Budget Cuts: they call it the Fiscal Crisis, Economic Crisis, and the greatest economic meltdown since the Great Depression. As Shakespeare said, “a rose by any other name, would smell as sweet.” Whatever the name, this one isn’t a rose. And, it doesn’t smell sweet to many nonprofits. The impact of this fiscal crisis has been very hard on most nonprofits and those they serve. And, recent research from the Center on Budget and Policy Priorities indicates that state cuts are averaging about 12% per year.
Let’s Look at What’s Been Happening:
The last few years have been extremely difficult for most nonprofits. Many have sustained budget cuts from multiple sources, including government contracts and foundation grants. Along with other nonprofits, the foundation community has sustained its own cuts and has had to reduce grants. Some of the cuts have been heaviest at the state level.
Just as our nonprofits are being cut, people in our communities find themselves in greater need of help. It’s a quandary, and very difficult for most nonprofits to meet the growing need. And, unfortunately, unless there are new sources of revenue, most nonprofits need to set boundaries about how many people are served, and with what level of service. And, they will need to cut administrative and program areas of the budget. However, most nonprofits should be able to raise more funds from donors to help fill the gap.
Manage Both Budget Cuts and Raising More Money
Nonprofit organizations need to develop and implement strategies for organizational development and funding. They should:
• Analyze the agency;
• Plan to cut parts of the budget, as needed;
• Implement strategies to diversify and expand funding sources, especially donors.
Analyze the Agency
- Study your state’s budget, and determine what kinds of cuts are expected in the areas where you have state contracts. Talk with staffers to find out what’s happening with funding levels for your program area.
- Analyze the agency, its strengths, weaknesses, opportunities and threats (SWOT).
- Identify programs and services that have the greatest support from diversified sources, and analyze those that are at greatest risk.
- Hold discussions with the board, management team and staff to discuss current and projected cuts, and options available.
- Create a written analysis, with priority areas identified.
- Create Scenarios for Budget Cuts
- Analyze your program activity levels and outcomes, and make any changes you can to reduce costs without impacting program outcomes.
- Review the agency budget and find places where you can reduce costs. Ask for staff suggestions.
- Develop cutback strategies for each area of the budget, ready to be implemented if needed. This way, when different challenges occur, you’re prepared, and not trying to cut during the crisis.
- Make more use of student interns, Vista, Americorps and other volunteers. There are some tasks made to order for volunteers and interns, others less so.
- Track budget cutting strategy on a monthly basis, using a team of the board treasurer and senior managers.
Expand Donor Revenue
- Review the donor list. Analyze the list to determine the following: number of total donors during the past 3 years; number renewing each year; number of lapsed donors each year; number of donors increasing giving levels. Share the analysis with the board. Develop strategies for increasing donor income over the coming months. Start with contacts with those that are active donors, then lapsed donors, then other friends and friends of friends.
- Increase board and volunteer work in fund raising, by asking for involvement.
- Ensure that your agency has more involvement with donors, especially major and mid range donors. Involve the board, and don’t be shy. Fund raising is one of a board member’s most important duties. Get the board’s support immediately.
- Work with the Chair of the Board and other board leaders to implement a 3 to 6 month strategy to build board involvement through donor appeals: small events and one-on-one solicitations. Start now, every month will count.
- Develop strategies for meeting with major donors to see what they can do to help. Board members should take the lead in this effort, supported by the CEO and development staff.
- Get donors to volunteer to schedule small house parties to raise money for the organization.
- Provide training and materials to board members and donors so that they can easily ask for donations, because they know the programs, the case statement, and the difference each gift can make.
- Develop strategies to promote your organization. Make certain your stakeholders know about the importance of what you do. That includes consumers, community members, donors, funders, state government leaders and others. Many of these stakeholders can become donors, if solicited appropriately.
Work both sides: (1) planning for and implementing budget cuts, and (2) mobilizing an active strategy to build the base of donors. And that’s how to beat the budget cut blues.
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Beating the Budget Cut Blues
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