RECOVERY AND THE PATH FORWARD: BEST PRACTICES FOR NONPROFIT ORGANIZATIONS: Local PNC leader reflects on best practices to help nonprofit boards meet today's unique challenges.

This is the twenty-second in a series of informative monthly articles for North Carolina businesses from PNC in collaboration with BUSINESS NORTH CAROLINA magazine.

North Carolina's 40,000+ charitable nonprofits play a crucial role in delivering services, resources and education throughout local communities--while also creating lift and impact for the state's economy and workforce. According to the North Carolina Center for Nonprofits, organizations in the nonprofit sector pay more than $19 billion in wages to North Carolinians annually. In total, nonprofits put $56 billion in revenue back into the state's economy each year--and the life-changing impact they provide cannot be overstated, particularly when reflecting on the personal and economic hardships and disruptions that have arisen in recent years.

Unpredictable markets, increased reliance on philanthropy and complex regulatory requirements are among the challenges nonprofits face today--all while being asked to expand their impact with fewer resources. As a result, many nonprofits are reevaluating their business models by establishing or strengthening long-term asset pools ("rainy-day funds") and reinvigorating fundraising and donor education efforts.

As nonprofits throughout North Carolina continue on the path to recovery and emerge from the pandemic, Winston-Salem-based Henri Cancio-Fitzgerald, senior vice president and managing director of nonprofit solutions for PNC Institutional Asset Management[R], provides insights on selected trends and best practices in the nonprofit sector.

UNRESTRICTED GIVING AND TRUST-BASED PHILANTHROPY

Among the emerging trends shaping the nationwide philanthropic landscape is the uptick in unrestricted giving and trust-based philanthropy. While this type of funding represents a departure from the norm for many donors, nonprofit leaders are increasingly communicating to funders the benefits of unrestricted or less restricted funding. "This could be as simple as explaining the differences between restricted and unrestricted giving and the impact that the type of funding has on the organization and its mission," says Cancio-Fitzgerald.

More unrestricted dollars reflects a stronger organization from a financial health perspective, and can, in turn, lower the cost of borrowing, affording the organization more financial flexibility. Restricted funds can be limiting and even jeopardizing to a nonprofit organization. Take, for example, an organization with a...