Sustaining Your Nonprofit Through The Fiscal Crisis
Sustaining Your Nonprofit Through The Fiscal Crisis
The last few years have been extremely difficult for most nonprofits. Many have sustained budget cuts from multiple sources, such as state government contracts and foundation grants. Along with other nonprofits, the foundation community has sustained its own cuts and has had to reduce grants. Nonprofit agencies need to develop and implement strategies for organizational development and funding that focus on two primary areas:
? Ways to diversify and expand funding sources;
? Ways to cut parts of the budget, as needed.
The nonprofit sector has been one of the hardest hit during this Fiscal Crisis. And, according to The Finance Project, most nonprofits are struggling with funding cuts — which usually mean budget cuts and cuts in programs.
Here are some important statistics about the Fiscal Crisis to keep in mind:
Foundations, on average, lost about 28% of their capital this past year as reported by The Chronicle of Philanthropy earlier this year. Although at that time, the majority of foundations had not developed plans to cut grant making, during this year and next, leaders expect foundations to cut grant making outflow to run more in line with the reduced portfolio size. There are some foundations that are making few changes, and others that are cutting back substantially.
State Governments cut their budgets last year, and most cut even more for the coming fiscal year budget. Since some areas receive greater cuts than others, the effect on grants and contracts could be anywhere from cuts of 5% to 20%-25%, with larger cuts going to programs deemed less essential. States like California project draconian cuts; whereas New Mexico has a moderate level of cuts. In any case, cuts have already had a negative impact on community services, and will continue. Nonprofits need to analyze all program areas and revise state contracts so that they are caught the bind of delivering the same or more for less. That would create double stress on organizational systems.
Donors have pulled back substantially. Some donors who have been heavily impact-ted by the Fiscal Crisis stop giving, or cut back a great deal. Others cut back from fear of potential future financial problems. In any case, that important base of continuing, often unrestricted gifts is a lot weaker today, and for the foreseeable future.
Nonprofits, on average, have received cuts averaging from 15% to 30%a year during the last two years. According to The Aspen Institute’s “Fiscal Crisis in the States: Impact on Nonprofit Organizations and the People They Serve,” nonprofits have been hard hit, and will continue to receive cuts. The types of cuts and overall scope of funding cuts varies from one organization to another, based on programs and services, funding sources, and diversity of funding sources. Nonprofits that provide services deemed less of a priority will find heavier cuts. And, nonprofits are expected to recover more slowly than other sectors. These are tough times. The Fiscal Crisis is affecting all areas of nonprofit life. And nonprofits are challenged in ways they haven’t been in many decades. And, this Fiscal Crisis has undercut nonprofit organizational capacity in many ways. Here are some things you can do today to reduce some of the stress:
Here’s What You Can Do Right Now To Strengthen Your Organization:
? Analyze your program activity levels and outcomes, and make any changes you can to reduce without impacting program outcomes.
? Talk with legislative staffers or other people in the know to find out what’s happening with funding levels for your program area, and participate in policy activities that promote the importance of nonprofit programs.
? Study the budget and find places where you can reduce costs. Ask for staff suggestions.
? Analyze the income streams, and develop some specific strategies for increasing and diversifying revenue.
? Increased board and volunteer work in fund raising.
? More involvement with donors.
? Develop cutback strategies for each area of the budget, ready to be implemented if needed.
? Make more use of student interns, Vista, Americorps and other volunteers.
? Develop strategies to promote your organization.
? Develop strategies to expand and diversify funding and build organizational capacity.
Identify the issues, ask key stakeholders for help, and track progress. You can also take a self assessment to rate your risk on my website.
BIO: Anne Hays Egan is an organizational development consultant to nonprofits. She provides information, resources, newsletters, fund-raising plan outlines, and many other materials from her website, Nonprofits Online http://www.nonprofitsonline.net. Check the website for her risk assessment and a complimentary fund raising plan summary.
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