Your Organization’s Experience in Financial Chaos

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Tough times. Enough to keep the best of us up at night

I have been hearing in my travels that some of you are already making financial decisions in response to what is generally seen as being a worsening economic climate. Certain types of organizations have already experienced funding cuts, and we have heard that some groups are making staff and program changes. On the assumption that we can all learn from one another, we would ask you to share your situation and decision making with us and fellow readers. Post directly to our Web site or send us an email that we will post for you, unattributed, on our site. After we have received a number of responses, I will ask a few well-seasoned experts on such stuff to weigh in with their opinions on the strategies you are taking.

When you write in — please answer some or all of the following questions:

  • · What actions you have taken and what cuts you have made or do intend to make?
  • · What circumstances have precipitated this action (is it real or anticipated cuts and from which type(s) of funding source).
  • · What immediate and longer term effect it will have on your organization and its constituents?
  • · How did you talk with board members and others about these actions?
  • · Have you been involved in any collective advocacy with other organizations regarding budgets?

Your story is likely to be quite helpful to others. Try to present a balanced view of the action you took and what it took to make decisions. We appreciate your keeping us all in the loop.

If you don’t mind having your comment attributed click here to tell your story. If you would like to remain anonymous, click here to tell your story.

p.s. A tough road is ahead for many nonprofits. A subscription to NPQ will help you immeasurably to properly scout and negotiate the terrain ahead. Our online content is great but a paid subscription provides you with the very most we have to give. NPQ’s winter issue promises to be one of our most current, provocative and hard hitting yet. Don’t risk missing it!

  • Anonymous

    We are a small nonprofit in Vermont. We have 26 staff, a 1.3 million dollar budget, and reach 1000 people every year with our services. We are the largest “little” agency in the area.

    For the first time in 15 years, we have a tenuous budget that has yet to be fully funded. We launched a capital campaign to buy much needed new space and to fund an investment account. These projects are already underway.

    If we cannot fund our budget this fiscal year, we will have to consider reduction of staff hours.

  • Anonymous

    As you are well aware, the funding side is adjusting, too, sometimes as a knee-jerk, and sometimes, thoughtfully.

    For instance, a foundation here is focusing on human service delivery and away from “planning” at least in the short run until the economic panic has stabilized.

  • Sharon Q. Adams

    Our fiscal year runs from 9/1 to 8/31 so we just recently adopted a new budget with this current situation clearly in mind. While we continue to provide medical coverage for our employees, we stepped down a notch and they have a higher deductible. We did not build into the budget any salary increases, we will review in March. And, we are doing a full energy and sustainability analysis to look for ways to save on energy usage, reduce, reuse and recycle products and make behavioral modifications that will reduce consumption and waste to save costs on trash pick-up. Our most exciting savings is to retrofit our 40ft long medical unit, called the Neuter scooter, to run on bio fuel, in our case grease. All of these things will reduce costs and they have the added benefit of being consistent with our overall mission and our education programs for 27,000 children. We are trying to turn a problem into a challenge. Sharon Q. Adams, Executive Director, VA Beach SPCA

  • Anonymous

    Our charity, NPI, has been operated by volunteers only for more than a decade, so the current financial chaos has caused us minimal damage. A few years ago, we elected to stop making grant requests to federal agencies due to federal “corruption.” at the same time, we started social enterprises to earn the income needed to soon support our charitable operations. We have a few individual and corporate donors, but most of our funds are earned. For overseas projects, we are using some barter as a means to support projects. As a small charity, we found that it was a waste of time to send funding requests to foundations lacking any creativity, and mostly interested in self-promotion. If we approach a foundation now, it is with great caution. To gain support for our charitable projects, we have gained support from Helium.com and its
    many contributors/ authors supporting good causes. Most of our educational efforts are accomplished using distance education means via our website. At a time when other charities are having financial problems, NPI is receiving considerable funding to assist w/ green energy development, worldwide. Green technology development has been the focus of our primary, affiliated for-profit social enterprise. In brief, NPI does
    not depend on others to fund its charitable works.

  • Anonymous

    We are a very small grass roots food pantry—budget about $250,000. We were notified that our funding from the state would be cut by $50,000. That is a pretty big hit. Massachusetts just completed a big round of budget cuts across the board. So we are lucky that we kept ½ of our state funding for 2009.

    We have spent the past 4 years developing other resources and a healthy reserve, so I expect that we will weather this…If it doesn’t last too long. Because we are doing poverty work with some of the neediest families in our area, we are seeing big increases in demand for our services. So are looking for additional resources at a time when we don’t know what to expect on the funding side.

    We have heard that most will keep funding direct services, but not planning, training, etc. to the best of their ability.

  • Anonymous

    I was raised in the great depression and am now an independent part time
    consultant in the twilight of a long career. I spent 35 years as a senior
    leader and CEO of small and large non profit social services agencies, and
    18 years as a consultant. Indeed, I am 77 years young and have the caution
    of experience and age, but after 53 years working in human services and
    eight serious downturns, I offer the following advice to my clients for the
    early throes of the recession.: I believe they have value for your readers:

