Now that there are signs that we may be pulling out of our economic slump, it pays to remember what we did right and what we need to remember to do next time, and more quickly.
Susan U. Raymond, in her wonderful book, Nonprofit Finance for Hard Times, Wiley 2010, offers the following steps toward avoiding crisis the next time the financial markets swoon:
- React Fast
Raymond says that we typically try to ignore the early tremors of an economic earthquake. We all want to hope for the best. However, she suggests that at the first signs of trouble we need to implement an economic emergency plan. That plan should include incremental organizational steps to react and adjust to new economic conditions.
- Engage Supporters
Raymond says that 60% of people who stopped supporting a nonprofit did so because they felt uninvolved. Engagement of your best supporters, she says, is "the best therapy to crisis." Reach out to supporters for help, and not only financial. Ask them for advice, create new volunteer opportunities or committees to get them involved. Help them feel invested in the fate of the organization. Make them peers and partners. Most of all, get out of the office and go where your supporters are. Engage in conversation, in planning, and brainstorming. People want to have a stake in your organization.
- Engage and Expand the Board
In corporations, Raymond points out, the board has minute-by-minute clues to how things are going. Share price is a thermometer to the financial health of the organization. However, in nonprofits the board members are volunteers who don't have a regular, public indicator of their nonprofit's financial health. Furthermore, in crisis, management is often are tempted to keep the board in the dark...to handle things short of the board. Staff leaders may see the board as necessary but not really helpful in decision making.
That is shortsighted. The board needs to be involved in a discussion of any emerging problems. It needs to be engaged in the development of alternative scenarios. An engaged board is an emboldened one that will reach out to its own networks for assistance. Don't hide from the board...engage them and use their expertise and connections.
- Communicate and Then Communicate More
Raymond says that "when resources are under significant stress, there is a tendency to draw inward and to focus...on adapting, coping, and at least surviving...." However, the organization must communicate even more with its multiple stakeholders, and the emphasis should be on more than just a plea to help in the crisis. Communications should underscore accomplishments and results; position solutions and value. It is critical to push forward communications, not pull back.
- Look for Opportunities to Collaborate
Look for collaboration immediately, emphasizing improvement of efficiencies. Consider shared administrative services with other nonprofits, sharing IT capacities, as well as abilities for evaluation and measurement. Both management and boards need to be quick, nimble, and attentive to quality. Look for good solutions, not slap-dash ones.
- Position the Organization for the Climb Out
Crises don't last forever. Recovery does happen. Even while coping with the crisis, Raymond says that nonprofits must lay the groundwork for recovery and growth. Get an assessment process in place and a development plan to make sure you are "positioned, poised,...perched, and ready to restore growth as the economy improves." That plan must be in place and put into action quickly.
Raymond's book is an excellent read and a real eye-opener when it comes to the complexity of economic cycles, innovations in philanthropic financial support strategies, and robust revenue strategy.