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VIEW THE REPORT 2020 Plante Moran Not-for-Profit Outlook Survey Report Introduction A Letter from John Bebes Executive summary 2020 Outlook 2020 Goals 2020 Challenges Revenue & profitability growth Economic & strategic outlook Tax outlook Strategies for success Attraction & retention Compensation & benefits Succession planning & performance evaluation Technology About Demographics Firm information Contact us NEXT

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Page 1: 2020 Plante Moran Not-for-Profit Outlook Survey …...VIEW THE REPORT 2020 Plante Moran Not-for-Profit Outlook Survey Report VISIT OUR SITE Introduction A Letter from John Bebes Executive

VIEW THE REPORT

2020 Plante Moran Not-for-Profit Outlook Survey Report

VISIT OUR SITE

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

NEXT

Page 2: 2020 Plante Moran Not-for-Profit Outlook Survey …...VIEW THE REPORT 2020 Plante Moran Not-for-Profit Outlook Survey Report VISIT OUR SITE Introduction A Letter from John Bebes Executive

1

2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

INTRODUCTION

How organizations can make the mark this year

The United States is in its longest economic expansion in history, but experts are wondering — with increasing frequency — how long it can continue. It’s a time of uncertainty — but there’s a lot to look forward to. The parking tax was repealed, boards are working hard to improve diversity, and many not-for-profits are finding creative paths to success, like mergers and joint ventures that make both organizations stronger.

What other trends are on the horizon? We surveyed more than 350 not-for-profit leaders to find out. Within these pages, we reveal the challenges nonprofits are facing, the goals they’re setting, and the tactics they’re using to improve. You’ll also find a review of last year’s performance, predictions for the upcoming year, and advice and trend forecasts from experts at our firm. The report is full of insightful, actionable information, and we’re pleased to share it with you.

I can’t wait to see how you turn uncertainty into opportunity this year.

Thank you for your consideration,

John Bebes Not-for-profit national industry group leader

We surveyed more than

to find out. Within these pages, we reveal the challenges not-for-profits are facing, the goals they’re setting, and the tactics they’re using to improve.

350 not-for-profit leaders

“ What other trends are on the horizon?

Page 3: 2020 Plante Moran Not-for-Profit Outlook Survey …...VIEW THE REPORT 2020 Plante Moran Not-for-Profit Outlook Survey Report VISIT OUR SITE Introduction A Letter from John Bebes Executive

2

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

INTRODUCTION

Executive summary

2020 Most important goalsThe most important anticipated goal for 2020 is obtaining more/new funding.

Approximately one in three respondents rank “obtain new funding sources/obtain more funding from current sources” as their No. 1 most important goal for 2020. Nearly half place it among their top two goals for the year.

Approximately one in five respondents place “Improve effectiveness of fundraising efforts and activities,” “Meet annual budget,” “Retain qualified staff,” and “Conduct long-term strategic financial planning” among their top two most important goals for 2020.

2020 Most important challengesThe most important anticipated challenge for 2020 is predicting future funding.

Approximately one in four respondents rank predicting future funding as their #1 most important anticipated challenge for 2020. Two in five place it among their top two challenges for this year.

Top issues for not-for-profits todayWhen asked what they consider to be the most important issue today for the not-for-profit industry overall, 50% of respondents cite funding, followed by staffing and sustainability.

The impact of the economic environmentOver half of the respondents anticipate the overall economic environment will have a neutral to negative impact on their nonprofit organization in 2020. Two in five feel the impact will be somewhat to very positive, and 5% are unsure. Economic environment impact is similar regardless of region.

Approximately one in three respondents anticipate their nonprofit organization’s total revenue and support in 2020 to be under $5 million, with one in four respondents anticipating revenue landing in the $1 million to less than $5 million range. The majority (7 in 10) anticipate less than $25 million in revenue and support in 2020.

