With COVID-19 details changing daily, if not hourly, the information contained in these posts may not reflect the most recent developments.
We live in uncertain times, but you’ve got this.
You’re likely reading the reports about coronavirus (COVID-19) and may be concerned about what this might mean for you, your family, and your community’s health.
Fortunately, the risks posed by COVID-19 for most of us are very low right now. As always, to stay healthy, keep doing what you know, e.g., wash your hands frequently, cover your nose and mouth if you cough and sneeze, stay home if you are sick and go to the doctor.
Because the stock market has responded to COVID-19 with a downward turn, you may also have concerns about fundraising and the health of your organization. I’m not an expert at forecasting the economy, but a downturn has been predicted, and now it looks more imminent. Plus, there is a lot of other uncertainty around us, with climate change, our elections, and more.
But you’ve got this. Just like your own health, to keep your organization healthy, keep doing what you know.
You’ve been working at building up a base of small and major donors. Individual donors are more-recession proof than foundations. Some foundations tie their grantmaking to stock market performance so you’ve been preparing for an economic downturn by reaching out to more donors and becoming less grant-dependent. At the same time, you have been building upon your success with foundation fundraising by identifying and building relationships with new foundations.
Over the last decade, we have had a strong and growing stock market, which means foundation endowments and the assets of high-wealth individuals have been growing, and you’ve been maximizing those fundraising opportunities. Additionally, we’ve been in a political climate where a vocal opposition has been a strong motivating factor for donors, and you’ve been using that in your fundraising appeals. This has helped many of you to build your reserves steadily over the last several years. Great work!
You have also been building your skills in strategic financial management. You are carefully reviewing the funding for your programs, and cutting unfunded and under-funded work. I know you to be careful with your organization’s resources, and that’s going to make all the difference in tough times.
During the 2008-2009 recession, I was out doing fiscal and fundraising consulting for TREC with many of your organizations. Those were tough times too, because of a precipitous drop in the stock market. The organizations that were the most impacted were those that had minimal or no financial reserves. That gave them no time to adjust to drops in foundation income. Many foundations stuck with us through that recession, which was great, but there were examples of some foundations getting cautious, delaying grant payments by three or four months, or giving 20-30% less. Some organizations were operating on such a thin margin that if even one of their foundation delayed a payment, they suddenly had staff positions that weren’t fully funded, and with no reserves to fall back on, they had to do painful staffing cuts.
This situation could have been avoided by adopting surplus budgets with conservative income projections in order to build up your reserve, planning on less and later from foundation grants, and filling positions only after grant funding is in-hand. You know how to do this. Instability in the stock market creates instability in foundation grants so it is especially timely to put these better practices in place now.
If you are feeling stressed about the uncertain times that we live in, one of the best antidotes to this stress is actually to look at your financial position with clear eyes. Look for points of vulnerability, and address those first. Explore the “what ifs,” and to do some planning and preparation around them. You will be reassured knowing you have a clear assessment and solid contingency plans in place.
Last Fall, we did a webinar session where we explored stress-testing your organization. In this webinar, we ask: How would your organization fare under stress? What if the economy dives into a recession? What if a key staffer, or several, left your organization? What if your lead program suddenly became irrelevant because of a victory, or a change in political landscape? What if opponents tarnish your reputation? Because we are facing more than just financial uncertainty, we walk through stress-testing your staffing, board, program, and more. We show you how to do financial scenario planning and create a contingency plan so that you can be ready for what lies ahead. If you missed the session, now would be a good time to watch it and to share it with your board.
Thank you for all you do every day. Let us know at TREC how we can support you in your important work. We’ll get through this together.