With COVID-19 details changing daily, if not hourly, the information contained in these posts may not reflect the most recent developments.
You are not alone; we are in this together. TREC has been hearing from you, which is great, keep the comments and requests coming. It is clear that many of you are grappling with similar challenges arising from the COVID-19 crisis.
Here are a of couple examples of what we’ve been hearing. I’m sure everyone can relate to these questions, statements, and reactions.
“I felt a sense of confidence before; now I have no idea what the future holds.”
“It’s bad enough that this is an election year; the COVID crisis could be a huge hit on fundraising.”
“How should we handle our spring appeal? Go ahead as is? How will that land? What other options do we have?”
“Will the lessons learned during the 2008 recession be relevant this time around?”
“Knowing the uncertainty that people are currently feeling, we don’t want anyone to have the added worry that they will no longer have a job.”
“We’re creating an emergency budget, and I fear that it drains reserves, but if this isn’t a “rainy day”, I don’t know what is!”
Does this sound like the conversations that are happening in your organization right now?
You are handling a lot, things are moving quickly, and you are doing it from your new set-up at home where you might be feeling a bit isolated from your team. Connections and conversations may have happened more easily when you were in the same space together. Now you have to put in a bit more effort to reach out. In these times, it is so important to connect to your colleagues, partners, donors, and TREC. Remember that others are likely having similar reactions and are contending with many of the same challenges. Reach out, check-in, offer help, share ideas, and get advice.
TREC is providing a forum for you to talk with each other about fundraising. Join the Fund Development Network to write and read posts and attend our Monday morning discussions to hear from TREC experts and each other about making changes to fundraising strategies. (email email@example.com to be added to the Fund Development Network)
Many of you are understandably concerned about the impact of the economic downturn on your organizational sustainability. Before the pandemic, we heard forecasts of a recession, but, now given the far-ranging impact of COVID-19, we should expect severe economic implications, which might be worse than we’ve experienced in prior recessions. You may not have seen the impact on your budget yet, which means it is the perfect time to ask some “what ifs” and do some financial planning – before decisions are urgent.
We have prepared this tutorial which walks through what you can do to be better prepared, including how to develop alternative financial scenarios. It walks through making decisions about when and what to cut. TREC provides a framework to help you hone in on the most strategic path forward. Doing this planning up front leads to the most rational decisions and gives you time to get everyone on the same page.
No one wants to talk about making cuts. But if you have a drop in revenue, you don’t want to spend down all your reserves before you start making cuts. You will likely not have enough reserves to withstand a long and deep recession if this current crisis prolongs.
Aim to maintain at least three months of operating monies in reserves. That is the minimum cushion for stability. It may be tempting to spend down even more of your reserves given the severity of the current situation, but, if you do, you risk eliminating your cushion before you know the longer-lasting impact of this crisis. And you eliminate your ability to make even more dramatic shifts in the future if the situation warrants it.
First, scan your budget for any places where you can cut back on expenses. Can you cutback office expenses by making the work-at-home arrangement permanent for more of your staff? Can you cut back on printing by doing more communication electronically? Can you hold off on filling an unfilled slot? Given the current economic forecast, it would be prudent to look at your current budget and trim now. Make it official by asking your Board to approve a revised budget mid-year.
If you need to cut back based on a drop in revenue, make sure that you stick to your most important work. Cut at the edges. Cut the add-on, opportunistic, and expansion programs. Stay focused on the work that is the most core to your mission, and the work that is the most impactful.
Don’t wait too long to make cuts. The longer you wait, the more you spend down reserves, and the more you jeopardize the funding to maintain your staffing.
As you do your financial scenario planning, consider the overall, long-term sustainability of the organization. Maintaining some financial reserves is critical to the health and wellbeing of your organization. Your work is critical. We need you and your organization working over the long term, so watch the tutorial and plan for the challenging times ahead.
Let us know if you need assistance. Thanks for all you do.