As this article was written in 2008, I feel the context still has relevance in 2012 and may also offer a few business and operational strategies for private sector business entities as well.
As Wall Street, the private sector, the banking industry and most recently the auto industry all have sought and in some instances received financial bail-outs, non-profits to are not immune to the tough financial challenges that have plagued this economy.
As the economy continues to face major challenges, non-profits too are faced with decreased donations, funding and other resources necessary to move organizational missions and services forward, as they too struggle with increased demands for services and programs with limited or even scare resources.
Tough times force hard choices. And as we are in the midst of some the toughest times most of us have ever seen; even nonprofit leaders and organizations who are accustomed to making much of little, are finding the repercussions of the unfolding economic downturn are likely to pose unprecedented challenges for years to come.
Listed below are six strategies designed to provide business, financial and operational strategies to help you strategically plan and manage through the current economic challenges.
1. Act Proactively and Plan Contingencies
In the current economic climate, this means taking immediate action to manage costs aggressively, to do away with program wish lists and to delay undertaking new initiatives. It also entails developing explicit contingency plans, even if your organization is not currently having financial short-falls or unable to meet increased servicing needs.
Recessions are a time to keep up hope, and to plan, quite explicitly, for the worst, recognizing that troubles may unexpected and sometimes suddenly. Having contingency plans in place and knowing when to make organizational program and business changes can provide strong stability through financial and operational challenges—whenever they occur.
2. Protect Effective Core Programs
The bad news is that financial constraints may mean you cannot pursue all of your current activities. The good news is that not all of them are equally essential in terms of impact. Now is the time to allocate your discretionary dollars and best staff to the activities that make the greatest difference in your ability to achieve and sustain results for the programs and services that have the greatest impact on those you serve and the organizational infrastructure required to support them.
3. Identify Key Internal Organizational Stakeholders
It’s often said that in good times you need good people; and in tough times you need great people. Every organization has a small group of people who are critical to its success—current and future. If you were to name your strongest performers, who would they be? Odds are not all of them are your direct reports; some are likely to be board members and volunteers, who is often a crucial resource to any non-profit.
Getting clear about who your strongest performers are also will put you in good position with a leaner staff, should lay-offs become necessary, so that your organization’s current and future effectiveness won’t be compromised.
4. Develop Closer Alliances With Key Funders
The individual donors that know you best are the ones that are most likely to help you navigate this downturn. Remember that you don’t have to wait for your key funders to call you. You can and should use this as an opportunity to build a stronger alliance with them regarding your current and short-term financial needs, and how they can be an essential partner in moving through any organizational financial challenges.
5. Organizational & Program Overview
Tough times can be the catalyst for taking advantage of low or no-cost opportunities to improve internal operations and make it easier for people to work smarter—and not just longer and harder. Establishing formal or informal linking mechanisms, such as cross-functional teams or liaisons, can make it easier for people to coordinate their efforts and to share knowledge. Clarifying and refining essential work processes will allow everyone to take advantage of best practices and avoid reinventing the wheel.
Other program and organizational assessments could include for example; identifying if you could merge similar positions or programs, or combine operations with another nonprofit provider in your field to lower back-office costs, consolidate purchasing efforts, create economies of scale, or leverage best practices across operations.
6. Engage Your Board of Directors
Now more than ever, your board needs to be both well informed about the organization’s financial standing and a central part of the planning process. In times of crisis, everyone expects to step up to the plate. As the organization’s fiduciary trustees, your board members are very much part of the stewarding the organization’s financial stability.
Board members can make important contributions in multiple ways; 1) by providing experience and expertise from other domains and sectors; 2) by helping to pressure test your assumptions and plans; and 3) by playing an especially active role in the organization’s fundraising efforts. They may also be able to provide focused operational support to complement staff efforts or to fill a gap if staff must be laid off.
During tough economic challenges, board members should expect to be called upon for consultation and advice in their spheres of expertise and knowledge in essential business and operational areas.
Final Comments
As you engage through the necessary assessment of your current organizational financial, operational and program positions, know that although the current economic climate is challenging, this will be a great opportunity to improve on what your organization does well and reduce those programs and operations that are not as successful or negatively impact your organization’s bottom-line or mission focus.
To get you started, and as discussed in this article, outlined below are several questions you may use as an internal organizational review and evaluation.
- Are we managing costs as aggressively as possible?
- Do we know what, specifically, we would do if we had to cut our budget by 10 percent, by 20 percent, by 30 percent?
- Have we identified the triggers that will set our contingency plans in motion?
- Do we know which of our programs and activities are mission critical, and what each unit of service costs?
- Are our discretionary dollars allocated to these mission critical programs and activities?
- Should we be cutting programs or services?
- What human resources/capital (current or future staff, volunteers, board members) are the most critical to our success, now and in the future?
- What are our most important external relationships and are we attending to them?
- Are we actively in touch with our key funders?
- How much of our revenue is “in the bank”? How much is at risk?
- Are there steps we can take to simplify our business operations?
- Should we be thinking about a merger with another organization that offers similar or complimentary services or mission focus?
- Do we have or are we currently maximizing low or no-cost ways to strengthen our organization?
- Is this an opportunity to bring critically needed skills onto our leadership team?
- Are we involving our board members and using their talents and connections appropriately?
- Is our organization internally stressed or are we still keeping our focus toward our mission and those we serve?
© 2012 Proverbs Consulting – All Rights Reserved
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Dr. Tamara Johnson, PhD, is the founder of Arlington, Texas based Proverbs Consulting. Proverbs Consulting offers a diversity of professional business consulting strategies to entrepreneurs, small-business owners, faith-based as well as non-profit organizations. Contact Dr. Johnson at tx76014@juno.com or visit the Proverbs Consulting website. http://proverbsconsultingonline.com
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