3 Priorities for Avoiding the Potholes on the Road to Recovery

Create a community
Along with a decline in giving, the recession created an increased demand for services. More people are coming to nonprofits engaged in human- and social-service work each day seeking help — often seeking help that goes beyond the organization’s core programs. It's heartbreaking.

As demand escalates, we can easily say, "yes," and try and take it all on, feeling compassionate and compelled to meet every need. But, this year, try something different: Decide to share that burden, involving others in your efforts. There may be other people or groups very well-equipped to help — perhaps even more gifted at the tasks than you. Now more than ever, charities need to collaborate with other organizations in their communities. No one can afford to duplicate services, and with the down economy you may find ways of cutting expenses while expanding services. Consolidate and cut out the waste. Don't be a lone ranger.

Commit to a plan
While the recession has affected many people in ways they may not be able to control, stress related to financial challenges can often be avoided with better planning. The problem remains, however, that leaders at nonprofits are often too busy serving to plan. And if they do, they often fail to plan for contingencies.

So, focus on planning for the future. For example, what is the organization's policy on operating reserves? According to the Nonprofits Assistance Fund, operating reserves are usually based on the premise that nonprofits need to have enough unrestricted cash to cover operating expenses for three to six months.

At the high end, reserves should not exceed the amount of two years' budget. At the low end, reserves should be enough to cover at least one full year of payroll expenses. When my own wallet gets squeezed, I am reminded to go back to my budget, take a look at my financial plans (retirement, savings, short-term wants and immediate needs) and reprioritize my plans for the future.