It is in times like the current COVID-19 pandemic where our national and global economies are facing historic challenges that organizations are confronted with the need to make paradigm shifts to stay viable and sustainable. As many organizations were preparing their 2020 financial budgets, fundraiser calendars, and establishing strategic plans, few, if any, were prepared for the current state of affairs. Therefore, as we all navigate through these uncertain times, it is essential to update current procedures and establish new ones to allow you to appropriately respond to the constant changes as they occur in real-time.
A few of the most essential procedural changes that can have a great impact on not-for-profit organizations include:
- Updating the internal financials and budgets on at least a weekly basis
- Re-examining all budgeted expenses and the spending policy
- Leveraging technology to continue fundraising events
- Exploring new cash flow streams
Updating Intern Financials and Budgets
There is so much that cannot be controlled during times of uncertainty; however, having updated internal financials and budgets at all times is one thing that you can control. Doing so allows management and the board to make the most informed decisions on what direction to move the organization based on current trends and metrics.
Reviewing current financials also allows you to understand different aspects of your organization, such as how many days of expenses are supported by your current cash balances. An understanding of this metric is particularly important to help you understand which expenses are non-essential and should be cut or can be moved to a later date.
Understanding these financial trends and metrics will allow your organization’s management to communicate the specific needs and shortfalls the organization is experiencing to the board and your donors.
Re-examining All Budgeted Expenses & The Spending Policy
A re-examination of all budgeted expenses and the spending policy has a direct correlation to the frequent internal financial and budget updates discussed in the previous section.
The current economies and markets are not the same today as they were when your prepared budgets and expenses were agreed to by the board. Therefore, your organization must re-evaluate all previously approved expenses to understand what is essential for the organization and what needs to be completely cut or pushed out to a later date. It is also generally best to have monthly budgets with actual expenditure expectations that will occur in each month rather than an annual budget or straight-line expenses over the individual months.
Information is power, so the better information you have in these situations, the more informed decisions management and the board can make to move your organization in the right direction.
Additionally, while most spending policies are created to protect the organization from dropping into historic corpus amounts, this is also the time to question and challenge your spending calculation and policy to ensure that the organization is protected during a time of such drastic market and economical changes.
Leveraging Technology to Continue Fundraising Events
The organizations that seem to find the most security during these times are those that can innovate and react quickly. The biggest difference between our current pandemic and resulting financial crisis and the financial crises of the past is the tremendous opportunity for us to use and leverage technology to our advantage.
Technology and connectivity are stronger than ever before with numerous video conferencing and sharing applications in the marketplace. Additionally, technology has also created a platform for people to donate and contribute money electronically. Therefore, instead of canceling your planned annual or major fundraising event, you should look for ways to leverage technology to continue sharing your mission and communicating specific needs with donors.
The best example of this can be found in the restaurant industry. Many traditional, sit down restaurants have embraced the use of technology to continue to stay open and serve take-out orders using applications and online ordering. It is this kind of innovative thought that organizations should strive for to keep collecting on their annual campaigns and fundraisers.
Exploring New Cash Flow Streams
Statewide stay-at-home orders have also allowed some individuals to experience unexpected cost savings from fewer gas purchases, canceled vacations, less eating out, etc. This provides an opportunity for some extra cash available to support your organization’s mission. In addition, individuals are further incentivized to support you through the charitable giving provision in the CARES Act.
This provides a great opportunity for organizations to explore additional revenue streams and cash inflow opportunities. There are many organizations and individual philanthropists who are funding relief-granting opportunities to help organizations that are struggling during this pandemic. Researching and applying for these various opportunities can be a way for organizations to also keep a portion of the staff employed and productive during this time.
Additionally, many small organizations are currently evaluating and applying for the Paycheck Protection Program and Economic Injury Disaster Loan Program, which have been created and modified under the CARES Act. We put together an article on PPP Loan Forgiveness Considerations for Not-For-Profits that may be helpful to explore. More information on these particular programs can be found on our COVID-19 resource page.
Overall, as organizations navigate these uncertain times, it is increasingly important for management and the board to continually be ready to respond to changes using relevant and accurate information. It is also equally important for the organization to challenge and revisit its budgets, revenue streams, expenditures, trends, metrics, and spending policies. All of this combined with frequent communications between management, the board, and the donor base will allow your organization to make the most informed decisions for its financial health and, most importantly, to continue proliferating the mission you are committed to serve.
Have questions about how to execute any of these items? Reach out to your local Blue & Co. advisor today.
Please continue to monitor our Coronavirus Resources and Information Page for updates.