Financial Focus: You Told Us

Article Highlights:

• In our April issue, we asked you to offer your thoughts on how the current political landscape will affect your organization’s funding.
• We asked, you answered
• Folks, it’s time to start asking tough questions and making a plan
• For those who have developed a contingency, the news isn’t much better.
• Being scared or putting your head in the sand is not going to help.
• How can others help?
• We’re in this together

In our April issue, we asked you to offer your thoughts on how the current political landscape will affect your organization’s funding.

Your answers weren’t surprising, but they weren’t optimistic either.

That’s understandable. It’s tough to make sense of the world when the daily news includes the United States pulling out of the Paris Climate Accord, the previous FBI Director alleging lies from the Oval Office, healthcare in limbo, and a budget proposal that eliminates the National Endowment for the Arts, Corporation for Public Broadcasting, and the National Endowment for Humanities.

However, understanding the problem is the first step to finding solutions. In order to deliver services in the long-term, we need to make sure our organizations stay focused and have a financial plan.

These survey results underscore the need to remain focused by asking your organization’s leadership and board the difficult questions.

We asked, you answered

While our respondents do not represent the entire nonprofit sector, the results are nonetheless eye opening. Twenty-two percent of respondents replied their budget was $5 million or over, while 32 percent indicated their budgets were $2 million or less. The remaining were between $2 and $5 million.

Nearly 75 percent of the respondents indicated that federal budget cuts were discussed by the board and senior management. This indicates a certain level of forecasting and scenario planning. However, nearly 20 percent said they’ll just wait and see what happens.

To be fair to the 20 percent who are taking a more relaxed view, many organizations don’t receive federal funding. However, 36 percent of you said the federal government funds from 50 to 100 percent of your total budget.

But it’s not just those with budgets highly-reliant on federal funding who may suffer. Many times, funding flows from the federal level, to the states, and down to local communities. So, while you think your budget may be safe from shifts in the political winds in D.C., it may not be.

Folks, it’s time to start asking tough questions and making a plan

Given the uncertainty, making a plan is important. Yet, when asked about possible budget cuts, 45 percent of the respondents said they have no plan in place!

For those who have developed a contingency, the news isn’t much better.

More than 60 percent of the respondents said they would have to eliminate staff positions. Fifty-two percent anticipate cutting services, and 46 percent of the respondents suggested they will fundraise to fill the gap. (How on earth this is going to happen is another question.)

Being scared or putting your head in the sand is not going to help.

Start thinking about the questions you need to discuss with your board and funders. What are others in your space doing to prepare for a late-night tweet indicating more budget cuts on the horizons? Prepare budget scenarios that reflect changes to your programs or organization. Rise up and take command of the situation. We need to be strong, support each other, and be proactive.

To get the conversation started, consider asking the following questions to your board:

• Are there board members who can share expertise on budget scenario planning?
• What factors does senior management want to include in budget scenarios?
• What information do we have? What information do we need?
• What is our current financial position and how does it compare to our current budget?

How can others help?

For funders reading this article, it’s time to be proactive and communicate what your foundation may be able to do. Communicate with your grantees.

Understandably, many respondents shared concern for their overall sector, like child advocacy or arts. Others drew the line between immigration status and the fear of coming forward for help. One unfortunate respondent suggested they will likely close their doors. Funders can assist in allaying concerns by providing special bridge funds. But thus far, those programs aren’t widely known or available.

In fact, 43 percent of our respondents said their funders have been quiet about what’s going on at the federal level. An additional 32 percent of the respondents said they don’t know how funders have reacted to the President’s budget plan.

This means 75 percent of organizations have no idea how funders might react to a potential financial crisis. That creates fear, and fear doesn’t help anyone.

We’re in this together

No matter what scenario fits your organization, most important is the idea that the sector’s long term health comes back to our purpose – helping each other. By communicating need and linking need to mission, we can work together to weather any potential storm.

You might also like:

• Treasurers of All-Volunteer Organizations: Eight Key Responsibilities
• Insider Newsletters: An Easy Way to Keep Your Board in the Loop and Engaged
• An Easy-to-Use Accounting Procedures Manual Template
• A Guide for Private Foundations: Tax Exemption and 990-PF Filing Requirements
• Board Horror Stories: How to Reduce Board Resignations

 

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