The Suffering Nonprofit Sector
posted on: Wednesday, December 17, 2008
by Gary Snyder
The storm clouds are gathering, but the ski may be clearer on the horizon.
Much has been written about the charity downturn and pending crisis. The objective seems to be to just afloat especially with projections like that of Paul Light, professor at NYU. He suggests that as many as 100,000 nonprofits will collapse in the near term. Here are some core fundamentals for the short-term with always one eye on the long-term.
- Prepare for the worst. Take a look at the strategic plan and the budget and act accordingly. Safeguard operating funds and cash reserves. Have up to 180 days for cash flow availability. As old staff vacate, be cautious in filling the position. Consider doubling up, but be mindful that the mission of the agency must be fulfilled.
- Focus on the core business. There may be some need for consolidation within the sector. Funders will want to rely on a trusted executive to assume the mantel for two or merged more agencies. If there is a symbiosis then consider it by strengthening the agency’s core; if not, do not give it any thought.
- Do not try to get a quick fix. Quick fixes, such as financial opportunities, have been known to end up as a bust. See Baptist Foundation ($500 million); National Heritage Foundation ($6.5 million). Keep a secure line of credit open.
- Do not go into a high spending mode. Conserve cash and monitor expenditures aggressively, including staff salaries that are usually the highest expenditure of a charity. Choose eliminating travel rather than staff. Capital improvements are typically less expensive during a national downturn, but the 10-15% savings must warrant the outflow. Monitor that insurance premiums are paid.
- Continuously befriend current and prospective donors. There is a fine line between keeping your current contributors and prospective donors warm and bothering them. Remember donors and funders are feeling the pinch, also. Keep in mind foundations may want to spend more now that they normally do.
- Stay close with the board/staff. Both the board as well as staff should be open with one another. The board may be the lifeline for the agency, so it must be kept informed as to the status---financially and programmatically. On the other hand, an ongoing open dialogue with staff will calm the agency’s internal waters. Both can be partners in developing contingency plans.
- Retooling may be in the offing. During painful times, introspection may be an opportunity to flip the switch. The dissection of the budget, mission statement, staffing, and fundraising could lead to a reinvention of the agency. All changes should point to a strengthening of the organization. Invest in projects that can assess operational needs, productivity and efficiency against organizational goals.
The flexibility of the charity is most important when the times are hardest. Set backs are frequently opportunities if kept in a long-term perspective. If history is any guide, the nonprofit world has been remarkably resilient and has adapted to similar economic slumps.
Gary R. Snyder is the author of Nonprofits: On the Brink. He is a frequent lecturer and author of articles in numerous publications and blogs. His email is http://gary.r.snyder@gmail.com; website: http://garyrsnyder.com/, phone: 248.324.3700.
The storm clouds are gathering, but the ski may be clearer on the horizon.
Much has been written about the charity downturn and pending crisis. The objective seems to be to just afloat especially with projections like that of Paul Light, professor at NYU. He suggests that as many as 100,000 nonprofits will collapse in the near term. Here are some core fundamentals for the short-term with always one eye on the long-term.
- Prepare for the worst. Take a look at the strategic plan and the budget and act accordingly. Safeguard operating funds and cash reserves. Have up to 180 days for cash flow availability. As old staff vacate, be cautious in filling the position. Consider doubling up, but be mindful that the mission of the agency must be fulfilled.
- Focus on the core business. There may be some need for consolidation within the sector. Funders will want to rely on a trusted executive to assume the mantel for two or merged more agencies. If there is a symbiosis then consider it by strengthening the agency’s core; if not, do not give it any thought.
- Do not try to get a quick fix. Quick fixes, such as financial opportunities, have been known to end up as a bust. See Baptist Foundation ($500 million); National Heritage Foundation ($6.5 million). Keep a secure line of credit open.
- Do not go into a high spending mode. Conserve cash and monitor expenditures aggressively, including staff salaries that are usually the highest expenditure of a charity. Choose eliminating travel rather than staff. Capital improvements are typically less expensive during a national downturn, but the 10-15% savings must warrant the outflow. Monitor that insurance premiums are paid.
- Continuously befriend current and prospective donors. There is a fine line between keeping your current contributors and prospective donors warm and bothering them. Remember donors and funders are feeling the pinch, also. Keep in mind foundations may want to spend more now that they normally do.
- Stay close with the board/staff. Both the board as well as staff should be open with one another. The board may be the lifeline for the agency, so it must be kept informed as to the status---financially and programmatically. On the other hand, an ongoing open dialogue with staff will calm the agency’s internal waters. Both can be partners in developing contingency plans.
- Retooling may be in the offing. During painful times, introspection may be an opportunity to flip the switch. The dissection of the budget, mission statement, staffing, and fundraising could lead to a reinvention of the agency. All changes should point to a strengthening of the organization. Invest in projects that can assess operational needs, productivity and efficiency against organizational goals.
Gary R. Snyder is the author of Nonprofits: On the Brink. He is a frequent lecturer and author of articles in numerous publications and blogs. His email is http://gary.r.snyder@gmail.com; website: http://garyrsnyder.com/, phone: 248.324.3700.
posted by Gary at
10:17 AM
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