While the need for services rendered by not-for-profit-organizations of all types is stronger than ever, the economic future for many is uncertain. It is critical that organizations take the time to reflect, plan and adapt to ensure that they will continue to operate in the short and long term.

Many not-for-profit organizations rely on spring fundraisers, galas and donation drives to support operations for the upcoming year. Others host annual meetings, conferences and in-person seminars. Because of shelter-in-place rules that took effect in March of this year, many of these events have been or will be cancelled. Organizations that rely on endowments and investment portfolios are seeing declines in investment balances and returns. All of these scenarios are leaving management scrambling to find ways to continue programming while working with less.

The organizations that will be the most effective are those that are realistic about their economic futures and are willing and able to adapt quickly.

In order to adapt, management and the board of directors should monitor and understand the following things:

  • Review Revenue Streams
    • Are restricted funds sufficient to cover the program(s) they are earmarked for?
    • Can grants or contracts be renegotiated to include new or different costs, changes to delivery methods or possible extensions of time?
    • Will cash flow continue following a similar timeline or will collections be delayed?
    • Can lost funding during the current shutdown be recouped in the future or is it simply gone?
  • Scrutinize Expenses
    • Many organizations have been working with tight budgets for a while. For some, there are no obvious costs left to cut. It is important to understand how expenses are interrelated so that you cut the right costs.
    • Organizations working with cost reimbursement grants need to make sure that they are able to continue to voucher for as much as possible. Eliminating a cost that could have been reimbursed is lost revenue.
  • Realize That Less Can Be More
    • Consider scaling back services in the short term. Changes in funding or an inability to adapt to social distancing rules may make it impossible to continue with some programs right now — this is okay.
    • If possible, consider reallocating personnel or other resources to programs that are able to adapt. Now is not the time to stick with the status quo. It is better to continue providing fewer services that cover costs or allow you to break even, than risk having to shut your doors completely.
  • Take Advantage
    • The government and other donors are funding many new programs to address the needs created by COVID-19. Assuming these new opportunities align with your mission, consider expanding your services. Be realistic with the cost, time and resources needed to service these new programs. Do not add any new programs that do not make economic sense for your organization.
    • Additionally, the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act contain provisions to assist not-for-profit organizations. Make sure you are educated on these and future governmental relief and reimbursement plans in order to take full advantage of them.

Related Read: Financial Relief Programs and Resources Available to Not-For-Profit Organizations

  • Connect With Donor Base
    • More than ever, it is important to stay connected to your donor base. Keep them informed about the proactive approach you are taking to continue to provide programmatic services and fulfill your mission. With many not-for-profit organizations at risk of closing their doors, donors may be nervous to continue contributing if they are worried about the future of your organization. Reassure them with what you are doing and see if there are different ways that they can help.
    • Recognize that your donor base may be in a difficult economic situation and have less to give.
    • Be careful not to alienate donors with too many asks.

No one knows how long this social distancing will last or how quickly the world will return to normal, but it is clear that organizations that have strong leadership, are realistic and are willing to embrace change will be more successful during this "new normal."

Originally published by Ostrow, April 2020

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.