy. In the United States, nonprofits employ over 12 million people. They have larger payrolls than other industries, including finance and construction. Many of these organizations work with the community to create new opportunities for the residents. Some offer child and elderly care, as well as job training to the underemployed and unemployed. As such, charities can create more jobs, contributing to economic growth.

Social factors: Helping the community grow and prosper

As briefly mentioned above, charities impact society. These organizations can employ millions of people or help others be employed. Charities focused on the community bring many goods and resources to help individuals get ahead in life.

We’re also seeing charities be introduced with technology. For instance, when it’s your birthday, Facebook now asks if you’d like to choose a charity to have friends and families donate to a specific cause. In only a few clicks you’ll have chosen your desired charity and have it posted to your wall.

Despite the giving attitude most have, charities are still businesses at the end of the day. As a business, they benefit communities by helping them with health, education, and spirituality. For some communities, charities are the backbone. Without them, many underprivileged individuals would lack the necessary guidance to live a fulfilling life.

Technological factors: Adopting technology for improved outreach

Technology is a potential vehicle of success for charities, and yet only a small percentage have adopted technology into their organizations. Adding new software would allow the organization to improve efficiency. Internally, organizations can manage tasks, handle documentation, and improve communication with other team members.

Externally, technology like social media platforms gives nonprofits a method of reaching more people — more than they can by calling individuals or meeting face-to-face. Charities can also ideas, events, and news through online platforms. By putting their activities out in the open other people can join in, such as journalists who publish stories on popular publications.

Most charities are drowning in data. They have an abundance of information and handling every piece is difficult. By introducing analytics to manage this data, employees will have instant access whenever needed. Additionally, the data can be analyzed to discover new markets or potential issues simmering below the surface.

Legal factors: From political blockages to workplace management

Charities are susceptible to many legal risks and the introduction of technology is partly to blame. If an employee shares internal marketing materials or presentations, they could be liable for copyright or trademark infringement. Additionally, employees need to be mindful of what they say on social media. Some go as far as to write “my opinions are my own” in the bios of their social media profiles to separate themselves from the charities they work with.

Then there are the workplace regulations. Charities need to provide a positive work environment for their employees. We have certain laws for this, such as the “Healthy Workplace Bill” which makes it a crime to “unlawful employment practice”. In this case, charities must ensure their employees aren’t working in a hostile or abusive work environment.

As I said earlier, most nonprofits can’t participate in politics. If they fall under, Section 501(c)(3), all political endeavors are prohibited. All members of the nonprofit must be aware of this and avoid political campaigns and activities in the name of the charity.

Environmental factors: Helping the health of our planet

Many charities focus on helping the environment. These charities care about improving the condition of the planet for people and wildlife. This includes raising money for endangered species, to protect our forests and clean water supplies, and maintain safe breathable air. As some political powers in the United States aren’t in favor of climate change or plans, it may be up to charities and nonprofits to help.

PESTLE analysis for Charities: Bottom Line

Charities provide many opportunities for the less fortunate. They employ millions of people each year and help underprivileged people gain confidence. However, they’re susceptible to changes in the economy; when it’s down, donations are few and far in between. But when it’s rising, the organizations gain bigger budgets and people can donate more. Charities also have to follow many strict laws and regulations, the biggest being avoiding most political campaigns. And yet, certain political changes could seal their fate, particularly by cutting federal funding.

Despite this, charities continue to prosper, as you now know through this PESTLE analysis of Charities.

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