Overall, two in three respondents believe their revenue and support will exceed their expenses in 2020. Two in three respondents selected contributed/donated income as the top revenue source that most supports their organization, followed by earned income.

Page 4: 2020 Plante Moran Not-for-Profit Outlook Survey …...VIEW THE REPORT 2020 Plante Moran Not-for-Profit Outlook Survey Report VISIT OUR SITE Introduction A Letter from John Bebes Executive

3

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

INTRODUCTION

Executive summary

Tax Cuts & Jobs Act (TCJA) impactFour in five consider the Tax Cut and Jobs Act (tax reform) to have had a neutral to very negative impact on their 2019 annual donations. Only 7% of respondents say the TCJA impacted their 2019 donations in a somewhat to very positive way.

When asked how they think their not-for-profit organization will be impacted by the TCJA in 2020, the perception leans neutral to negative with 24% stating they’re unsure what, if any, impact there will be and 22% citing it won’t impact them.

Technology prioritiesThe top technology priority that was selected overall by 69% of respondents for their not-for-profit organizations is to improve the performance of the existing system. Following closely, 60% of respondents say cybersecurity is a top technology priority. Midsized and large organizations are significantly more likely to say cybersecurity is one of their top priorities compared to smaller organizations with 50 or less employees. In turn, the smaller organizations are significantly more likely to say social media and an online presence is one of their top technology priorities.

Talent retention & recruitmentThree in four respondents say the overall greatest challenge in talent retention and recruitment is competitive pay and benefits. The next leading talent challenges include internal advancement opportunities (three in five), a lack of qualified candidates, and workloads/staff resources (cited by half of respondents).

Overall, 85% of organizations say they anticipate an increase in their total wages in 2020 compared to 2019. Just 3% overall anticipate their 2020 total wages to decrease from 2019. More than 65% of respondents say their total 2020 wages will increase believe it will increase by 3% or more while 29% think the increase will be 2% or less.

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4

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

INTRODUCTION

Executive summary

Anticipated changes in employee benefits in 2020Overall, 58% of not-for-profits anticipate their total healthcare benefits to increase in 2020. Among the 58% who believe healthcare benefits will increase in 2020, more than half anticipate an increase of 3% or more.

Overall, when asked if their organization will offer bonuses or incentive compensation in 2020, agreement is split fairly evenly with 43% citing ‘yes’ and 42% citing ‘no.’ Of the respondents who indicated their organization will offer bonuses or incentive compensation this year, performance-based bonuses (27%) and bonuses for leadership only (21%) are the most common unaided mentions used when describing the type. Fifteen percent indicate that they won’t participate in a bonus or incentive program in 2020.

The majority say their organization contributes something to their retirement plan. One in five say their organizations contribute more than 5% to their retirement plans. Fourteen percent say their organizations contributed nothing to their plan, and another 5% are unsure whether they do or not.

Evaluating CEO & board performanceMore than 60% say their organization’s board evaluates the CEO performance and compensation via an executive compensation committee review. An additional 35% say there is a benchmark analysis against other not-for-profits and 32% say the CEO goes through a full board review.

Overall, 54% of respondents say their not-for-profit organization doesn’t annually evaluate their board’s performance. More than 30% indicate that their organization does implement an annual board survey.

One in three say their board has a succession plan in place for their CEO and other C-level positions, but half do not.

Page 6: 2020 Plante Moran Not-for-Profit Outlook Survey …...VIEW THE REPORT 2020 Plante Moran Not-for-Profit Outlook Survey Report VISIT OUR SITE Introduction A Letter from John Bebes Executive

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

2020 Goals

2020 Challenges

Revenue & profitability growth

2020 Outlook

Economic & strategic outlook

Tax outlook

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6

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

Top goals for 2020

2020 OUTLOOK

We asked respondents to select their top five goals for 2020 in order of most important (1) to least important (5). Their top-ranked goals were:

