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Monday, December 18, 2017

Building Resilience in the Face of Change


Many nonprofit leaders are feeling more anxious than they have in recent years, fearing radical policy shifts, the threat of decreased government funding and a potential reduction in charitable giving. While there is no magic bullet, nonprofit leaders are pursuing a number of tactics to prepare for emerging threats and minimize the impact of change. 

During a session at the 2017 Armanino Nonprofit Symposium, panel members discussed how a strategic approach to leadership can help create more resilient organizations that thrive even under adverse conditions. 

Renewed Focus on the Core Mission

Nonprofit leaders can start by examining programs to ensure they both fulfill the mission and meet financial goals. “I was CFO of a local nonprofit, and we had one program that was detrimental financially and, in my opinion, was not pushing forward our mission,” said Renee Ordeneaux, partner at Armanino. “Now seems like a good time to consider whether you have something like that in your portfolio, and how much the program contributes to overhead.” 

Even if you identify such a program, however, it may not merit cutting. CFOs must analyze how programs interact and how various strategic decisions might impact an overall budget. “Sometimes programs cover their direct costs and a portion of overhead, so cutting that program might put you in a worse situation,” Ordeneaux said.

Proactive Contingency Planning
 
Juliet Clothier, CFO at the Glide Foundation, served on the United Way’s Financial Issues Committee during the Great Recession. That challenging period taught her that organizations need to have contingency plans in place. “What I’m doing now is listing all the things we’re doing that are new and prioritizing,” said Clothier. “We are looking at everything we are doing and asking ourselves if we are doing it in the best way possible; that is an exercise every nonprofit organization should perform.” If an organization is not truly the best at delivering a program or service, they should consider spinning the activity off to another group, Clothier suggested.

Funders are preparing for change, as well. “We are committed to staying the course in core grant-making,” said Carol Bradford, senior counsel at the California Community Foundation. “We are trying to set aside some of our monies for rapid response funding. As things come up and issues may become emergencies―for example, if federal funding shuts down on a particular issue and some organizations are left in the lurch―we want to step up and provide assistance.”

Zeroing in on True Costs

Liz Bluestein, COO, vice president and general counsel at nonprofit Public Counsel, said that her organization makes an extra effort to analyze costs in times of economic stress. “Understand what the true costs of the programs are, including the overhead that maybe we wouldn’t need to have if the program wasn’t there,” Bluestein advised. “Is the funding for this program budget-relieving or is it just paying for itself, or less than paying for itself? That is important to understand.”

Michael Shanklin, CEO of Kidspace Children’s Museum, relies on his CFO to help him objectively assess the nonprofit’s programs and provide realistic data that will help him make solid business decisions. They look at where they are underperforming and ask the critical question―why? “It’s about looking at the P&L as a guideline, where the outlier numbers are and discovering why they’re outliers,” said Shanklin. “How do we take advantage of those if they’re helping us and negate them if it’s a liability?”

Strategy and Advocacy

Many nonprofits are shifting attention to advocacy around issues that impact their operations and funding, and providing additional advocacy training for staff. Some are expanding their commitment―and even their mission―to counteract policy shifts that worsen existing societal issues like racism, poverty or unequal access to the arts and education.

Targeted fundraising is another option. “We’re seeing people come out of the woodwork,” said Nancy Berlin, policy director at CalNonprofits. “As I talk to nonprofits and their boards, I believe this is a great opportunity to sit down with your best donors.” Organizations can have a loving and frank discussion with donors about how this may be a great time for them to do something. “Show donors love and understanding, and let them know how they can best help you,” Berlin advised. 

Change is the new normal, and strategic planning has become a key to long-term viability. From contingency planning and enhancing financial reserves to increasing advocacy efforts, organizations are taking steps to build resilience that will carry them through an uncertain future. Whichever tactics they embrace, nonprofit leaders must step into an ever more strategic role to serve the interests of their organization and its mission.

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