4 Steps to Manage the Covid-19 Crisis at Your Nonprofit Organization
Here we are. April 2020 and working our way through a global pandemic. March seemed like the longest month in history. April probably will, too.
So while you're staying home and working out what's next for you and your nonprofit, here are some thoughts on how to manage the next several weeks thoughtfully, fairly, and with a mindset of stewardship and sensitivity to all involved.
We don't know yet what our new normal will look like, but we can still approach this strange and unforeseen situation with equity, transparency, and strategy.
Here are my suggestions on how to do that.
(1) In general, the board, which must act as a fiduciary body, is well within its purview to work with management and:
Strongly advise on executive salaries, staffing levels, and recommended salary reductions
Review current monthly spend/burn rate and recommend budget revisions that eliminate non-critical spending, like travel and meals, for example (perhaps even pass a revised budget)
If there is a finance committee in place, that committee should take the lead. If not, work closely with your board treasurer and chair instead.
(2) Do do your best to rally resources and financial support:
It’s time to rally your individual donors. A cohesive, deeply personal approach to donors who have given $500+ in the last year, is required. For major donors, asks for emergency funds, or commitments, are key. Now is the time to remind folks why your org matters. Time for phone and video calls. Time for storytelling and building on the bonds that folks already have with your organization. Emails should be the last resort – regular phone call touches are a better bet.
Devote some of the development staff to looking just for emergency funding.
(3) Review year to date spending and create a cash flow forecast to assist with decision making:
With the 1st quarter nearly ended, you will have a good idea of core operating expense trends.
Have an honest conversation with board and staff around what initiatives should be tabled or delayed, and what core activities must continue.
To assist with those considerations, I strongly recommend a cash flow model be put together so you can run different scenarios.
The forecast would need to take into account the anticipated donations/grants, and large anticipated expenses that are core to operations in order for it to be meaningful.
You can then run scenarios which take into account the timing of things like salary cuts so you can see the impact on cash flow clearly over a 12-18 month period.
And yes, you do want to look at a time period of at least 12 months. The long-term impacts of coronavirus should be expected to be deep and persist well into the next fiscal year.
(4) In terms of communicating expectations and plans to staff here’s what I recommend:
In order to prevent anxiety and uncertainty, which leads to low morale and poor efficacy, provide your team a timeline when decisions will be made. This transparency will go a long way to calming folks in most cases.
Examples:
By April __, we will let you know about any changes in staffing that we may have to make.
We are considering strategies like ___-___% reductions in salary in __ weeks if [XYZ happens]
If by May 1, XYZ happens, we will then move to a __% reduction in salary.
We are committed to supporting you and your families as much as we can during this difficult time, etc., but we are also obligated to support our mission as best as we possibly can.
In the worst case scenario, state unemployment coverage is being expanded and employees should be directed to those resources when/if they are let go.
Understand, however, that if you receive any funding from the Payroll Protection Program, the amount of the loan that may be forgiven will be reduced if changes to staffing levels or payroll are made and not reversed by June 30.
We're with you!
Chantal Sheehan, Founder & CEO, Blue Fox - Agile Accounting