Other options included: • Improve program reporting efficiency

and accuracy

• Increase effectiveness of board involvement and governance

• Meet annual budget

• Start new or expand current programs

The #1 top goal for 2020

Obtain new funding sources or obtain more funding from current sources

Selected by two in three respondents overall

Obtain new funding sources/obtain more funding from current sources

Improve effectiveness of fundraising efforts and activities

Retain qualified staff

Collaborate with other organizations/entities

Conduct long-term strategic and financial planning

1

2

3

4

5

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7

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

Top challenges for 2020

We asked respondents to select their top five challenges for 2020 in order of most important (1) to least important (5). Their top-ranked challenges were:

Challenge in predicting future funding

Scarcity of talented job candidates

Obstacles to new program implementation

Board effectiveness/engagement

Cybersecurity

1

2

3

4

5

Other options included: • Challenge in predicting cash flow

needs

• Increased compliance and regulation

• Inadequate access to funding

• Inefficient, insufficient, or outdated technology

2020 OUTLOOK

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8

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

What’s top of mind for not-for-profit leaders?

2020 OUTLOOK

“The nonprofit industry provides significant needed services that feed and train our citizens and make our communities stronger, safer and better places to live. Financial hardships and challenges occur at a high rate in our communities. More and more, the nonprofit community is being called upon to help meet the basic needs of our citizens, but there hasn’t been a corresponding increase in financial resources provided to nonprofits to meet these needs.”

“In addition to the always important issue of fund development,we are struggling with finding qualified candidates for open positions. I see the issue of qualified staff as an important issue today.”

“Leadership transition (lack of new talent to replace those leaving).”

“Pulling in revenue and contributions from diverse sources to impact/offset any changes to government funding sources.”

“Adapting to culture as it relates to digital technology, social media, and communication with constituents.”

“The most important issue is ensuring the stakeholders have the tools necessary to tell the story of the organization. Whether it is to donors, volunteers, or simply community members; being able to explain the importance of the organization, the needs of the organization, and the accomplishments of the organization play a vital role in the long-term success and sustainability of the organization.”

“Having the financial resources to remain relevant.”

“Government continues to reduce funding to low-resourced people in our communities with the anticipation that nonprofits will cover the deficit. Consequently, there is greater need and lower resources for nonprofits with no new funding sources.”

“Lack of consistent volunteers and funding. There are a lot of other NPOs to compete with for both, and more companies are limiting their donations.”

*Select verbatim comments from respondents regarding the most important issue today for the nonprofit industry overall.

What do you think is the most important issue today for the industry overall?

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9

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

Revenue & profitability growth

2020 OUTLOOK

What is your organization’s total anticipated revenue and support for 2020?

Less than $1M

80

70

60

50

40

30

20

10

0$1M to less than $5M

$5–$10M $10–$25M $25–$50M $50–$100M More than $100M

28

75

41

75

42

2824N

umbe

r of o

rgan

izat

ions

Page 11: 2020 Plante Moran Not-for-Profit Outlook Survey …...VIEW THE REPORT 2020 Plante Moran Not-for-Profit Outlook Survey Report VISIT OUR SITE Introduction A Letter from John Bebes Executive

10

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

2020 OUTLOOK2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

Do you expect total revenue and support to exceed total expenses in 2020?

Revenue & profitability growth

What type of budget does your organization prepare?

Yes

No

Surplus

Breakeven/balanced

Loss

No budget

66% 34%

57%

31% 11%

1%

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11

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

2020 OUTLOOK2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

Please rank these revenue sources in order of provides the most support to my organization (1) to provides the least support to my organization (5).

Revenue & profitability growth

12%

27%

29%

31% 27%

29%

26%

19%

13%

27% 23%

17%

74%

4%

35%

33%

16% 10% 5%

7% 12%

15% 4% 1%

Contributed/ donated income

Earned income Government Investment income Other

100

90

80

70

60

50

40

30

20

10

04%

Ranked #1

Ranked #2

Ranked #3

Ranked #4

Ranked #5

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12

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

Economic & strategic outlook

2020 OUTLOOK

How do you think the overall economic environment will impact your organization in 2020? PerceptionThe perceived impact of the economic environment on not-for-profit organizations is similar regardless of the region of the country.

