Times are tough. Money is tight, cutbacks are on the rise, and employment is on the decline. Bay Street is exceptionally cautious these days as nervous anticipation sets in. The automobile industry, the media conglomerates, banks – they’re all feeling the effects. But what about the country’s nonprofit sector? How will they fare? What are their predictions for 2009 and beyond?

It seems the answer to that question depends on the organization. And for many, it’s still too early to tell. Some remain hopeful, others trepidatious, while still others have already started cutting back, adopting frugal mindsets and bracing for the worst. But one thing’s for sure: the next year will be a telling one. It will test an organization’s financial mettle, strategic viability, staff, funders and, very possibly, their missions themselves. In fact, it may prove a timely opportunity for nonprofits to take a hard look inward and perhaps even make some tough decisions.

Wait and see…

The economic situation is certainly palpable at the office of Montreal-based Santropol Roulant, a community organization run by young people, bringing together generations and cultures through an innovative approach to meals-on-wheels. “We’re feeling it mostly with new potential funding partners,” explains executive director, Jane Rabinowicz. “People who would normally be in a position to give are not in a position right now or people are giving, but less than they would normally want to.”

Will that reduction in donations affect the services they provide? It’s a wait-and-see situation, Rabinowicz says. Since their fiscal year is the calendar year and they’ve just passed the 2009 budget, they haven’t made significant changes to their programming just yet. But they’ve set up a much more vigorous monitoring mechanism so they can stay atop of any trends – of granting organizations, etc. – and make changes should lesser resources demand it.

How lean can you go?

Then again, when it comes to cuts, Santropol Roulant doesn’t have that many options. They’re already operating on a very lean budget in terms of expenses. “There’s not a lot of fat to trim without feeling it,” Rabinowicz offers, explaining there are only a few places they could technically cut if the situation demands it: the already-lean administration, programming, or people. But that’s the worst-case scenario and she is hopeful it won’t come to that.

Let’s talk about it

What about messaging? Will Santropol Roulant have to communicate differently with their stakeholders in light of the leaner times upcoming? On a very basic level, the message will remain the same, says Rabinowicz. It will continue to emphasize their worth and the benefits of investing in the organization. “Our job is to be relevant, to do excellent work, and to communicate the work we do so people can make decisions for themselves as to whether or not they want to support it,” she says. But, she adds, the organization may take on a greater role as advisor to grantmaking organizations, reinforcing the notion that, given the significant services Roulant provides and the role they play in society, cutting funding is not the answer. “The message does have to shift a little, helping people think through what to do during difficult times like these.”

When it comes to communicating, the key is to stay close, says Betty Ferreira of ReStructure Non-Profit Consulting. “This is a time to stay connected and seek strong personal connections with your funders and your donors.” Donna Lockhart of The Rethink Group would concur. “Knowledge and information is power and when you let people know what is happening, they feel connected.”

You need to reinforce the value to the community that your services bring, she adds. “You have to convince donors that your organization gives them the best return on their contribution.” That’s what the Canadian Red Cross emphasizes daily, says senior public affairs advisor, Heather Badenoch. Ensuring continuous communication about the work they do is an important strategy, keeping everyone aware of their significant efforts.

Less fear, lots of confidence

However, the organization doesn’t seem too concerned about the upcoming downturn. Thanks to past experience, they’re hopeful – very hopeful. “We remain confident that Canadians will rise to the occasion and donate their time and money to help those in need,” Badenoch says, citing how, despite a downturn in 2008, Canadians still gave generously to earthquake victims in China, their most recent large-scale fundraising appeal. “Within the global Red Cross network, the Canadian Red Cross was the second largest donor after the American Red Cross, and the largest donor per capita,” she adds.

Ever-vigilant, the organization is constantly monitoring the situation but expects the economy to have only a moderate impact on the organization. “There has been no major reduction in donations based on our available information for 2008,” she explains. Gearing up to celebrate their centennial in 2009, Badenoch adds the organization has endured many economic conditions during the last century. One more challenge won’t phase this veteran organization.

