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What's Changed for Nonprofits in 2021 Featured

What's Changed for Nonprofits in 2021 Ibrahim Boran

In the United States alone, nonprofits account for more than 5 percent of the economy and over 10 percent of employment. Although the demand for nonprofit services has been on the rise globally, leading to new challenges for charities, 2020 was the worst year of all. Regardless of the difficulties, nonprofits have managed to stand firm and offer their services. These uncertainties have inspired change in the nonprofit sector heading into 2021.

Here are things that have changed in the nonprofit sector this year:

  • Federal COVID relief funds are silent on nonprofits

The coronavirus pandemic has affected everyone and every industry by extension. With this in mind, the government created relief funds to help the affected businesses and persons. However, the current COVID relief framework is silent on nonprofits. It does not specify how nonprofits would get help to continue providing their services. Recovery from the pandemic will demand more nonprofit services. Although we expect that this year will be better, the unfortunate truth is that there will be more demand for support than ever. In 2020 alone, food insecurity issues surged. More than 70 million people were pushed back to poverty, and a majority now have adverse mental health issues due to stress caused by the pandemic. Unlike ever, nonprofit services are needed to protect them. There is an increased need for support and connection to the recovery of the communities.

  • New regulations demand nonprofits using contractors to file New IRS Form 1099-NEC

Nonprofits that paid people $600 or more as an independent contractor last year is required to file the new IRS Form 1023-NEC with IRS, unlike in the past when nonprofits would use IRS Form 1023-MISC to report compensation of non-employees to contractors. This was due on February 1. For 2020 however, charities should still use IRS Form 1023-MISC to report payment of above $600, which is paid to attorneys, and raffle prizes of above $600. There is also a regulation that requires nonprofits to disclose donor information to state officials. However, the case is still pending in court, awaiting the decision by the US Supreme Court.

  • The occurrences have increased the need for digital services

Although there is hope that things will be back to normal next year, the transition to in-person fundraisers and events will take time. Digital events have proven to be effective in the past and will continue making a change in 2021 going forward. They have encouraged engagement from donors during such a time when they would not have attended the events. From now on, data from online interactions with the donors will be used to offer valuable insight into the strategies that are resonating, who is donating, and how to plan for future events. The data can be used to tailor messaging and create a better donor experience. For organizations that are eager to return to physical events, they must consider hybrid events going to the future.

  • There will be a need for centralized data management to enhance efficiency and transparency

Data is crucial for generating insights that are useful for planning, reporting, and marketing. Sadly, many nonprofits have not set up their infrastructure to manage large data volumes from diverse sources. For a nonprofit to survive in the current environment, a complete data strategy is required. However, most charities say that measuring and reporting on data is a problem. Ways of tracking outcomes and client feedback have been developed to analyze the impact of specific data and report to the donors. With transparency, teams can operate efficiently and effectively to deliver services to people that need them.

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Scott Koegler

Scott Koegler is Executive Editor for PMG360. He is a technology writer and editor with 20+ years experience delivering high value content to readers and publishers. 

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