NEWS & ANALYSIS

01/12/2024
HSC Publications

Health and Human Services Trends in 2024

As we step into 2024, it’s time to prepare for our sector’s upcoming challenges and opportunities alike. Our members will have some new challenges and some longstanding ones, including:

  • Uncertain demand for agency services, 
  • Ongoing labor shortages,
  • Persistent-Though-Easing Inflation and High-Interest Rates,
  • Donor fatigue and the fiscal cliff,
  • Increasing adoption of artificial intelligence, and 
  • Unpredictable state and federal governments.

Uncertain Demand for Agency Services

In a June 2023 survey of our members, 92% of organizations were experiencing higher demand than in June 2022. Those were record levels of demand, levels that have been increasing ever since the pandemic began. Unfortunately, a December 2023 survey of our members revealed that the demand for services has not eased, with 82% of our members reporting increased demand since June.

This continued increase in demand is attributable to at least three factors: The aggregate consequences of inflation on individuals and families, driving more people to require assistance; the cessation of pandemic aid over the course of 2023; and increasing population levels in Columbus resulting in higher quantities of people in need regardless of the percentage of people in need.

With inflation finally easing, with people adjusting to the absence of pandemic aid, and with the economy churning, we hope that levels of demand will begin to diminish in 2024. 

Ongoing Labor Shortages

Another pandemic aftershock has been shortages in labor across sectors of our economy. This has been true for nonprofits nationally, and member nonprofits have not been immune, as we reported in June 2022 and June 2023 about 1,900 and 1,000 unfilled positions, respectively. These were massive numbers for a membership that employs 18,000. These shortfalls are a key reason why 70% of our members reported in June 2023 that they could not meet the demand for their services.

Though nonprofits have continuously been responding to these challenges, through increases in wages and benefits to adjustments to recruitment and retention strategies, they have been exacerbated by rapid wage growth in competing sectors that has far outpaced the ability of nonprofits to keep up. Consequently, the remaining nonprofit workforce is overworked, and community demands are going unmet. Nonprofits will, of course, continue fortifying its workforce with whatever efforts it can, but this problem cannot be unilaterally resolved: Funders will need to increase capacity-building investments, the government will need to increase reimbursement rates to keep pace with inflation and improve economic conditions will need to both drive more people into the nonprofit sector as employees, and fewer as clients.

Persistent-Though-Easing Inflation and High-Interest Rates

Inflation is decreasing, but its ramifications for nonprofits and the people they serve are yet to follow suit. Indeed, inflation does not only affect individuals and families; it increases operational and borrowing costs for nonprofits.  As noted elsewhere in this forecast, inflation’s ripple effects are widespread and significant for our sector. 

As the Federal Reserve continues to lead the charge to corral it, inflationary burdens will hopefully ease, bringing much-needed relief to nonprofits struggling to meet the demand has created for services and to overcome the financial burden it has created for nonprofit operations. In the interim, nonprofits will continue seeking efficiencies wherever it can, including in strategic collaborations to minimize costs, diversify revenue, and increase efficacy through this inflationary period. Furthermore, nonprofits should continue being transparent with the public and with donors about the financial challenges inflation continues to have for them. 

Donor Fatigue and the Fiscal Cliff

Nonprofit organizations are experiencing decreased quantity and quality of donations. For example, #GivingTuesday saw just a 0.6% increase in donations, with the number of donors down about 10% from 2022. And with a presidential election coming this November, nonprofits will again have to compete in what will be another record-setting year of political giving and spending as well.

Despite these headwinds, there is an excellent opportunity to reach new audiences with innovative approaches. For example, Gen Z and Millennials are ready to fund and support mission-driven nonprofit organizations. Additionally, adopting subscription-style donor models can increase recurring revenue streams and promote donor engagement. 

Revenue streams will be strained by more than just diminished philanthropy, however, as pandemic aid from the federal government will cease being distributed by years’ end. This fiscal cliff presents a whole host of challenges as government dollars to and through the nonprofit sector will shrink dramatically without similar funding available in the years ahead. 

Increased Adoption of AI 

As Artificial Intelligence (AI) technologies progress, nonprofits should begin to prepare for how to use the best AI and protect their organizations from misuse. Additionally, setting up policies for responsible use for internal and external audiences will become imperative. Under proper governance, these technological tools can aid fundraising training and development and streamline processes internally and externally. 

For example, we have engaged in a cybersecurity partnership with GBQ, which provides services and policies for members to utilize. 

Unpredictable State and Federal Governments

After the most unproductive years in Congress and the Ohio General Assembly in decades, we’re entering what will be a rancorous political and election cycle that will incentivize even more partisanship rather than pragmatism amongst our elected officials than we’ve all become accustomed to in the last few years. This is evidenced most starkly by the dogged fights to preserve funding levels for health and human services in the state budget, and the inability of the U.S. House and U.S. Senate to pass even the most fundamental of appropriations bills due to rising objections to social services spending 

This is bad news for our members and the people our members serve, as the continued threat of shutdowns and spending cuts makes it harder for agencies to meet or anticipate the demands of the community. Despite this turbulence, nonprofits will be expected to rise to whatever demands our community has in being housed, in being fed, in being educated and in being cared for.

This is why advocacy and being involved in the democratic process will be so important this year, as the health and human services sector is a sleeping giant when it comes to nonpartisan voter registration and get-out-the-vote efforts. Trust and empathy are our sector’s greatest assets, and that must now extend to shoring up our democracy to ensure our sector can shore up our community.

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If, as a sector, we prepare for these changes, we can stabilize our sector after four tumultuous years and move towards an equitable future for our entire community.