Some giving goes on

Rethink Breast Cancer is perhaps equally optimistic – but for different reasons. “It’s a bit of a bizarre, lucky, good situation,” executive director, MJ DeCoteau, begins by saying. Thanks to a new corporate partnership with TELUS, the organization has actually come off their best year yet. “It’s taken us to a whole new amazing level,” she gushes of the new, symbiotic partnership. So, while the financial crisis is certainly on their minds and they’re planning modestly for the coming year, the lucky break has provided them with an exceptional opportunity. While others will be pulling back, they’re using the current situation to expand and increase their presence in a crowded marketplace. “Thanks to a very generous donation, we will start to expand our programs and it will really allow us to forge forward and think about our future.”

Strategic planning

They’re also adding two new staff members and increasing their charitable expenditures for the coming year. “We’ve set targets that will see us raising slightly more income than last year; we’ll see how that goes,” she adds. “Our strategic planning is going to be about examining what we’re great at and how we can build on that.”

 

Lockhart would appreciate that plan. “If you’ve set priorities and attached costs (people, money and time) you can keep your focus by selecting those areas that are both most important by priority and that you have the resources for. This keeps you moving forward.” She cautions organizations not to follow the tendency of abandoning the strategic plan when crisis happens. “Just like a sailboat weathering a storm, keep your sights on the horizon and adjust the sails.”

 

Santropol Roulant’s strategic plan is similarly focused on examining their assets, but is more reflective of their potentially tougher challenges ahead. It comes down to asking really tough questions, says Rabinowicz: what’s critical and what’s not in what they do. What are they prepared to live without? Do they refuse to sacrifice because it would compromise their mission and integrity as an organization? Assessing the situation and its impact on the organization is a vital practice for every organization, says Ferreira. “What do I need to do now so that I know exactly where I sit?” is her central question. After making that assessment, they can then look at creative solutions to minimize the impact.

Fundraising

“This time may present us with an opportunity to think about our fundraising philosophy and how we can best think about resources in a way that feeds our core mission and programming,” adds Rabinowicz. As for Rethink’s fundraising objectives, despite their very fortunate scenario, the organization is setting realistic expectations. “We’ve set pretty modest increases in our fundraising goals for next year; it’s definitely about focusing on strengthening existing partnerships and less focused on new businesses or new people because we know a lot of corporate organizations are pulling back,” explains DeCoteau.

The topic that presents a bigger challenge, however, is donors. “We’ve been very focused on events and cause marketing and it’s really donor loyalty that’s needed in a financial crisis,” she says. During tough times, ‘party people’ may scale back or move onto other events and corporates can have budgets slashed. But if they establish a strong base of monthly or annual donors, committed to Rethink because they believe in the cause, they may have a stable base during future ebbs and flows.

DeCoteau reiterates the organization is lucky to have strong corporate partnerships because without them, they’d probably be in a very critical situation right now. “We need to do a better job stewarding donors; that’s definitely going to be a focus in 2009,” she concludes, admitting the financial crisis has been a great eye-opener. “We’ll take the opportunity to expand, but also take steps to make sure if this happens again in the future, we’re well-prepared.”

Preparedness, vigilance

Santropol Roulant is preparing as well. Fortunately, thanks to the organization’s intergenerational focus, they can draw upon the experience and education of members of their own community, many of whom have lived through the depression, to help and share survival techniques. The other thing Roulant will be vigilant about is not spending money they don’t have. “We can’t stick our heads in the sand and keep working the way we’ve always worked assuming the money will come,” explains Rabinowicz, adding that their long-time fundraising principle – if we do good work the money will come – may need a bit of tweaking. “That’s how we’ve always operated and that’s always been true, but our thinking on those lines might have to change a bit.” That said, this ED is not feeling particularly negative; she’s simply being realistic. “It’s not about jumping into crisis mode if we’re not in crisis yet.”

More tips from Ferreira and Lockhart:

1. Avoid cutting staff by reducing the work week or adopting job sharing.

2. Find creative ways to reduce spending while at the same time continuing to increase your income stream.

3. Track the budget more often than quarterly during the next year so you can meet your targets or adjust your strategy if targets are not met.

4. Consider outsourcing.

5. Carefully assess the efficiency of the finance function: sometimes a job that is assigned as a five-day position can actually be completed in two.

6. Shorten the accounts receivable cycle or lengthen the accounts payable cycle so you have more money coming in and you can pay it over a longer period of time.

7. Sign up for newsletters, blogs, read the business section of newspapers; do whatever you can to stay on top of the situation.

Elisa Birnbaum is a freelance journalist, producer and communications consultant living in Toronto. She is also president of Elle Communications and can be reached at: info@ellecommunications.ca.

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