Just when you think the economic news can’t get any worse, it does. Daily stock market declines, a credit crisis, and talk of a long lasting, international recession crowd the headlines and broadcasts. Nearly everyone is worried about their own jobs and the financial health of their companies.
For those of us in the not-for-profit world, the stress is even greater. Our success is directly dependent on the income of others; donations come from disposable incomes. Despite the best intentions and the philanthropic nature of Americans, I am uncomfortably certain that there will be a decline in charitable giving this year.
So how should nonprofit organizations respond? If you don’t have the money to fund your programs, the answer is painful yet simple--you must cut. But if you do have enough capital to fund your current activities, what should you do? Cut now to save for next year? Continue to spend normally while expecting to substantially reduce budgets in the future? Nothing is black and white, and there is no one right answer. Here are a few suggestions to help not-for-profit executives weather the current economic climate:
- Continue to review budgets and trim anything that is unnecessary. Donors will want to see that you are responding to the economy. They’re cutting back, their businesses are cutting back, and you should too.
- Continue to fundraise--if you don’t ask for money, you won’t get it. Don’t be surprised if even long time donors turn you down or decrease their giving, but don’t give up. You must keep asking.
- Involve your board in the discussion. Reach out to key supporters for their opinions. Have them help you identify different options.
- Ask board members for their own personal financial commitments. Now is the time for a board to show leadership. If they can’t commit during these times, you can’t expect others to do so.
- Develop an action plan that includes future decision-making milestones.
- Communicate with your supporters. Let your community know how the economic uncertainty will (or will not) impact your organization and the demand for your services. Focus on donor stewardship so that when the market does come back, your support base will too.
There may be some not-for-profit organizations--like their for-profit cousins--that do not survive the current downswing. This is an unfortunate reality. However, if your services are in demand, your programs effective and your operations sound, you will get through this period. It may involve hard decisions and unpleasant actions, but the times have to change back at some point--don’t they?
