The purpose of businesses is not merely to make profits. Granted, money-making is one of the major activities of any commercial establishment. But there are businesses that make the welfare of society their prime concern.
Non-profit organizations and charities are such businesses that work to improve the lives of people through their activities. Like regular corporations, these businesses too have all the parts inherent in any company, like company policy, internal budget and employees. The only difference is that their primary concern is the welfare of society.
Charities and non-profits are usually funded partly by donations. But the prime purpose of their activities is to uplift parts of the society that are at-risk. And true to everything on this planet, nothing operates in isolation with each other. Like any other business, these are also affected by the macro-factors that influence any other company.
In today’s PESTLE analysis of charities and non-profits, we are going to take a brief look into how the charitable business landscape is affected by political, economic and other external influences.
So, let’s begin.
Table of Contents
Political Factors
As with any business, non-profit organizations and charities are deeply affected by political change. A volatile political environment is often detrimental to the well-functioning of these businesses. As mentioned before, charities and non-profits are largely funded through donations. Much of these come through political routes. Any change in the political landscape can result in a slowdown of such funding.
Another way in which political factors may influence these charities is that of taxation. Usually, political changes are followed by changes in policies and tax structure. Charities and non-profits are usually exempt from strict tax-laws. But this can change with regimes. As a result, these businesses need to keep a keen eye on the political scene.
Finally, some charities and non-profits are directly related to political activity. These are often the first ones influenced by political changes and upheavals.
Economic Factors
Economic changes always have an effect on businesses, and charities and non-profits are no exemptions. Just as a thriving economic condition is beneficial for these organizations, a sluggish one can affect their growth negatively. For example, during times of economic downturns, jobs are scarce, earnings are low, and livelihoods face numerous risks. In such situations, people are less likely to be worried about social causes and more concerned about self-welfare. As a result, charities and non-profits, which are dependent upon donations, are likely to suffer.
Another factor that must be considered here is how these organizations themselves affect the economy. Charities and non-profits working to improve the livelihoods of individuals, and by doing so contribute to economic welfare. They also employ a large number of individuals and thus help to increase employment. By creating greater employment opportunities, these businesses help the economy to sustain itself.
Social Factors
Charities and non-profits are primarily associated with social welfare and seek to uplift the vulnerable sections of society. Through direct employment, training and education or enabling change, these organizations aim to change society for the better.
Despite being businesses, the fundamental giving nature of these organizations makes them extremely important for certain sections of society. In fact, without the aid of charities and non-profits, many underprivileged sections of society would not be able to survive.
Finally, by raising awareness about social issues, these businesses aim to involve more and more people in their work. This creates a ripple effect that resonates across society. In a nutshell, we can safely say that charities and non-profits and inherently linked to social welfare.
Technological Factors
The rapidly evolving technological landscape presents multiple opportunities for charities and non-profits alike. As the cost of tech and software comes down, these organizations can induct and adopt these innovations. Doing so would allow them to enhance efficiency, improve task management, streamline documentation and achieve constant communication.
Further, by leveraging tech solutions such as digital marketing and social media platforms, these businesses can spread the word about their work and ideas. This will allow them to reach a greater number of people than through traditional channels. This, in turn, will help to bring in greater assistance for their operations, both financial and otherwise.
Another area of technological innovation that charities and non-profits can explore is data science. These organizations usually have large amounts of data at their disposal. By applying data analytics, they can glean useful insights into critical social and market-based problems from this data.
Legal Factors
Like any business, charities and non-profits too are subject to legal limitations. Often, such organizations are privy to sensitive information. Thus, any mishandling of critical data may lead to legal complications.
Also, employees of these businesses need to regulate their public life with great care. As these businesses operate under constant social scrutiny, they must take care to follow all legal requirements and compliance rules.
Environmental Factors
This is one area where non-profits can play a big role. All over the world, it’s a common trend that political leadership is largely reluctant to take steps about environmental concerns. In this scenario, many non-profits, as well as charities, are stepping up to do their bit for the planet.
They help to gather funds for environmental conservation and raise awareness about these issues. This can go a long way towards mobilizing popular movements for the environment.
Final Words
In conclusion, it can be said that political and economic factors play a big role in the operation of these businesses. At the same time, they provide employment to a large section of society and help in bringing about positive social change.
And despite being susceptible to legal hassles, they can use technology to streamline their operations and explore new frontiers. In fact, technology can take charities and non-profits to greater heights of efficiency and effectiveness.
Finally, with environmental awareness being the need of the hour, these organizations should step up to do their bit. By being agents for change, charities and non-profits can help to be a positive force to reckon with.
