Most economists believe that the Great Recession is ending. Let’s assume for a moment that this is true. That the economy has finished the deepest contraction since the Great Depression and is now on the verge of beginning to expand again.
If this outlook it correct, it is critical that nonprofits recognize this moment as one of great opportunity.
Cutting back is tough to do. Income is relative, so while getting a raise from $50,000 a year to $75,000 a year makes people feel flush, getting your pay cut from $100,000 to $75,000 requires painful cutbacks in your lifestyle.
The good news is that if the recession is ending, we have all completed most of the cutbacks we needed to achieve. Today, we stand within organizations that were able to handle the downturn and are now operating on budgets set well below where they were a few years ago. We’ve completed the tough layoffs, we’ve cut back on wasteful spending, we’ve reset our expectations.
If you are operating a nonprofit you have a huge opportunity to reset the future path of your organization’s financial health. At any given time, it is hard to take resources that are needed to tackle today’s problems and invest them in the future. But because income is relative, as the economy improves and additional resources become available, you will face the easiest possible time to earmark those resources for investment in your future.
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Develop the next generation of your most effective program.
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Put in place an outcome measurement system.
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Build a reserve fund.
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Upgrade your technology infrastructure.
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Hire a top notch fundraiser.
You’ve already done the hard work of cutting back. Don’t let this opportunity go to waste by simply letting your budgets slow creep back up to where they were before the crisis. If before the crisis you had told people you wanted to enact layoffs, cut back on travel and eliminate your weakest program in order to invest in one of the items above, you would have faced a revolt. But today you’ve already done the cutbacks. It is up to you what new path you chart as the economy recovers.
This recession was the worst since the Great Depression. So if economist are right and the recession is ending, the next few years offer the easiest possible time to invest in your future.
If not now, when?
9 Comments
Sean,
Even if we are coming out of the recession, nonprofits tend to be on the “caboose” of the economic train. Therefore I anticipate we will be suffering well into next year.
Hi Sean,
a good rallying cry for non-profits to be bold as we emerge out the other side of the recession. I just hope trustees/CEO’s share your views.
There was a similar rallying call from nfpSynergy in the UK today, which may be of interest: http://www.nfpsynergy.net/reports_presentations/nfpsynergy_our_latest_editorial/a_bigger_slice_or_less_pie_why_charities_should_invest_to_grow.aspx
Thanks,
Craig
Thanks for the link Craig.
Ken, I’m not suggesting it is all sunshine and lollipops from here. I’m just pointing out that now that the hard cuts have been made, you might as well reap the benefit my allocating new revenue to a sustainable future rather than just trying to claw back to where you were a few years ago.
Sean,
I hear you. However, I believe that many NP leaders are in denial with their heads in the clouds. Most NPs are normally in survival mode to begin with. They may have NOT done the “hard work” of cutting back in anything but a reactive manner and “planning ahead with the allocation of revenues for a sustainable future” is a foreign concept. I am afraid that the recession being over (if it really is) means for many NPs back to business as usual with little learned and much wasted.
“the recession being over means back to business as usual for many nonprofits.” I would add that the same will be true for many for-profits. But of course encouraging people to think otherwise is why I wrote the post!
#1 should be “hire a top notch fundraiser” IMO.
Without funds the rest will not matter much.
Best regards,
Tom Bailey
Read my blog and share what you think.
http://day-accountability.blogspot.com/
Great post. The recession has forced change and new strategies, and many lessons. What doesn’t kill makes us stronger, right? 😉
What doesn’t kill us makes us stronger… unless we just go back to our old ways and end up getting hit on the head in the same way down the road!
Amen brother!