Radical Ideas for Nonprofit Survival in 2020
There is no shortage of articles and opinions circling about that nonprofits are going to take a harder hit than they did in the aftermath of 2008's financial collapse.
My experience with nonprofit clients has been that most of them did the hard work of building up rainy day funds for the next downturn. But, those recommendations for rainy day funds were not benchmarked against the impact of a global pandemic that would stretch nonprofits in multiple ways: serving more need, having to adapt to new ways of serving while being physically distant, increased costs of doing business, and declining contributions and revenues. It will not be possible, or even feasible, for every nonprofit to survive. A number of seasoned executives will opt for retirement. Board members will find the governance needs greater than volunteer time will support. And, on a very practical level, money will be harder to raise or earn the longer the pandemic and high unemployment persist. Those are intellectual capital and resource deficits that are hard to surmount.
It doesn't have to mean the end of the organization's impact or service, though. There are ways to proactively consider how to transition or leverage the organization's most important assets - it's intellectual capital - so that the people, communities, and causes that you serve are not left behind.
Get real about operating overhead. There is no doubt that the pandemic and local mandates to stay-at-home have radically changed how many of us do our work. How much of your cash flow is in overhead you couldn't use - such as office space rent or mortgage, internet connectivity and infrastructure at those offices, utilities, and maintenance of equipment or fleets? Now is the time for real talk about sharing space with another organization or whether you need a dedicated space at all. If you own your space, is sharing it with another organization feasible? Rent is not taxable as Unrelated Business Taxable Income (UBTI).
Collaboration. No, not the kind where you say it's collaboration so you can share a grant. But, genuinely co-laboring on a shared objective. This won't be easy, but if you can find your way to honest, vulnerable, and brave conversations about the needs you serve and how you might not just survive by doing it together, but even be more effective at meeting your mission because you're not looking over your shoulder at what the other is doing.
Inviting the dreaded M-word over for dinner. That's right. Merger. Or, if you're in a position to do so, acquisition. This is absolutely a tool for nonprofit leaders to consider - mergers and acquisitions aren't just for the Wall Street set and they can be beneficial to your stakeholders in ways you might not have considered. Think about why for-profits merge or acquire businesses - mostly they do so to add value to their product or service for less than it costs to independently do so with the resources they currently have. Mergers have a bad rap in the nonprofit sector because they're associated with funders requiring merger to reduce perceived redundancy. However, I'd challenge you to think about how your organization and your board could be stronger merged with or acquired by an aligned organization in such a way as to make your value to the people or communities you serve even more impactful.
Not just locking the doors. For some organizations the decision to close down operations has already been made. This is a difficult, but often necessary choice. There is research out there to support the idea that it does not happen often enough or quickly enough. But, it makes sense, from an emotional and humanitarian perspective to try to keep going and serving and doing what you're there to do. For those that are at this juncture consider how to leave a lasting legacy by transferring (or selling if you have debts to discharge) intellectual capital to other organizations. If you have an effective curricula or service model, share it with an organization that's keen to benefit from you're hard-learned knowledge. Are your board members welcome to serve on the boards at other organizations with similar missions? We know how hard recruiting good board members can be and their skills and network capital could be invaluable to another organization.
Somewhere in this list you probably thought: "These aren't terribly radical! I've seen them before in other strategic nonprofit posts." Perhaps not. But, the organizations that emerge on the other side of this pandemic will have to endure radically altered norms, practices, and ways of doing business. Now is the time to think of yourselves as radicals.