    A. Begin discussions with the Board to get their perspective on the
    economic landmines implicit in the current credit crisis
    B. Improve cash position and cash reserves. This will be necessary for
    cash flow as lines of credit will be tight
    C. Pay down debts as soon as possible. Do not add new debt
    D. Avoid new recurring obligations. Do not fill staff openings unless
    absolutely necessary for contract compliance. Freeze salaries. Involve
    employees in your challenge to survive and ultimately thrive
    E. Be alert to mergers or acquisitions when such action builds long term
    strengths of your agency. Some small agencies will not survive.
    F. Monitor government RFP offering for program opportunities in current
    fiscal pipeline when such program add to a diverse funding profile.
    G. Conduct discussions with City/county/ state officials re the needs of the
    organization’s target population in the context of possible cut backs and
    the role that you could play to backfill public cut backs with non profit
    substitutions
    H Look for diversified opportunities in the Green economy
    I. Ensure that your program has credible outcomes that convince public
    funders that your program makes a difference in the economic life and
    health of the community
    J. Maintain current fund development program but focus on government funds
    K. Expect “pump priming “initiatives regardless who wins the election. They
    are inevitable, particularly for workforce type programs
    L. Keep your donors informed. They will stay with you but at a lower level
    M. Ensure you have good measurable and credible outcomes
    N. Stay alert for growth opportunities and new stable initiatives. They do
    occur even in the worst of time
    O. Stay optimistic. This crisis will pass and your organization will
    survive if you have a valuable service

  • Anonymous

    An accountant on a community foundation board in Indiana suggested that
    due to the plummeting market, the staff salaries should also be reduced
    rather than provide cost of living increases. Fortunately, his idea was
    not supported by anyone else and the staff is still on the job. How
    would you like to work for that guy?

  • Anonymous

    . What actions you have taken and what cuts you have made or do intend to
    make?

    We are eliminating a director level position and are considering postponing
    a national conference. We are also revisiting two of our workplans and
    discussing with our Board slowing down or postponing some strategic items.

    . . What circumstances have precipitated this action (is it real or
    anticipated cuts and from which type(s) of funding source).

    We have lost $175,000 or 22% of our our funding. About half is that normal
    attrition of a funder pursuing other interests and the other half is a
    foundation cut of about 16% due to their loss of value in the market.

    . . What immediate and longer term effect it will have on your organization
    and its constituents?

    Our funding will slow the rate of our growth as an emerging national
    nonprofit. We hope the impact is short-term, but it is happening at a time
    when we were really gaining momentum and we hope we do not lose our window
    of opportunity. Our members will also be personally affected since they are
    already on the edge as individuals. We will have less to help address their
    personal needs.

    . . How did you talk with board members and others about these actions?

    The discussions were with the staff executive team initially, then the
    executive committee of the Board and will happen next at a quarterly Board
    meeting. My board members are very supportive.

    . . Have you been involved in any collective advocacy with other
    organizations regarding budgets?

    Not yet.

  • David Thomas

    We are a fairly small nonprofit charity with a budget of $2 Million per year. We provide child care services to children with special health needs and children affected by HIV/AIDS. We serve low-income families.

    In addition to taking steps to shift our bank balances around and opening new accounts to remain under the $250,000 cap for FDIC insurance, our Board has been discussing whether to reduce programs or to use some of our very substantial reserve funds to make up any deficit this year. As a result of the current economic climate, we all believe that we will have more clients than ever who need services, a trend that we have seen already.

    The debate is whether we should spend reserves to provide services. Some Board Members believe that this is what a “rainy day” fund is for, and there’s a big storm brewing out there. Others believe that we should balance spending and income every year, and for both groups it’s an ethical and moral issue as well as a financial one.

    The Board is holding many meetings to discuss this, and the conversation is going in a positive direction. It’s a comfort to have a Board that cares so much and is willing to participate actively.

    Of course, we also have loyal donors who might make this discussion academic by the end of our fiscal year in 9 months.

  • Anonymous

    · What actions have you taken, and what cuts have you made or intend to make?

    We currently employ 4 full-time and 3 part-time people. This month, we are laying off 1 full-time and 2 part-time people (the full-time Case Manager, the part-time Administrative Assistant (30 hrs/wk), and the part-time Youth Group Facilitator (10 hrs/wk). We also are no longer paying four part-time adult group facilitators (3 hrs/week each). We used to cover 100% of health insurance, we will now only cover 50%.

    · What circumstances have precipitated this action (is it real or anticipated cuts and from which type(s) of funding source).

    $70,000 of state and federal cuts in six months. We have relied on this money for at least 3 years annually. (a portion of it ($30K) for several years)

    · What immediate and longer term effect it will have on your organization and its constituents?

    This will decrease our ability to full serve our clients, delay previously planned program additions, enhancements, and expansions.

    · How did you talk with board members and others about these actions?
    · Have you been involved in any collective advocacy with other organizations regarding budgets?

    No, not yet. But everyone in the domestic violence community is hurting. Another batterer’s program in town is closing at the end of the month due to the same cuts. Other DV victim service programs are talking about cutting staff or programs as well.

  • Anonymous

    We are a summer arts school, and are planning a reduced program for 2009.

    We are hoping that this crisis will be similar to the dot-com crash of 2000 – 2001. Then the decline had already begun earlier in the year, but it wasn’t until 9/11 that the general public got scared and stayed home. But by January most people had adjusted to the new reality.

    Our students sign up in March, by which time we hope that the panic will have faded.

  • Anonymous

    . What actions have you taken, and what cuts have you made or intend to
    make?

    Four vacancies not filled and one notified of position lost in
    restructuring.

    . What circumstances have precipitated this action (is it real or
    anticipated cuts and from which type(s) of funding source).

    Private foundations are not supporting us as they have in the past although
    we have met and exceeded all goals and have three years of clean A-133
    audits.

    . What immediate and longer term effect it will have on your organization
    and its constituents?

    We will do less outreach and less research and development.

    . How did you talk with board members and others about these actions?

    Kept them informed of the budget situation and of the probable staffing
    changes.

    . Have you been involved in any collective advocacy with other
    organizations regarding budgets?

    No.