In 2023, small nonprofits – defined as organizations with less than $25M in revenue – were focused on their finances, and their top three challenges were budget constraints, economic uncertainty, and increased competition for funding.
But the tide shifted in 2024, and financial health is no longer the chief concern. According to BDO’s 2024 Nonprofit Standards Benchmarking Survey, small nonprofits are on stronger financial footing this year. Nearly half (45%) saw increased revenue in the past 12 months, compared to only 38% who reported the same in 2023. More notably, only 11% of small organizations reported a funding decrease in 2024 compared to 36% in 2023.
2023 vs. 2024 REVENUE
Organizations are also optimistic about their next 12 months, with 65% anticipating increased revenue in 2025.
With this solid financial foundation, small nonprofits are now focused on successfully navigating the changes coming their way in 2025 and beyond. Keep reading for some of the key takeaways from the 2024 Nonprofit Standards Benchmarking Survey.
Small Organizations Tackle Talent
The employee experience is in the spotlight for small organizations. Not only was staff recruitment and retention a top priority for small nonprofits (34%), but employee morale was also reportedly a top challenge for 39% of organizations.
The good news: the majority of small nonprofits (66%) rated their organization’s culture as moderately strong. This is defined as:
- Some employee turnover
- Most employees are engaged and connected to the organization’s mission
- Employees are taking on new projects
| WORKPLACE CULTURE | |||
|---|---|---|---|
| 16% | 66% | 15% | 3% |
Very strong | Moderately strong | Somewhat strong | Needs improvement |
While this is a solid place to be, there is still room for improvement – especially since only 16% of small nonprofits said their culture was very strong (compared to 24% of nonprofits in the overall dataset).
Small nonprofits should prioritize strengthening workplace culture through targeted employee engagement initiatives and clear professional development pathways. Small investments in improving staff satisfaction can have large returns, helping organizations retain talent despite budget constraints while reducing costly turnover and recruitment efforts.
Small Nonprofits Focus on Their Boards
More than one-third (34%) of small organizations stated that enhancing board member skills was one of their top three priorities for the next 12 months. This shows that small nonprofits are not only prioritizing the individuals that help with their day-to-day operations – they are also focused on how their boards can have the maximum impact and make the most significant contributions with their time and effort.
Some small nonprofits may also be focusing on this area to overcome challenges with board member recruitment and retention. In the past 12 months, small organizations have taken a variety of actions to improve board skills and engagement. This includes assessing gaps in overall board knowledge (47%), establishing specific resource commitments for each board member (47%), and developing plans to enhance each board member’s skills (40%).
Organizations are putting in the work to identify and address areas for improvement – so what comes next? Nonprofits should develop and implement comprehensive programs for their boards that include clear expectations, regular knowledge assessments as priorities shift or new board members are onboarded, and individualized plans for skills and knowledge enhancement. Nonprofits are at their best when their boards are optimized – and this starts with successfully leveling every board member up to their full potential.
AI for Small Organizations
Our survey found that AI use among small nonprofits is much lower than their larger counterparts. Fifty-six percent of small nonprofits currently use AI, compared to 86% of organizations with $25M-$75M in revenue and 93% of organizations with $76M+ in revenue.
| AI USAGE | ||
|---|---|---|
| 56% | 86% | 93% |
Under $25M in Revenue | $25M-$75M in Revenue | $76M+ in Revenue |
Cost is, by far, the largest barrier to AI adoption and expansion according to more than half (52%) of small nonprofits. A lack of data cleanliness or data infrastructure (39%) and concerns around ethics and safety (39%) remain significant obstacles.
Among the small nonprofits that douse AI, chatbots to assist in daily work (49%), performing financial tasks like forecasting, budgeting, and/or automating AP/AR (46%), and volunteer/staff management and scheduling (37%) are the most common AI applications.
As organizations look to further engage employees and enhance their workplace cultures, using AI for time-intensive tasks may be a viable way to free up time so staff can focus on more high-value work.
For organizations encountering barriers to AI implementation, consider looking for low-cost options that could serve as a stepping stone to AI use. For example, some tools that nonprofits are already using may have AI enhancements built-in or available for activation.
All organizations – especially those who view ethical considerations as a roadblock to AI adoption – should develop proper policies to encourage the safe and responsible use of AI. These policies should then be communicated to all stakeholders. Learn more about the board’s role in AI implementation for nonprofits in our recent blog post.
Small Nonprofits are at a Critical Juncture
For small nonprofits, continued success will likely depend on the ability to strategically balance technology investments and talent development with external-focused initiatives like program and mission expansion. No matter where small nonprofits choose to focus, the overarching goal is the same: position their organization to keep making an impact for the communities they serve.