Beginning in 2009, the Nonprofit Finance Fund published its annual State of the Sector Report. Like the decennial census, it provides a number of indicators that the sector, in general, is experiencing. The report doesn’t drill down to a single sector in a single market, but it allows funders, donors, and community benefit organizations to glimpse at trends.
I’ve kept my blog readers (thank you!) up to speed on these reports.
So, what’s new? Arizona State University’s Lodestar Center for Philanthropy and Nonprofit Innovation launched a "Research Friday" blog series on how nonprofits are reacting, adapting, innovating and taking action to stem negative trends identified in the annual reports. I hope community benefit organizations get value from the blog and that it provides sparks for innovation.
As a facilitator, I don’t come to the table with the answers to challenges. The facilitator’s role is to provide the space to let those with a common agenda work through various topics. But let’s have some fun! I’m going to describe a scenario and let readers complete the story. Here we go!
I am the CEO of a community benefit organization with 25 full-time and 16 part-time staff members, providing human services. In 2009, a handful of dedicated donors lost their shirts at the race track and then called to say that the check wasn’t in the mail after all.
I didn’t panic, but my cool was jolted as I’d been relying on these funds to expand into a nearby rural community that is currently without services.
Reaction: cut back on employee health benefits, staff training, consolidated job responsibilities, limited the number of clients we could serve, scrap (for now) expansion plans and dip into the rainy day fund. My organization had very little time to prepare for this seismic shift, and I felt like my hand was forced.
By the end 2010, my colleagues and I know that the short-term strategies are here to stay. I am so proud of the staff and how they’ve held it together during the financial storm. We are doing more with less. Everyone is. But many staff members are stressed and the demand for our services continues to rise. I must make more cuts: additional reductions to employee health benefits; suspend contributions to 401K plans; delay capital improvements (roof and a/c are at the end of their life cycles); continue hiring freeze and 20% compensation cut for top management, including me. Federal and state grants are no longer a given.
Adaptation: The board is fully engaged in fundraising, but there is so much competition—yikes! Plus, our supporters are jittery and have adopted different giving strategies. The pattern is disrupting our cash flow. The Finance Committee meets more frequently and scrutinizes every expense.
2012 began with soul searching and the acknowledgement that the organization—staff and board—are pretty tired of managing the down side and are ready to explore opportunities.
Innovation: At the end of the annual board retreat, we are all strangely relating to Peter Finch in "Network" delivering his “mad as hell and I’m not going to take it anymore” speech. The retreat opened our eyes that we must be willing to explore a new way of doing business if we are to survive and stabilize with the ultimate goal being to thrive. Many long-time board members just aren’t up for the new reality challenges. A few fought changes, while others graciously stepped aside. New realities are here.
And here we are. More than half way through 2013. Time for action.
What action plan do you think should be explored? Before you make one key stroke or let one idea out, read the Research Friday blog. And please add your own innovations. Looking forward to your thoughts!
Learn about these and other concepts used in TPF's approach to philanthropy.
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