While the public may recognize nonprofits’ inspiring missions and enjoy their positive community impact, they often don’t see that the daily inner workings of running a nonprofit are demanding and complex. From balancing budgets and juggling grant deadlines to managing staff and volunteers, running a nonprofit can be as challenging as it is rewarding.

Nonprofits, often the heartbeat of communities, are also businesses — they have to raise capital for office space, staffing, marketing and visibility. They need to manage IRS reporting, develop HR policies and take care of other organizational documents along with ensuring their financial health is stable. They must decide on the right mission statement and vision for the organization, narrow down who they serve and who they don’t, fundraise and collaborate with other nonprofits for continuation of services.

The challenges facing nonprofits, particularly small to mid-size nonprofits, are many and the biggest one is no surprise — raising funds for operating costs and programs. With grants and donations being unpredictable, it’s difficult to achieve financial stability and plan ahead. According to Independent Sector’s 2024 Health of the U.S. Nonprofit Sector: Annual Review, the number of donors decreased 3.4% in 2023 and 22% of nonprofit workers struggled to afford basic necessities.

In Maryland, it’s no different. “There's a perpetual sense of scarcity in what nonprofits need to advance their mission and how they can access their resources to do it,” said Heather Iliff, Maryland Nonprofits President and CEO. “And this is primarily related to small and mid-sized nonprofits that are community led; community accountable. They have good, strong relationships in the community and expertise to offer, but often don't have connections to big money and big donors. The vast majority of the funding is going to the largest nonprofits.”

In fact, according to a recent study conducted by Maryland Nonprofits, it is estimated that 90% of the funds and resources in Maryland go to nonprofits with more than $10 million in revenue. “So, the rest of the nonprofits are sharing less than 10% of all the revenue, including government funding, big and small donors,” said Iliff. “There's just a mismatch in terms of where the money is and the nonprofits that need it. It’s an ongoing challenge that is difficult to address.”

Small to mid-sized nonprofits have smaller staffs meaning that they have to wear many hats and divide their time, making it difficult to focus on a specific area. They are confronted with the tasks of generating awareness, grant writing, finances, program development, managing staff and volunteers and limited resources — all the while, trying to raise funds to keep their programs going.

The Community Foundation of Anne Arundel County’s (CFAAC) Grants Manager Rosalind Calvin regularly sees nonprofits struggle to balance programming with business operations. “Fundraising, compliance, donor relations and other business-related factors can be a real challenge because the best nonprofits are focused on and motivated by delivering services and those tasks can be time stealers and bureaucratic challenges.”

That’s not to say that large nonprofits don’t encounter challenges — the challenges are just different. They must manage complex structures, donor relations, maintain programming and impact across regions and sustain a broad reach through strategic communication.

And although there are difficulties, many nonprofit workers say that the rewards are greater. There is nothing more fulfilling than seeing the direct impact of their work on those in the community who need it most.

The firsthand stories and feedback from those they serve is incredibly gratifying, said Calvin: “If a nonprofit provides programs for children facing academic struggles or economic hardships, and a child says, ‘This was the best thing I’ve ever done,’ or if they share how much they’ve learned, those are the kinds of moments that are especially meaningful to nonprofits,” she said.

The good news for local nonprofits is that they do have access to valuable resources to help them. Recently, The Nonprofit Center, in partnership with CFAAC, hosted Mission & Method: Strategies for Greater Nonprofit Impact and Collaboration, a day-long conference focused on strengthening nonprofit operations. CFAAC also offers ongoing educational programs and encourages its fundholders to support unrestricted giving, which often strengthens nonprofit operations and capacity building.

A strong business model is essential for nonprofits to serve effectively, and unrestricted gifts provide the flexibility they need to thrive. When donating to a nonprofit, consider supporting overhead costs — it’s one of the most impactful ways to sustain their mission so they can continue to serve others.

This article was originally published in the Capital Gazette on March 30, 2025.