Term paper on Industry and competitor analysis

Industry trends

World economy is gradually recovering after the recession, and the main trend is the increase of fundraising in the nonprofit sector, along with the growing demand for the help of NGOs in various parts of the world. Frequent disasters, hurricanes and earthquakes in 2011 have already increased this need for humanitarian help, and the long-term trends in countries with high poverty rates indicate that the demand for NGOs will definitely be increasing.

At the same time, there is a clear trend for more confident fundraising strategies in the nonprofit sector (Edgington, 2011). The NGOs will select the sources of fundraising which correlate with their mission, vision and goals instead of seeking any financial support. The NGOs also have a clear trend for the diversification of funding sources, which allows to mitigate risks and to have a great portfolio return if the NGOs use their resources to generate profit as well.
The anticipated growth of nonprofit sector will likely cause the need for developing new initiatives and expanding the existing ones. The overheads of the NGOs will increase, and in this case such increase will indicate that the industry is growing rather than point at the operational ineffectiveness of the organization (Edgington, 2011).

One more trend of the nonprofit sector is that the organizations are using social media as a strategic resource for creating partnerships, increasing public awareness, and establishing new connections (Edgington, 2011). Finally, the focus on long-term initiatives resulting in social change and greater social stability of a particular country or region will be witnessed in the recent future, since this approach proved to be more effective.

Problems in the industry

The major problem in the nonprofit industry is the lack of resources (e.g. funding, skilled employees, social support etc.) to help all potential clients. Unfortunately, there are many more countries and regions needing humanitarian help than all the NGOs can address. Another problem is the consequence of the former situation: the NGOs have to make a choice between several groups of potential clients; there also exist accountability pressures associated with the nonprofit initiatives – NGOs need to provide certain proof that their programs are truly efficient. These activities increase overhead costs and draw funds away from the charity programs to accounting and financial issues. Registration and paperwork, especially in the countries with high level of bureaucracy are another issue in the nonprofit industry.

The nonprofits depend on international regulations, financial and trade agreements and the mode of interaction in the countries of their service provision. Also, the NGOs are vulnerable to local price increases and exchange rate fluctuations, which might significantly change the efficiency of the programs. In many countries, there are collaboration issues, or there are no local NGOs available to support and maintain the activities of the international charities.

One of great problems of the nonprofit sector is board development (Cirelli, 2011). Creating the appropriate culture and building an active board of directors is quite difficult, because high-impact people often are not interested to struggle with the NGO.

Finally, the NGOs often lack a strategic approach to management and especially to promotion. Although the competition in the nonprofit sector is still present, there are few leaders who really understand that and use the means of promotion and advertising to attract the attention of public and sponsors (Cirelli, 2011). Overall, managers in the nonprofit sector need more training on marketing and fundraising, as well as efficiency training. Many new nonprofits suffer from inefficiency and the lack of focus. Thus, the leaders in this industry have to focus on efficiency, sustainable fundraising policy, strategic planning and impressive promotion, especially in online sector.