Hard Economic Times Don’t Have To Mean the End for Non-Profit OrganizationsOctober 12, 2011
By Lori Budnick, CPA
In difficult economic times such as these, non-profit organizations often feel the brunt of the struggle as much as businesses do, sometimes even worse. A struggling economy often means that people and businesses are able to give less in terms of philanthropic donations to charities, despite the worthiness of the cause. This is a reality all non-profit organizations must face, unfortunate as it may seem.
So how are non-profits able to weather difficult times and survive even though donations are down and operating capital is that much harder to come by?
The good news is that hard financial times can still mean success for charitable organizations. There is never a cause for panic, no matter how bad the news, but there is a tremendous need to think strategically and prepare for the tough times. And even though we may be in difficult economic times, there are still things that non-profits can do to ease the burden.
Examining and Refining Focus
What worked best for an organization during the economic boom of the 1990s may no longer be the right approach during a recession. Are there efficiencies that can be found in operating costs and staffing? Can roles be combined? Is there a way to tighten the focus of a non-profit to maximize opportunities for donations? These are the questions any organization should ask itself at the outset.
This is an area in which our firm has worked extensively, counseling clients to pinpoint the most critical areas of need and focus on serving them, rather than a broader approach to more audiences that may have worked in better economic times. Having a conversation like this can mean a much better chance at success during the lean years.
Reducing costs is particularly challenging, no doubt, because it means making some very hard choices. And any reduction that takes place must be precise and strategic – they should not in any way impair your non-profit’s long-term health or the ability to reach its core mission.
The expenses and programs that should be examined are those that are inefficient, or that lack strategic direction and do not fit directly in with the organization’s ability to reach its main goals. Differentiate between those expenses that are absolutely essential at the moment, and those that can wait a while until times are better.
For example, funding key staff positions, keeping essential operating bills paid and the lights on and outreach to core target audiences can be viewed as essential expenses, whereas office renovations or capital projects, while enticing and ultimately necessary for the long-term, can perhaps wait until the financial turmoil has passed.
Communicating Is Essential
Non-profit organizations should not go it alone, and no such organization is ever alone, even during the good times. There are community partnerships, corporate partnerships, collaborations between agencies and with government agencies that are often a routine part of operating any charitable organization. Communicating with all of these partners and collaborators during the tough times is imperative.
Why? If a non-profit is struggling, its partners should know about it. Maybe there are ways to help that haven’t yet been thought of. There could be opportunities to share expenses or combine resources to help navigate through the difficulties. But only by keeping the channels of communication open can solutions be found.
Making your non-profit more visible in the marketplace is another positive step that can be taken, and there are ways that this can be attained without breaking the bank. A strategic marketing plan aimed at the target market – including Public Service Announcements, press releases, op-eds, web-based promotion and utilization of social media sites – can mean an uptick in your agency’s recognition by the general public. This can be a great way to get the good news out about your agency at a relatively low cost.
There are other strategies that organizations can consider during difficult economic times – such as evaluating fundraising costs, seeking new and appropriate partnerships with the right businesses and reaching out to past donors – and all of them could provide value to a non-profit during times like these.
The key is to think strategically, fully examine the organization from the top down to gain efficiencies and never sound the panic button. A tight economy can mean serious challenges for non-profits, but it doesn’t have to mean the end for them.
Lori M. Budnick, CPA, is a partner at BlumShapiro,the largest regional accounting, tax and business consulting firm based in New England, with offices in West Hartford and Shelton, CT and Rockland, MA. The firm serves as business advisors for today’s leading companies, non-profit organizations and government entities, working to strategically tailor and consistently deliver tested solutions for unlocking an organization’s full potential. For more information about BlumShapiro, visit blumshapiro.com.