The Hidden Competition Challenging Your Nonprofit’s Success

Local organizations don’t just compete with “the group across town.” They compete with national brands, other causes, donor‑advised funds, and crowdfunding platforms — all while fewer households give at all.

For a local or regional nonprofit, it’s tempting to define competition as “other organizations doing what we do.” That’s true — but it’s only the first circle. Today, your donors face a marketplace full of alternatives that pull attention and dollars away from your mission.

Local and National Same-Cause Rivals

In most communities, there are multiple organizations serving a similar need. Add national brands with large media share and sophisticated digital programs, and local groups fight for attention even among people who already care about their cause. In 2024, contributions rose in current dollars across all nine subsectors. That means donors were active, but they had more credible choices than ever, according to Giving USA. The number of nonprofit 501(c)(3) organizations grew 85% — from 819,000 in 2000 to 1.5 million in 2023.

Cross‑Cause Competition Is Real

Donors don’t silo their choices. The same household weighing a gift to a food bank may also be considering contributions to health, education, religion, animal welfare, and other sectors. With total giving in 2024 reaching $592.5 billion — a return to real growth — the pie got bigger, but not evenly. Some subsectors are buoyed by macro events and media moments; others are squeezed.

The Participation Problem: Fewer Households Give

This is the quiet driver of competitive pressure. Two decades ago, about two‑thirds of U.S. households gave to charity. By 2020, participation had fallen to ~47%, even as average gifts among donors rose. Fewer givers means more organizations competing for fewer active donors, which intensifies zero‑sum dynamics in local markets. 

The Rise of Donor‑Advised Funds (DAFs)

DAFs have changed timing and channels of giving. DAF assets reached $251.5 billion in 2023, up ~10% as markets rebounded. Grants to charities were $54.77 billion, with payout rates near 24%. For nonprofits, that’s both opportunity (steady granting) and friction (donors “park” funds and grant later, but not always to you). Knowing how to be easy to grant to — and how to ask for DAF grants — is now table stakes.

Crowdfunding and Third‑Party Fundraising Reroute Generosity

Crowdfunding lets people give to people — and it’s emotionally compelling. Platforms also create third‑party pages that route funds to charities, sometimes without the charity’s consent. Recent reporting showed 1.4 million nonprofit pages auto‑created on GoFundMe, raising brand and stewardship concerns for surprised organizations.

On social platforms, policy changes introduce new costs and constraints. Payment processing fees can exceed 3%. All of these fees take a slice off of each dollar that donors intend for your mission.

There Are Simply More Nonprofits

IRS records show roughly 1.85 million tax‑exempt organizations as of 2023, including ~1.5 million 501(c)(3) charities. The presence of more organizations means more mail, more ads, more fundraisers in the same mailbox and inbox — and less donor attention per organization. 

So what? The net effect is “more competition for less (accessible) money.” Even though total giving rebounded in 2024, donor participation stayed low, and giving became more concentrated (e.g., major donors, DAFs). For many local nonprofits, this feels like a zero‑sum game: When a neighbor gains, someone else loses. The practical question is: How do you win locally in this environment?

How Local and Regional Nonprofits Can Compete — and Grow Net Revenue

Fortunately, there are some things nonprofits can do to compete and grow net revenue:

Own Your Local Value Proposition

Be “Vehicle Ready” for How People Give Now

• Prominently offer DAF giving on your site (widgets, instructions, legal name/EIN), and steward DAF donors like majors.
• Maximize monthly sustainer giving because sustainers protect you from platform swings.

Manage Third‑Party Risk and Fees

• Claim/verify your presence on major platforms; update branding and payout information; and decide where you’ll accept donations natively versus routing back to your site. 
• Set internal guidance for Facebook Fundraisers and GoFundMe (fee expectations, donor data access, and how you’ll steward these gifts locally). 
• Monitor for unauthorized pages and publish a “How to donate safely” page.

Build a “Ladder” Across Segments

Pair broad‑reach channels (mail, social, search) with higher‑yield plays (mid‑level cultivation, DAF outreach, major gift discovery).

Put Participation Back on the Agenda

Local nonprofits can counter the participation decline with inviting entry points: low‑barrier gifts, volunteer‑to‑donor journeys, community events, and clear first‑gift-to-second‑gift conversion programs.

Bottom line: You’re not competing just with “the other organization.” You’re competing with other causes, other vehicles, and other experiences. Nonprofits that clarify their local value, reduce giving friction, and diversify channels will grow — even in a crowded field.