Planning Ahead for Potential Threats
OpEd by Marnie Taylor, President and CEO
Last month, many nonprofit organizations began their new fiscal years. For those on calendar years, they are now past the half-way mark. We encourage nonprofits to use this period as a reflection point, a time where you can analyze the past and then plan for the future, particularly the busy end of calendar year.
This year is like no other, given the potential threats that are faced by the sector from both the state and federal levels. Nonprofits must begin to prepare for major changes that will affect how they do business, deliver services, work with clients and solicit and steward donations.
A number of nonprofits that we work with continue to rely heavily on only a few sources of income. Those might be government grants and contracts, Medicaid or Medicare reimbursements, or other public sources of money. Now is the time to have contingency plans in place for various scenarios. Could your organization weather a 50 percent cut or losses of entire programs? Both staff leadership and boards should be having those conversations now to avoid crisis later.
Additionally, we have concerns that nonprofits continue to rely on only a handful of donors to keep them in business. I have talked with a number of corporate and foundation program officers who say that requests have doubled or even tripled. Philanthropy cannot meet that kind of demand. Individual donors are being asked to give more and more often. With potential changes to the tax code, there may be less incentive to write the larger checks at the end of the year. Nonprofits should be solidifying relationships with donors by showing them the impact of their gifts and how they improve lives and the community.
Finally, nonprofits should be looking at ways to diversify their earned income sources, in addition to contracts, grants and donations. A diverse portfolio of income ensures organizational sustainability long-term in case other sources diminish or disappear. Earned income helps to cushion organizations that have grant funding or other philanthropic decreases.
I hope that board members, leadership and funders are having these conversations together to promote sustainability in the sector. We know that big changes are on the horizon, and we must prepare for those changes with strategic, objective plans that build in contingencies for best-case and worst-case scenarios.