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Newsletter, February 2009, Issue #12
IN THIS ISSUE:
Keep Your Eye on the End Goal
Maximize your Cash Flow
Collaborate and Communicate
Running the Recession Marathon
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Sharing Information to Further a Cause
The Movement Advancement Project, an operating unit of the Gill Foundation, has gathered extensive data on over fifty LGBT organizations and twenty key funders. The information gleaned helps funders and nonprofit executives target their activities to maximum effect. For example, learning that only half of their individual donors give year after year prompted both leaders and funders to focus more on improving donor retention. For more information, and to see how similar data sharing might be useful in your sector, visit www.lgbtmap.org.
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As we enter the second year of recession, uncertainty reigns: Nobody can predict how far the markets, economy, or budgets will fall, or how much unemployment will rise. We do know one thing: the recession will be long and recovery slow. In this issue we focus on what you can do - what you can control - to sustain quality programs. Please let us know what actions you're taking so that we can share it with others.
Keep Your Eye on the End Goal.
Marathoners know to plan for a long, hard race. This situation is no different. Like runners, you have a clear goal: provide quality programs for the people you serve. The question is how to achieve that goal.
- Start with where you expect to be in two years and plan how to get there. In this environment it is realistic to project 2011 revenue at 60% of your 2007 income. Planning for such a drop reduces uncertainty and frees you to refocus on delivering quality programs, confident that you are in control of your future and can weather the recession.
Start with financial statements from when your agency was smaller. Consider the programs you delivered, numbers served, and the infrastructure you had. Revise to reflect best practices and changes in organizational and community needs.
- Recognize you've already made the across-the-board cuts that you can. Just as running a 26-mile sprint is impossible, so too are repeating such reductions. It is "death by a thousand cuts". Now is the time for other solutions.
- Make the tough decisions about what is absolutely core to your mission. Determine where you make the most difference for your community and adjust accordingly.
Harlem Children's Zone decided to focus on its early childhood and elementary school programs because school readiness and reading and math proficiency in the early grades are critical to long-term success. After laying off 10% of its staff in November, it announced plans to eliminate its high school and college programs if necessary.
- Analyze where your revenue is most vulnerable and plan accordingly. Contracts or grants that are up for renewal are obvious targets, so plan without them. For contract-dependent social service agencies, consider each program based solely on its government revenue: how long can you continue to subsidize the shortfall? One organization we know decided to exit programs rather than risk such deficits.
- Set trigger points for action. Be able to articulate clearly where you will cut and why. Examples could include key contracts or grants that aren't renewed, lower-than-anticipated donor contributions, or expensive increases in performance contract requirements.
- Don't be afraid that you will cut too much. There is little reason to believe that the situation will actually be better than what is projected. By having trigger points, you can add back resources (or not have to cut them) if conditions are better.
Maximize your Cash Flow
Marathoners know to pace themselves, yet focus on the current mile. The same is true for nonprofits, where the near-term need is cash.
- Maintain your investment in development. You can support quality programs better, even though serving fewer people, if you have the requisite cash to do so. You can, however, stretch those development dollars. Organizations are holding their fund-raising events in less-costly venues or having smaller, more intimate dinners in people’s homes. Donor-driven nonprofits are focusing on donor retention: it costs less to keep than add a donor. We've even seen board members call donors to thank them for their gifts, an example of good (and free) stewardship.
- Maximize your government revenue. Contract-driven social service agencies can make sure vouchers are prepared correctly and submitted on time to speed payment receipt. Follow up frequently with contract administrators to confirm all is in order and cash on the way. Closely monitor spending to spend budget lines fully and submit needed budget modifications early if you will exceed others. Make sure your staff is trained to do this, and hold them accountable.
Collaborate and Communicate
Foundation executives, government officials, nonprofit leaders and their trustees face the same economic challenges and share the same goal to provide quality services to their communities in support of their mission. By working and talking together, we can get the most from our limited dollars and serve those we can in the best way possible.
- Make the most of foundation dollars. Grant-makers are asking how they can best help their grantees, recognizing that "business as usual" is no longer sufficient. Several foundations now provide more general operating or capacity building support; some have reduced restrictions on existing program grants. Others are making matching grants to encourage agency fund-raising.
Foundations and grantees can benefit from meeting together, articulating concerns, and structuring a grant that optimizes limited foundation dollars. Recognize, foremost, that foundations will focus more and more on stronger, well-managed organizations that can deliver quality services as promised.
- Collaborate with other nonprofits so all benefit. These times call for sharing ideas and devising different ways to serve our communities well. Although collaborations take leadership, trust, and time to be effective, the result can be stronger programs, more creatively delivered, and at less cost.
For example, with funder encouragement several neighboring Brooklyn nonprofits formed a partnership to promote their "combined cultural campus". Some funders are joining forces to persuade city agencies to shorten the gap between contract approval and registration, thus speeding agencies' receipt of needed funds. Other collaboration forms include becoming another stronger institution's program, sharing back-office support, or creating a continuum of services across several providers.
- Communicate with everyone, clearly and often. Uncertainty breeds anxiety, lowers morale, and reduces productivity. Frequent, candid conversations with staff, board, funders and grantees will help reduce uncertainty and forge constructive working relationships. Acknowledge reality, articulate the actions you take or might in the future, and seek others' help. And say it often: remember it takes 17 times before a message is truly heard.
This recession is hard, painful, and fewer people will be served. But at least we can act to ensure we serve our communities well.
We Want Your Suggestions! Let us know whether or not you find our newsletters helpful and why, so we can improve, too! And we'd love to hear from you about suggestions for future issues.
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