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Your 2009 Nonprofit Survival Guide

You’ve seen the news.  You know it’s tough out there.  Just this morning I saw the following headlines on my Chronicle of Philanthropy RSS feed:  “Charitable Donations Fell by Nearly 6% in 2008”, “Ford Foundation Offers Buyouts to One-Third of Employees”, and “Robert Wood Johnson (Foundation) Offers Buyout to 40% of its Employees”.  Tough stuff indeed.  I’m sure that you have your own stories about what the current economic situation has meant to your family and friends.  So, the question is this:  Is there any way to survive, maybe even thrive, in such circumstances?  We resoundingly say, “Yes!”  Consider this your 2009 Nonprofit Survival Guide.

First off, stop listening to the news.  I mean it…turn it off.  I’m not advocating locking yourself into a cave and shutting out the world.  But, the constant drumbeat of negativity takes its toll on you after a while.  I saw a great sign on a realty office near my home the other day.  It said, “We have decided not to participate in this recession.”  What a great message!  The half-empty folks driving by no doubt scoff at such a sign and call it denial.  I call it taking responsibility for your own success.  The facts around them may not have changed, but at least for this one realty office in Mt. Juliet, Tennessee, they aren’t making excuses.  So what about you?  Yes, it’s harder to win than to lose.  But you have people (or animals or something) that need what your organization brings.  Determine to make it.

Next, honestly evaluate your situation.  Be brutal in your assessment.  It’s nearly the half-way point in the year and you need to know where your organization stands.  How is your revenue?  Is it down?  If so, by what percentage?  Have you adjusted your spending accordingly?  This sounds like common sense.  But, as you and I know, it’s not so common.  If it was, the average family wouldn’t be in debt up to their eyeballs.  Getting a handle on where your nonprofit is financially is the first, concrete step to stabilizing the patient.  This may include some tough decisions.  Let’s be very honest:  following step #1 and getting positive doesn’t mean your organization is immune from what the Ford and Robert Wood Johnson foundations have had to do.  Their decisions to cut back is reflective of an evaluation of their current financial situation.  You may have to let some people go.  You may have to scale back a program or two.  That’s OK.  It is difficult, but it is a whole lot better than rushing headlong into a brick wall.

OK, you’ve made the tough financial choices.  That’s really big…many can’t bring themselves to do it, but you did (or will).  So, now what?  Try making parallel plans.  By that, I mean make one plan that reflects a prolonged  financial downturn.  For plan #2, stretch out a bit.  Suspend disbelief for a little while and imagine this thing turning around in 6 to 9 months.  The reality is that no one really knows what is going to happen.  Be prepared either way.  Whenever this thing does turn around, and it will eventually, your nonprofit shouldn’t find itself trying to ramp up to a new reality.  Prepare for it now.

Two more quick observations…

First (and we’ve said this before), stay relevant.  That is something that is always true, but even more so in tough times.  Many is the organization that trudges along and never takes an unfiltered look at its programs to see if they still make sense in this ever-changing world.  Your mission may be timeless, but your programs probably are not.  Relevancy is critical to maintaining a donor base.  Even more importantly, it is critical to accomplishing your mission.

Secondly, don’t let times like these sneak up on you again.  Our financial world is cyclical.  During the Clinton adminstration, the business cycle was declared dead.  Well, it has proven to be one tough zombie!  Economies always swing from boom to bust.  So many businesses, and way too many nonprofits, cruised through the middle part of this decade with bloated budgets, little-to-no cash reserves and way too many staffers.  When crunch time came…and it always does…people got hurt.  Determine to stay lean and mean.  When things improve, don’t go back on cruise control.  Stay sharp, stay focused and stay efficient.  That way, you’ll have a seat the next time the music stops.

Greg McRay, EA

Greg McRay, EA

Greg McRay is the founder and CEO of The Foundation Group. He is registered with the IRS as an Enrolled Agent and specializes in 501(c)(3) and other tax exemption issues.

This Post Has 2 Comments
  1. Question: We are a 501-C-3 organization. Another non -profit organization (not 501-c-3) wants to use our bulk mail permit to send fliers about a program which will raise funds and will donate surplus to charity or some non -profit organization. Will this jeopardies our 501-C-3 status? Can we do cooperative or joint function?

    1. You can do cooperative programs with other organizations, even those that are not 501(c)(3), so long as it furthers your organization’s exempt purpose. I would not recommend letting another organization borrow your permit, however. Even the postal service will have a problem with that. If your organization wants to mail something promoting the joint effort, that should be OK.

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