Needs and Problems in the Nonprofit Sector

Problems in the Nonprofit SectorTackling massive problems such as social injustice, income inequality, healthcare availability, sustainability (among others) requires innovation, a process by which ideas are transformed into implemented services or products. This process, however, is not as easy as it sounds for nonprofit organizations. In a “management for nonprofits” article, I read that innovation is a crucial factor of success in a worldwide and competitive economy. The power of innovation is widely exploited in all types of industries, and the nonprofit sector does not want to be left out.  

In another exciting article, they mention that the role of innovation in nonprofit organizations is crucial because the challenges that the organizations address are continuously changing. A vast number of stakeholders, the complexity of operations, and levels of social engagement (voluntary work and donors), all pose challenges towards the implementation of ideas. By definition, nonprofits must be very innovative as the goals they pursue regularly change, and the organization is forced to keep moving. Resources are frequently scarce in the nonprofit sector, as donations are not always reliable, and different types of funding offer very variable results. This complexity is why innovation processes are so crucial to the industry as it is a tool that allows for more inclusion of stakeholders, a clearer path to idea implementation, and a way to keep the organization going. The Three Bids failed nonprofit initiative serves as an example of how problems with funding, and problems with the board of directors and leadership took the organization down.

Some of the most important challenges faced by nonprofits are mentioned down below.

There is a very complex network of interdependencies that can make processes hard and agreements hard to reach. Donors, staff, stakeholders, volunteers, etc. all pose a challenge in both ideation stages, and in implementation. Having such a big gap for the ideation can be problematic, as different stakeholders might be after slightly different outcomes.

According to an innovation article, another of the main challenges for nonprofits is coordinated action. Accurate representation from all parties and consistent implementation from all sides remains a tough challenge to take on for these types of organizations. This is especially real for organizations which rely on volunteers because although they work due to shared interest and goals, the commitment is more fragile than for a regular employee.


  • Harness the shared interest among all participants.
  • Leverage the manager’s influence.
  • Promote innovation as an organizational value.
  • Foster clear communication within the organization.

This blog is part of a three-part series focusing on opportunities for innovation in the nonprofit sector, authored by our Accounts Fellow, Aaron Shildrick. The following blog posts (released every Thursday) will be focused on the solutions, providing a better insight into each of these solutions mentioned.

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