How to Survive in a Difficult Economy
Hard times force re-evaluation and streamlining, according to panelists at the Dec. 4 Roundtable on financial survival during economic crisis.
Recommendations ranged from the upbeat, "This is an opportunity to cut sub-par programs," to the less optimistic, "Cuts, no matter how painful, may have to be made."
The consensus was, however, that alert and pro-active leadership can minimize the damage.
Survival techniques were put forth by panelists Emily Guthman of the Nonprofit Finance Fund, an organization that provides loans, financing and financial advice to nonprofits; Susan Cippoletti of Girl Scouts USA, which has developed a social-entrepreneur program; and Jim Marley, an assistant executive director at Good Shepard Services. The panel was moderated by David LaGreca, executive director of the Volunteer Counsulting Group.
- Understand your balance sheet, asset liquidity and cash flow. Understand your operating expenses and where the money will come from each month. How many months of cash do you have?
- Avoid investment in fixed infrastructure. If it's not too late, stop major hires, restructuring or capital projects. Delay until you know the cash is there.
- Quantify the challenges ahead. Analyze the revenue and expense of every program and develop budgets for three funding scenarios: worst case, best case and most probable case.
- Develop formal responses to changing situations, such as increased demand. Which grant proposals will you revisit?
- Be open with funders, boards and staff. Funders need to know why your program is still relevant, why your constituency needs you.
- Mobilize your workforce; it is an asset. Tell them how you see the situation and elicit their ideas and support for what you are doing. Do not allow people to feel isolated and out of the loop.
- Involve your constituency so it can mobilize or contribute solutions.
- Determine what standards you will not compromise and the cost of maintaining them: staffing ratios, experience, etc. These are your fixed costs.
- Analyze the place each program has in accomplishing your mission and what loss of the program would mean to your mission. In doing this, be aware that some on-mission programs are subsidized by programs that less directly serve your mission.
- Look for new ways to meet your goals.
- This is a sterling opportunity to cut marginal programs.
- Assess community need. Just because you are passionate about a program doesn't mean it is needed.
- Look for under-utilized assets that you can tap or re-purpose.
- Develop partnerships with other agencies to share expenses, resources or deliver services in a new manner or venue.
- Consider mergers ... but carefully. Mergers must be based on the strengths of each organization and must articulate details such as staff seniority, membership in the new board, inherited debt, pay scales and mission. A merger is not a quick fix.
"Activate the board to re-evaluate everything," Marley said. "The bottom line is that you have to make decisions to protect the organization, to protect services. This is what we need to do to survive."
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