Non-Profits Need New Strategies to Weather Budget Crisis

Non-profits everywhere are facing very difficult times as government funding is dwindling and public need for services is increasing. Sitting at my local county budget hearing on recently, it was quite obvious that many organizations are in panic mode, fearful of what will happen to them and their constituents if their county funding is cut. Unfortunately, elected officials have very tough decisions to make, and some non-profits will end up losing out.

This is an extreme year, but based on my experience with non-profits, these problems are nothing new. Non-profits, while very passionate about their missions, can also be dangerously short-sighted, not wanting to think about “what ifs” and prepare contingency plans. This leads many organizations to be caught in a revolving state of emergency. I am also a volunteer for the American Red Cross, whose mission in to help people prepare for and prevent emergencies. Most non-profits could stand to learn a lot from this philosophy. The issue here is sustainability. Having the foresight, management strategy, and reserves to weather storms like the current budget crisis.

There are several components to a sustainable non-profit strategy. The first is obviously building a diversified funding base. We are advised to do this with our own investment portfolios and for good reason. Non-profits need to continually be looking for new and varied funding sources. These could be fee for service ventures, corporate affiliations, updated fundraising campaigns, adding board members with financial clout, or targeting new donor segments. Complaisance with status quo funding, can eventually lead to crisis.

Second, the non-profits who are most likely to succeed in competing for scarce funding are not necessarily those with the most just cause. They are those that can sell themselves best. This means having a dynamic marketing strategy and taking advantage of public relations opportunities. Invest in name recognition and community presence and it will pay off because people are more likely to support organizations they recognize.

Third, show accountability to yourself and your constituents. At the Commissioners hearing, while everyone was moved by the heartfelt human impact stories, I was struck by the lack of hard facts about outcomes, especially for the human services non-profits struggling to keep their funding. Non-profits not only need to operate at the highest level of efficiency, but they also need to measure the results they produce. How many people does your organization help place in jobs annually? How many people are kept out of the criminal justice system and what is the savings for society? How much money is saved by keeping a child out of the foster care system? While non-profits hate to think of themselves in terms of dollars and cents, those appealing to cash-starved government entities, foundations, and businesses that care about bottom lines, need to be able to provide this type of information.

Finally, non-profits should never let down their guard. A collective sigh of relief is often uttered after the annual budget review is done and funding has been secured. But that generally leads to a false sense of security for a year. Like businesses, non-profits need to be constantly surveying their environment. What national economic trends are likely to affect them next year? Who are major constituents today and who are they likely to be tomorrow? Are there any new competitors and what does that mean? What are current internal strengths and where can new opportunities be leveraged? Are there other agencies duplicating services with whom you might forge a partnership? Surveying the landscape and anticipating change is key for ongoing success.

Organizations in crisis mode are generally not as effective in fulfilling their mission. Looking at all of these areas and taking steps to make improvements can give any non-profit a little more breathing room to face up to their next funding challenge, and most importantly, continue serving their target populations.