Ann C. Fitzgerald, President
With inflation rising, increasing labor expenses, and a shaky stock market, the economic outlook is less than rosy.
Economists are divided as to whether or not a recession is coming, but it’s probably still wise to prepare your nonprofit to weather the storm. After all, most nonprofits that existed during the Great Recession of 2007-2009 saw revenues decline, and some never fully recovered.
If you want to recession-proof your nonprofit, take a page from the for-profit world. This is what they are doing:
- Take care of people. Your biggest expense—and most valuable asset—is your staff. Find ways—financial and other—to reward the star performers.
- Know your numbers. A surprising number of nonprofits have no understanding of cash flow, nor have they made projections for the year ahead. Connect with an accountant to build your financial knowledge.
- Hope for the best but prepare for the worst. Develop several budget scenarios. If you had to streamline your organization, what would you do first?
- Fund your operating reserve. And if you don’t have a reserve, now is the time to create one. One nonprofit executive said, “We try to put away 10 cents of every undesignated dollar.”
- Maximize your fundraising and look for other streams that fit. Most nonprofits have a dominant funding stream. Be sure to make the most of it while diversifying funding sources, especially if you are reliant on one or two major donors.
- Build your brand. Strengthen your positioning and comparative advantage by focusing on what your nonprofit does best.
- Focus on donor relationships now. Nonprofits that survived the last recession relied on strong ties with loyal donors. They also worked hard to reactivate recently lapsed donors. Review and improve everything from gift acknowledgments, to donor communications, to meetings.
- Involve your board. Don’t wait until you can’t meet payroll to discuss the budget. Form a committee to help navigate this challenging fiscal environment.
It’s daunting and disheartening to look at what might be coming, financially. But with a bit of foresight and preparation, your organization can weather the storm with strength and calm.
Ann C. Fitzgerald is Founder and President of AC Fitzgerald, using her decades of experience in fundraising, management, leadership, and sales to help nonprofits build their capacity and achieve success. She is a sought-after speaker, writer, and advisor.