Reports of the Demise of Nonprofits Greatly Exaggerated
I am disheartened by the recent reports that point to the likelihood of a great many nonprofits shutting their doors. Not only does the proliferation of these articles spook funders, it impacts morale, strategic thinking and the active engagement of boards. Certainly, many nonprofits are suffering and facing financial difficulties. But now is the time to energize boards into action, not throw in the towel. Yes, many nonprofits may no longer be relevant. But now is the time for innovation, not scrambling to figure out how to do the same thing in a difficult environment. And yes, many nonprofits have closed. Now is the time to shore-up and/or fill the gap left by those organizations, not lamenting their demise.
While nonprofit managers and staff are focused on putting out fires and addressing immediate needs, now is the time to stop and think. Organizations should take the time to do some strategic planning, look at where they are and innovate. Nonprofit workers are so consumed with the day-to-day challenges that they are not thinking about innovation; but now is precisely the right time.
Nonprofit leaders should stop, take a breath and focus on the following four critical actions.
Engage or Reengage Your Board
Now is the time for board members to step up or step down. A perfectly structured board should be diverse not only in background, but also in expertise. This goes beyond just the ability to fundraise; they should bring a skillset that is relevant to the organization and be willing to use it. Nonprofits should actively recruit board members whose expertise can act as an extension of staff. This should occur, most importantly, in the areas of finance, marketing, legal and human capital. Stacking an organization’s board with professionals that can provide meaningful guidance and advice in these areas will ensure that the organization always has the resources it needs to meet its mission.
And board members must be engaged. These individuals were put on that board to help the organization. Yes, fundraising is important, but so is their time, their guidance, their expertise and their dedication to the mission. If they are not showing up, not actively helping the organization, they should step down.
Short-Term Strategic Planning
While long-term planning is important, how can one do a one-, three- or five-year strategic plan when nobody knows what the landscape is going to look like in one, three or even months? Most organizations don’t know if they are planning for 1) a return to normalcy, 2) an impending second wave or 3) a shift to remote delivery permanently. Not until the situation becomes clearer will nonprofits be able to know what to plan for. So focus on the short-term.
What are the critical needs over the next three months? Most likely it will be financial scenario planning, fundraising and getting staff back to work. Focus on those areas. If it is funding — identify grant opportunities and new fundraising techniques. If it is staffing and program delivery — plan for multiple scenarios:
- A continuation of the current environment.
- One where you come back to on site in three months.
- One where you are back in six months.
- One where you remain remote permanently.
What do the various staffing needs look like? The technology needs? The new policies and procedures that must be put in place?
Prepare rolling, fluid three-month strategic plans that include: action items for board members, three-month financial plans, staffing plans, funding opportunities and multiple program delivery models.
Focus on Innovation
With many nonprofits in crisis mode, few have had the time to really think about innovation. Take the time. The very definition of innovation is change. That is what the sector has been doing for the last six months and that is what will allow sustainable operations. Review what worked and what did not. Take a day to sit down with staff and board members to determine what transformational steps need to be taken for long-term sustainability. Has your fundamental mission changed? Then the organization must change with it. Don’t be afraid to introduce new programs and efforts rather than just working to sustain the existing one. Use this opportunity to be creative and make meaningful steps to secure your mission.
By taking the time to focus on innovation, nonprofits should think about how they meet their missions and see if it is sustainable long-term. How have you adapted, and how can you continue to adapt? Can you pivot to remote work full time? Can you continue to meet the mission of your organization in the new environment? Are there changes that need to be made to the mission, the organizational structure and the board? Can you join forces with another nonprofit through affiliation or merger? Is your mission still relevant? The answers to these questions will guide you through the coming months.
Financial scenario planning is more important now because it is real. We don’t know what the future looks like. There are so many possible variables and assumptions that normal financial and cash flow practices are difficult. Organizations should undertake a comprehensive effort that includes many, many different scenarios with multiple variables using the best- and worst-case spectrums. Use multiple assumptions for: fundraising, grants, program delivery, staffing, expenses, remote versus on-site work, government contracts, federal funding, investment revenue, etc. This takes time, but it is the only way to be adequately prepared. Use outside experts if needed. It will be worth the investment.
“It takes a village…” is an overused cliché. But it is applicable one last time here. In order to save nonprofits from their imminent demise, it will take the hard work of all those that touch the sector — nonprofit leadership, managers, board members, consultants, funders and government. Board members must be active participants in their organizations, offering not only to fundraise, but to work hand in hand with the leaders of the organization to guide it through these uncharted waters. Leaders must not be afraid to innovate, pivot and revamp in order to ensure the organization survives and meets the needs of its stakeholders. Consultants must support struggling nonprofits with affordable or pro bono creative assistance. Funders must understand the challenges faced by nonprofits and be willing to ease the restrictions and bureaucracy involved with getting grants and government contracts. Together we can ensure that this critical section of the economy and society survives to provide the essential services it provides to what is often the neediest among us.
Nonprofits fill a critical gap in society, and we must all make sure that they not only survive, but become stronger.
Kim Vaccari is president of NFP Advisors LLC, a consultant firm dedicated to advising nonprofit organizations and served as CFO at one of the largest nonprofits in New York City.