As governments around the world continue easing lock-down restrictions, executives are thinking about how to help their not-for-profit financials accelerate recovery post COVID-19. Rather than hunker down, it’s time for not-for-profit organizations to take 5 proactive steps to stabilize their finances, adapt to new conditions and prepare for continued mission success.
The financial deterioration caused by the COVID-19 pandemic has dramatically increased community needs while simultaneously reducing charitable donations. As weeks eventually become months of stay-at-home orders and millions of jobs lost, not-for-profit leaders are increasingly concerned about meeting demand for services and sustaining funding levels.
But there is some good news for not-for-profit organizations! A March 2020 donor survey by Fidelity Charitable states donors are stepping up during this time of crisis. When asked how the pandemic would impact their charitable donations, 54% of donors intend to maintain their prior giving levels and 25% plan to actually increase donations. Donor-advised funds were even more positive, with 59% planning to continue normal contributions and one-third planning to increase their giving this year.
As you make plans to lead your organization into recovery, here are five steps to think about:
It will be critical to invest now in processes and infrastructure that infuse the most flexibility into your organization which leads to resilience, enabling you to move with agility to adapt to any new situation. The way to do this is to:
“Moving to a one hundred percent work-from-home arrangement has created very limited disruption with our finance team. We still have to physically pick up the mail but with Sage Intacct we have been able to completely manage the finances of our church remotely during the COVID-19 crisis. It’s business as usual for us. This is just another reason a cloud-based accounting system works for Seacoast.” — Glenn Wood, Pastor of Administration, Seacoast Church and Baker Tilly client
The federal government’s economic response to COVID-19 includes provisions for not-for-profit organizations. 501c3 organizations are eligible to participate in many of the government financial relief programs set up in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Options for not-for-profit organizations may include:
Now more than ever, you will need to keep existing donors enthusiastic about your mission and try to re-engage previous donors that may have gone dormant in their giving. To inspire your donors, you need to deploy every strategy in your toolkit to tell your organization’s story in a clear, powerful and compelling way. Use your website, social media, email campaigns, direct mail and telephone engagement to amplify your message. Add credibility to your story by backing up your mission with the financial and operational metrics that demonstrate your organization’s impact.
As you update past and present donors about your mission, educate them about this opportunity to help your cause while reducing their tax burden. Tell donors about three new, limited-time, tax deduction bonuses in your next donor communication — the CARES Act provides for:
Storytelling has always been a critical component for not-for-profit donor engagement, but right now you will need to do more to overcome news overload. Now is the time to take your storytelling to the next level. It’s important to be sensitive. In a recent survey of national advertisers, 89% of marketers said they continue to adjust their messaging in view of the current environment. Not-for-profit organizations need to relate messaging to current events, convey a sense of being “in this together,” and demonstrate how they are helping others right now.
Every not-for-profit organization will face difficult decisions in the weeks and months ahead. The economic road back from COVID-19 will not be as quick or easy as we would like. The good news is not-for-profit organizations have weathered many economic storms previously and history shows charitable giving usually recovers more quickly than the overall economy. According to a recent analysis of not-for-profit performance during the last recession, Nonprofit Quarterly noted, “according to the hard data, nonprofits are excellent and highly adaptive managers when it comes to running complex organizations, even in financial downturns.”
To recover faster, use every financial analysis tool and report available to help your team find the path forward, including:
“It's no surprise that finance teams are starting with the eminently practical urgency of cash flow management and redoing budgets. But this puts the focus on the tools in use - especially given the remote work imperative. If there's one thing this pandemic has underscored, it's the value of trusted - and remotely accessible - financial and planning systems. Paper-based processes and re-circulated spreadsheets were already problematic. When the office itself is off limits, they are soul-grinders.” — Jon Reed, Co-Founder, Diginomica
After you’ve taken stock of your financial picture, get creative in continuing your mission. Get the staff (and perhaps major donors) brainstorming about better ways to deliver programs. Reimagine some of your services. Explore new ways to fundraise without being face-to-face. Talk to other organizations — could collaboration help you drive better results with scarcer resources?
“There is also a significant amount of collaboration, hope and ingenuity coming out of the sector right now. With organizations like Habitat for Humanity and Save the Children staying connected to their core missions and showing up for those in their care, no matter what, an important metric for success is being seen in the field: unconditional love.” - Alyssa Wright, Contributor, Forbes
Not-for-profit executives have faced tough financial situations before and emerged stronger, more creative and with a greater mission focus. As you now work to protect employees, apply for stimulus programs, increase donor engagement, and determine the best path forward, Baker Tilly and Sage Intacct stand ready to support you with people, tools and extended resources to help you analyze financial performance. Engage your donors with not-for-profit storytelling that employs images, outcomes metrics and financial performance data to earn donor trust and contributions.
1 Fidelity Charitable, “COVID-19 and philanthropy: How donor behaviors are shifting amid pandemic,” 2020.
2 The Nonprofit Times, “Marketers Adjusting to COVID-19 Using Creative Messages,” April 6, 2020.
3 Nonprofit Quarterly, “Nonprofits in Recession: Winners and Losers,” March 19, 2020.
4 Diginomica, “How Has Coronavirus Changed Business Spending – and When Will the New Normal Get Here?,” April 29, 2020
5 Forbes, Three Reminders for Nonprofit Leaders During COVID-19, April 7, 2020