A NONPROFIT ORGANIZATION'S SURVIVAL GUIDE
TO A TOUGH ECONOMY

Michael Barloewen, Sr. Manager, Assurance & Advisory

The economic question of the day that every organization is asking is if we are at the start of a "double dip" recession. Organizations that survived the sudden downturn in the economy during the 2008 "Great Recession" are facing the prospect of a continuing painfully slow recovery or, worse, a slide back towards recession. Nonprofit organizations continue to see challenges on many fronts in their efforts to maintain their programs. The depressed economy has the effect of impacting fundraising across the entire spectrum of donors because uncertainty related to future prosperity leaves donors hesitant to commit vital funding to organizations. This occurs simultaneously as the demand for the services provided by organizations climbs to unseen levels, leaving Nonprofits facing the untenable position of doing more with less.

For charitable organizations, weathering a bad economy should not lead to a sense of panic, but instead should lead to a sharpened focus. Here are several suggestions to consider for the economic tough times:

1) Identify and focus on core services. Often when faced with reduced revenue, most organizations are forced to engage in cost cutting activities. However, the choices made as to where to cut costs will set the organization up for the future. It is essential that the decisions made on cost cutting go beyond just across-the-board cuts. It could be more effective to instead deeply evaluate service extensions beyond the core mission and other higher cost offerings with an eye towards cuts in these areas thereby protecting your programs servicing your core mission. It is important to stay focused on your key mission statement and make every decision made serve the purpose of protecting the core mission and positioning of the organization for the future.

2) Continue to invest in relationships with key donors. Let your donors know that you need their help more than ever to fulfill your mission and deliver services to those most in need. Try and effectively communicate the first hand plight of those you serve and show how your services are making a difference. If your donor can understand how essential and effective their funding is they are more likely to keep giving or perhaps to be quick to resume giving when they can. To accomplish this, consider the use of testimonials from those you serve. In addition, it is important to stay in touch with all donors that have stopped giving and keep them connected to your organization so that when times improve they will be quicker to resume their donor relationship with you.

3) Cut expenses where practical. Evaluating how to run a more cost effective operation can be one of the few benefits of a recession. Consistent with protecting your core mission, cost cuts should not impair your organizations' long term health or ability to achieve that core mission. The goal is to cut what isn't essential and to eliminate waste. There are many places to look for cost savings.

4) Prove your effectiveness. Donors want to know that their contributions are making a difference. It is essential as an organization that is competing for a smaller pool of donor contributions, that you effectively make the case about how efficiently used all contributions are. Donors want to see their funds used for programs, not administration. Openly share your successes and accomplishments so as to demonstrate to the community and potential donors that you are a smart investment.

The lessons learned during difficult times are that organizations that embrace the challenges ahead can use this as an opportunity to get their financial house in order, connect more deeply with their community and donors and be positioned for success when the economy improves.