“They shouldn’t be operating on the same budget if they know funding is about to change. They need to change as the situation does,” said Quan.
Further, many nonprofits focus on securing revenues but may forget to keep costs under control. These organizations will need to anticipate cutting costs in order to remain viable businesses. Even “small across the board salary reductions” are something managers might consider, said Giantris.
• Join an association
Clark added that joining a trade group like the one he runs can save money and improve operations. The Nonprofit Coordinating Committee offers services to its member organizations such as group purchasing discounts, advocacy, workshops, and consulting – all of which can make a significant dent off the bottom line.
“When I ran a nonprofit, we couldn’t afford not to be part of the NPCC,” Clark said. Likewise, Giantris’ Nonprofit Finance Fund offers loans, financial consultation and skills training. The Community Resource Exchange, where Quan works, has been providing affordable management consulting for social service organizations since 1979.
• Consider outsourcing – even merging
Nonprofits might benefit from altering the structure of their operations entirely. One way to save on costs of secondary or administrative tasks is to outsource these duties to external firms. Giantris went further to suggest that mergers with similar or complementary organizations should remain a possibility for nonprofits at risk. “If it looks like funding will disappear permanently, this should be considered,” she said. This is a decision managers need to be prudent about, but it should remain an option for organizations feeling the squeeze of tighter funding.
• Prepare now for future shortfalls
Most critical is the need to prepare for upcoming shortfalls, when more services will likely be in demand. “What many people don’t realize is that there is a time lag between economic slumps and services being cut,” said Sesso. Even if the economy bounces back, it’s likely that the damage has already been done and that the real effects won’t be seen for months.
In order to be resilient, nonprofits must take measures now, Giantris said, and “address the situation head-on."
Additional reporting by Alex Cotton.