55% anticipate the overall economic environment will have a neutral to negative impact on their organization in 2020.

Very positive

Somewhat positive

Neutral

Somewhat negative

Very negative

Unsure/Don’t know

5%

35%

36%

17%

2%

5%

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13

2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

Economic & strategic outlook

How do you expect 2020 to compare to 2019 in these five major categories?

Financial outlook What should not-for-profits consider in 2020?

2019 was a strong year for capital markets, with the U.S. stock market up more than 30%. So, what does that mean for 2020? Unfortunately, not much — a past year’s performance doesn’t always tell us what to expect the next year. But with an upcoming presidential election, among other unknowns, we won’t be surprised if investors experience more volatility in 2020 than they did last year.

One of the best strategies not-for-profits can use to mitigate volatility is to make sure your organization has cash on hand to cover spending needs for the near future — you don’t want to be forced to raise cash or sell equities at the wrong time.

If you’re like most not-for-profits, you may be considering environmental, social, and governance (ESG) investing. While the name might seem self-explanatory, every organization has their own definition of ESG, and the investment products available today are wide-ranging. Consult with your investment advisor to learn which approaches may be right for your organization and your mission before making any decisions. You’ll feel more confident that you did.

Casey VeachPlante Moran Financial Advisors

2020 OUTLOOK

Increase more than 10%

Increase 1-10%

Stay about the same

Decline 1-10%

Decline more than 10%

Revenue/Support

100

90

80

70

60

50

40

30

20

10

0Operating expenses Profit Total employment Demand for services

49%

16% 28%

62% 48%

6% 2% 3%

7% 16%

16% 24% 10% 7% 6%

26%

54%

59%

23% 29%

3% 1% 4% 1%

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14

2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

Tax outlook

2020 OUTLOOK

How do you think the Tax Cuts and Jobs Act impacted your annual donations in 2019?

Tax outlook What should not-for-profits consider in 2020?

There are a handful of tax-related trends not-for-profits should be aware of, pertaining not only to changing regulations, but also to public perception. On a statewide regulatory level, changes stemming from the recent Wayfair case may be applicable if you’re operating in multiple states. At the federal level, increasing IRS scrutiny of net operating loss carryovers and the growing difficulty of getting real estate exemptions might mean reconfiguring your tax strategy. Be sure to consult your tax professional on these issues.

Not-for-profits can also expect a possible increase in public scrutiny of their 990s. These documents are public and easy to find, and we may see, for example, journalists using data analytics tools to quickly find information and call attention to it. Two of the biggest areas where we expect additional scrutiny are executive compensation and business transactions between members. People may also look at the percentage of money a charity spends on the mission — this number is easy to sensationalize, even though it can have little to do with the effectiveness of money spent. However, this increased scrutiny presents an opportunity to add information to the 990, detailing the type of work your organization does, the grants it makes, explanations for items that may appear negative, and program successes.

David LowenthalNot-for-profit tax leader

Four in five consider the Tax Cuts and Jobs Act impact on their 2019 annual donations to be neutral (54%) to negative/very negative (28%).

Only 7% of respondents say the Tax Cuts and Jobs Act impacted their 2019 donations in a somewhat to very positive way.

Sentiment is similar regardless of region or employee size. Organizations who prepare surplus budgets (24%) and/or breakeven budgets (34%) are significantly more likely to say the impact was somewhat to very negative compared to organizations who prepare a loss budget (9%).

