Nonprofit Sustainability in an Uncertain Economy: Fundraising and Finance

2020 put many nonprofits in peril for survival.

It’s not entirely bleak, but thinking back to the electric energy of a presidential election year that pervaded 2020’s start, many of us probably ask ourselves every day in astonishment “how did we get here?”

And in this very moment more than ever, fiscal strength is critical to nonprofit survival. For good reason, fundraising is typically the focus of the money conversation for nonprofits, but equally (if not more) important is the finance. (And yes, strong nonprofits deal in finance even though we are not-for-profits.) Here are a few factors to prioritize during economic uncertainty, in parallel to the immediate need of reassessing and re-envisioning programs to be relevant and impactful in a world where societal changes and shifting priorities take center stage.

Fundraising Strategy

Fundraising is a special skill that is a must (and a gift) for nonprofit leaders, but with it comes a need for strategy.

Planning, monitoring, and adjusting

Take the time to plan and adjust. Work with your development team, enlist the Board, and scrap the plan you started the year with and take the time to come up with a new one.

Good management requires the cycle of planning, monitoring, and adjusting at all times. Not just in crisis mode, but especially now that it is clear that we will not return to the way things ‘used to be,’ and need to instead pivot to what a new normal can be.

We nonprofit folks have so much passion, that we sometimes let the business of things take a backseat to the more pressing need to keep programming and services going for those in need. As tempting as it is to react first and plan later. We are all thinking on the fly and making decisions through uncertainty. Move quickly, but try not to be rash and think that we can keep doing business as usual.

Diversified revenue

Understand your donor base with clean records and a maintained database. Then think about what it would take to diversify.

In-person events and fundraising galas most likely won’t be happening this year. Individual donors are experiencing their own financial impact or shifting their charitable giving to different causes in immediate support of the pandemic. Grants have requirements that you don’t know how you’ll meet.

Some industries are economically thriving even more right now and may have corporate dollars to commit to a charitable cause, many individuals in your donor base can still give their dollars without feeling a pinch...don’t assume they all can’t, and many foundations are showing up with emergency funds.

On the other hand, some industries are economically thriving even more right now and may have corporate dollars to commit to a charitable cause, many individuals in your donor base can still give their dollars without feeling a pinch...don’t assume they all can’t, and many foundations are showing up with emergency funds. Don’t get me wrong, it is not a simple feat (or even a possibility for us all), but now is the time to think beyond our traditional funding sources and strategize a new approach that diversifies the type of revenues on which we can rely.

Finance (in nonprofit terms good stewardship)

This is what I believe is a necessary focus for any nonprofit to grow from shaky to sustainable, and increase chances of staying power for the long haul. Leadership is responsible for ensuring the resources of our organizations are well protected and used efficiently for the organization to fulfill its mission, year over year.

Clean bookkeeping and reporting

The first step in contingency planning, which many of us have recently had to do, is having a clear understanding of your financial position.

That requires up-to-date, accurately accounted for information. Do you have a regular finance meeting with key internal stakeholders...even if your entire team is less than 10 people? Do you know who you owe and what pledges are due to you? Do you have that all in writing? Whether you outsource or manage finances in-house, it is critical to maintain good bookkeeping practices and understand what all those statements mean. With clean bookkeeping and regular reporting, you can find comfort in knowing that whatever financial decisions need to be made, they’re being made based on reliable data. Regardless of the financial situation.

Let’s also ask ourselves, ‘where can we go from here?’ by beginning to build sustainability through good practices for fiscal strength.

Scenario planning and forecasting

The economic impact of this pandemic is not over, we do not know how long it will last, and we don’t really know what the long-term effects will be.

The second step in contingency planning is to plan for as many scenarios as possible. If your typical budget process is months-long labor, now is the time to get scrappy, hunker down with the key decision-makers in your organization and tighten up that timeline to quickly plan through the best, worse, and worst-case scenario for your fundraising pipeline and expenses. Remain optimistic and support it with practical reality by formally developing and having a Board vote on a new budget for 2020 and 2021. Doing this will illicit trust from your team and provide a roadmap to a thoughtful financial future.

Return on Investment (ROI)

Invest in the elements of your nonprofit that have the highest return.

This profitability metric looks a little different from for-profits to nonprofits, but the concept is the same. In a time when literally every dollar should be scrutinized, get aligned across your leadership team, Board, and donors about the most important spends for a thriving future.

Of course, foremost is Programs. That goes without saying. Creating opportunity for positive societal impact and behavioral change is the reason nonprofits exist. But where can the Programs budget be cut to spare the costs (say partnering with an organization to create virtual content versus trying to do it alone), and where do expenses such livable wages need to be continued? We may have to do some education to the outside world that our Programs do not exist without our people.

There isn’t one right answer or a one-size-fits-all way to make these impactful decisions. What is important is that candid discussion is had and shared, and understanding is gained about how whatever investments you can continue to make today will set the organization up for a position of strength tomorrow.

The impact of the pandemic on our current economy has many of us jolted into a new reality. Now is a scary time for many of us to be digging deeper into the reality of our financial situation and it’s okay to ask ourselves at this moment, ‘how did we get here?’ Let’s also ask ourselves, ‘where can we go from here?’ by beginning to build sustainability through good practices for fiscal strength.

#financialmanagment #nonprofitbudgeting #nonprofitaccounting #fiscalhealth