Very positive

Somewhat positive

Neutral

Somewhat negative

Very negative

Unsure/Don’t know

54%

1%

24%

4% 11% 6%

Page 16: 2020 Plante Moran Not-for-Profit Outlook Survey …...VIEW THE REPORT 2020 Plante Moran Not-for-Profit Outlook Survey Report VISIT OUR SITE Introduction A Letter from John Bebes Executive

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

Strategies for success

Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

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16

2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

Attraction & retention

We asked respondents to select their greatest challenges to talent retention and recruitment. Their top choices were:

STRATEGIES FOR SUCCESS

Real estate outlook What should not-for-profits consider in 2020?

Forward-thinking not-for-profits are embracing one particular real estate trend: reducing per-person square footage. Market rents have been relatively flat, if not slightly creeping up, so many organizations are choosing to rightsize their space. Spaces are trending away from individual offices to a more open floor plan with collaborative and flexible environments that feature more natural light and modern décor.

If you’re looking to increase efficiencies, decrease your real estate cost per person and create a more dynamic space, consider rightsizing and reinvesting a portion of your savings toward developing a more visually appealing space that will delight your current staff, attract potential staff, and enhance your organization’s mission.

Rick Pifer Cresa | Commercial real estate advisors

Competitive pay & benefits

Internal advancement opportunities

Lack of qualified candidates

Workloads/staff resources

Organizational culture

Training & development programs

Cost of living/housing

Lack of remote/flexible work arrangements

1

2

3

4

5

6

7

8

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17

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

STRATEGIES FOR SUCCESS2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

Compensation & benefits

Do you anticipate your 2020 total wages to increase, decrease, or stay the same compared to 2019?

Overall, respondents say they anticipate an increase (85%) in their total wages in 2020 compared to 2019.

Just 3% overall anticipate their 2020

total wages to decrease from 2019.

The majority (68%) of those who anticipate their total 2020 wages will increase believe it will increase by 3% or more while 28% think the increase will be 2% or less.

The Midwest and West regions are significantly more likely to say they anticipate an increase in their wage in 2020 compared to the South region.

By what percentage do you anticipate your 2020 total wages to increase compared to 2019?

Increase

Decrease

Stay the same85%

12%

3%

0-2%

3-5%

More than 5%

Unsure57%

29%

11%3%

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2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

STRATEGIES FOR SUCCESS

Compensation & benefits

Do you anticipate your 2020 total healthcare benefits to increase, decrease, or stay the same compared to 2019?

By what percentage do you anticipate your 2020 total healthcare benefits to increase compared to 2019?

Employee benefits outlook What should not-for-profits consider in 2020?

Not-for-profits and their staff have some exciting opportunities to alleviate financial stress this year. With the passing of the Setting Every Community Up for Retirement (SECURE) Act, there are a number of new opportunities for employers and employees. For example, the rules relating to multiple-employer retirement plans have been loosened, which makes it easier for organizations to pool retirement plans. This will be huge for small to medium-sized not-for-profits who want to provide staff with retirement savings opportunities at a lower cost than they would see with a single-employer plan. Another big win is a change to 401(k) and 403(b) plans, which will now allow limited penalty-free distributions in the event of the birth or adoption of a child.

Not-for-profit staff will also be pleased by a SECURE Act change that affects student loans. Many staff prioritize student loan repayments over retirement savings, which results in smaller retirement account balances and causes staff to miss out on employer-matching contributions. Under the SECURE Act, 529 plans — the tax-advantaged funds parents, grandparents, and others set up for future students to pay for their education — can now be used to pay off student loans up to $10,000 (with restrictions, naturally). This, coupled with other approaches like “matching” student loan payments staff make with an employer contribution to their retirement plan, can make a substantial difference for staff.

Michael KruckerEmployee benefits consulting

Increase

Decrease

Stay the same

58%

37%

5%

11

32

28

9

32

28

24

20

16

12

8

4

00-2% 3-5% More

than 5%Unsure/

Don’t know

Num

ber o

f org

aniz

atio

ns

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19

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

STRATEGIES FOR SUCCESS2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

Compensation & benefits

What is the average percentage of employees’ salaries your organization contributes to retirement plans?

Will your organization offer bonuses or incentive compensation in 2020?

Four in five respondents say their organization contributes something to their retirement plan.

Two in five say their organization contributes 3% or more to their retirement plans.

Of the respondents who indicated their organization will offer bonuses or incentive compensation this year, performance-based bonuses (27%) and bonuses for leadership only (21%) are the most common unaided mentions used when describing the type.

Yes

No

Unsure/Don’t know

43%

42%

15%

0-2%

3-5%

More than 5%

Unsure

26%

41%

28%

5%

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Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

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STRATEGIES FOR SUCCESS2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

Succession planning & performance evaluation

Does the board have a succession plan in place for CEO and other C-level positions? Please describe.

“A succession plan exists for every senior management position.”

“Succession planning is in place for all C-level positions and a number of the key second-level positions. These entail the how and sometimes the who.”

“Detailed succession plan in place, outlining responsibilities during interim as well as board responsibilities regarding candidate search.”

“Most detailed plan is for the CEO. Includes interim appointment of a physician to fill CEO slot. Also, includes description of recruiting process for permanent CEO.”

“All are retirement age and there is no succession plan(ning)- making several of us very uncomfortable, especially those of us on career paths that it would make sense to move to the next level. VERY behind in this area.”

“Due to size of the organization, there is no identified successor; however, systems are in place to provide the continuity during transitions.”

“It is a board initiative for 2020.”

“Our previous succession plan was recently implemented. We are in the process of updating the plan for future succession.”

No:

Yes:

Yes

No

Unsure/Don’t know

33%

16%

51%

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Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

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2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

How does your board evaluate CEO performance and compensation?

How does your board evaluate its own performance?

STRATEGIES FOR SUCCESS

Not-for-profit organizations with more than 50 employees are significantly more likely than the smaller organizations (1-49 employees)

to say their board evaluates the CEO performance and compensation via an executive compensation committee review.

Succession planning & performance evaluation

Executive compensation committee review

Full board review

Benchmark analysis against other not-for-profits

We don’t annually evaluate CEO performance and compensation

Executive committee of the board evaluates performance

Annual board survey

We don’t annually evaluate board performance

Other

45%

23%

25%

7%

7%

32%

7%

54%

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2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

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STRATEGIES FOR SUCCESS

Technology We asked respondents to select their technology priorities for 2020. Their top choices were:

Cybersecurity outlook What should not-for-profits consider in 2020?

As hackers continue to get more sophisticated, cybersecurity protections are becoming more outdated. Not-for-profits should pay special attention to IT vendor management, as contracts may not fully cover your cybersecurity needs. While many not-for-profits outsource their IT, many don’t realize that the services provided by vendors need to be verified to ensure they’re properly protecting you.

To make sure you have appropriate security controls in place, you’ll first want to establish a baseline of controls with a seven-point cybersecurity assessment. Then, attack and penetration testing will expose where you’re vulnerable so you can start working toward fixing those issues. Hackers tend to go after the lowest-hanging fruit, so every little fix helps protect you. Your IT vendor may be able to do this for you, or you may need to consult an outside firm. Either way, make sure you’ve spoken to your IT vendor about updating security patches and enforcing cybersecurity practices.

Scott PetreeCybersecurity

Improving performance of existing systems1

Donor/member relations & analysis6

Cybersecurity2

Donantion/income collection/mobile-giving7

Systems that readily integrate with each other3

Remote access (for employees)8

Social media & online presence4

Program/service delivery to recipients9

Tracking impact/outcomes5

Outsourcing technology support/strategy10

The top technology priority for 2020 that was selected overall by nearly seven in 10 respondents for their not-for-profit organizations is to improve the performance of the existing (technology) systems. After that, cybersecurity and systems that readily integrate with one another are the #2 and #3 technology priorities for this year (selected by 60% and 57% respectively).

Respondents from the West and Midwest are significantly more likely to say that systems that readily integrate with one another is a top priority compared to Northeast respondents. Similarly, West respondents are also significantly more likely compared to Midwest and Northeast respondents to say tracking impact/outcomes is a top priority.

Midsized and large organizations are significantly more likely to say cybersecurity is one of their top priorities compared to smaller organizations with 50 or fewer employees. In turn, the smaller companies are significantly more likely to say social media and an online presence and donation/income collection/mobile-givings are among their top 2020 priorities compared to the larger counterparts.

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IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

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About

Demographics

About Plante Moran

Contact us

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IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

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ABOUT2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

Demographics

Results came from respondents in 25 states and Washington D.C.

Respondents to the Plante Moran Not-for-Profit Outlook Survey represent leaders across the United States from various organization types and sizes. This year’s survey was conducted online during January 2020.

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IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

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ABOUT2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

What type of organization are you representing?

Demographics

2%

5%

4%

8%

8%

12%

11%

15%

10%

25%

Arts & culture

Association or membership

Education

Social services

Foundation

Healthcare

Religious

Environmental

Government, research, & economic development

Other

Including: public media, county fair, real estate,

senior housing

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IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

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ABOUT2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

Demographics

How many employees did your organization have at the end of your previous fiscal year?

How long have you served your organization in your current role? (By number of participants)

44%

12%

17%

12%

15%

24

138

86

5362

Less than 49

50-99

100-249

250-500

More than 500

Less than 1 year

1-5 years

5-10 years

10-15 years

More than 15 years

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IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

ABOUT2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

About Plante Moran

Plante Moran is a nationally recognized professional services firm providing services in the following areas:

• Audit

• Commercial real estate advisors

• Cybersecurity

• Data analytics

• Employee benefits consulting

• ERP consulting

• Finance & accounting solutions

• International services

• Investment banking

• Restructuring & transformation

• Risk management

• Strategy

• Supply chain & operations

• Talent

• Tax

• Technology consulting

• Transactions

• Valuation services

• Wealth management

More information about our not-for-profit services can be found at:

plantemoran.com/nfp

Our not-for-profit experienceWith decades of experience in the not-for-profit sector, we understand and respect the importance of your mission, and we recognize that just as your mission is unique, so are the structural, financial, and operational issues your organization faces. Our dedicated not-for-profit experts work together to deliver solutions in a practical and effective manner.

1,100+ NFP clients

90 years of service

250+ professionals serving not-for-profit clients

500+ single audit reports filed annually

2ndlargest single audit provider in the nation

1,800 Form 990s filed annually

$750K–$1.2B annual expenditures for government programs audited

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IntroductionA Letter from John Bebes

Executive summary

2020 Outlook 2020 Goals

2020 Challenges

Revenue & profitability growth

Economic & strategic outlook

Tax outlook

Strategies for success Attraction & retention

Compensation & benefits

Succession planning & performance evaluation

Technology

AboutDemographics

Firm information

Contact us

ABOUT2020 PLANTE MORAN NOT-FOR-PROFIT OUTLOOK REPORT

Contact us

John Bebes | Industry group leader [email protected]

Kellie Ray | Southeast Michigan leader [email protected]

Christina Hardy | Greater Michigan leader [email protected]

Kristin Hunt | Ohio leader [email protected]

Kathy Downey | Illinois leader [email protected]

Lisa Meacham | Rocky Mountain Region leader [email protected]

Dori Eggett | Tax [email protected]

Michael Krucker | Employee benefits [email protected]

David Lowenthal | Tax [email protected]

Scott Petree | Cybersecurity [email protected]

Rick Pifer | Cresa [email protected]

Casey Veach | Plante Moran Financial Advisors [email protected]

For more information about Plante Moran and our not-for-profit services, contact: