In last week’s article, Strategies to proactively assess the impact of the recession, I provided you with a simple framework that will help you and your management team to assess the potential impact of the recession on your organization. Ideally, you will have time to apply this framework and make any necessary changes in revenue forecasting in your upcoming fiscal budget.

I imagine that you might have some difficulties in proactively assessing the actual anticipated decrease in funding from funders, as they are quite tight-lipped about sharing that type of information with the public…right now.

Obviously, this makes it more difficult for you to accurately assess the anticipated cutback in future government funding, but you may find that corporations and foundations are a little more open to speaking with you about any of the potential cutbacks to grants or sponsorships in the near future. Take the time to connect with all of your funders; build your relationships with them, and keep in touch so that you can be first in line to know what the anticipated cutbacks might be and when they might occur.

In the meantime, if your funding has already been reduced, or if you want to proactively implement leaner measures in these leaner times, please see the list below for fifteen tips that you can employ immediately.

Fifteen leaner measures to help you save

The following 15 tips can help you save money and prepare for future funder and donor cutbacks:

1. Shorten the accounts receivable cycle to 30 days (receivables such as fees for service).

2. Lengthen the accounts payable cycle (60 – 90 days where possible, larger vendors may be more amenable).

3. Develop quickie fundraiser events with current and longstanding donors.

4. Ask donors for all or a portion of revenues/donations to be unrestricted to cover the expected decrease in funding.

5. If you sell products to the general public as a general source of revenue, consider increasing your prices by 5 – 10% and explain the reason for your increase to your constituents. And, if you don’t already, include an appeal or rebrand the appeal to help stave off decreases in government and corporate funding.

6. Share services. Consider what you do well and sell it. Other similar organizations may be in need of your services but do not have the ability to finance it (i.e. secondments of a staff position, HR, IT, accounting services).

7. Share space. Rent space for meetings or rent your space out to organizations that need space for meetings. Share use or rent equipment such as printers/copiers.

8. Consider purchasing outsourced services for non-core services (IT, admin, HR, finance, accounting). We have conducted several financial assessments of small to medium-sized organizations that demonstrated that while the organizations employed full-time bookkeepers (in addition to a full-time finance manager), the work load of the bookkeepers could be streamlined and cut back to part-time by implementing simple efficiencies into the bookkeeping function, thus saving the organization a lot of money. In addition, these bookkeeping positions could also have been outsourced, thereby streamlining the expenses and ensuring value and return for their money.

9. Be prudent and sell assets that you don’t need – vehicles, equipment, buildings.

10. Look into opportunities to integrate delivery of services with other organizations. This goes beyond shared services and spaces. At the micro level this refers to a situation in which, for example, four case managers in the health field are working at two different organizations but are not working at full capacity. The organizations may decide to settle for three full-time case workers and integrate the services instead. At the macro level, integration refers to mergers and other collaborative ventures with nonprofit organizations. For those whose immediate reaction is that they can’t afford integration, keep in mind government may actually be interested in funding the merger.

11. Strategize on how to integrate the delivery of services within your organization so that you can minimize costs while maintaining programs and services. For example, an organization may be servicing clients in three locations. As an alternative, they can close one location, extend the hours in the other two and add a transportation service or free TTC tickets to those having to travel further. This is just one brief example of how to restructure services so that costs are streamlined without negatively impacting the delivery of services.

12. Cut administrative expenses without diminishing quality. Ask your vendors and suppliers for discounts on office supplies, health/dental benefits, phones, insurance, etc.

13. Spend reserves prudently. Some organizations save money for a rainy day – this may be it. But be prudent. First, read through all the tips on this list and see if it’s necessary to spend money just to stay open. Only after making that assessment could an organization determine whether they should spend some of their reserves. Be wary of resorting to spending some or all of your reserves without assessing if other methods will help to trim expenses.

14. Seek a short-term mortgage principal deferral from your bank. A client in the tourism industry – with a blanket mortgage on a couple of properties – was hit hard by SARS. They needed to cut expenses so we approached their bank with this request and it did help trim costs. The important thing is to always maintain an open and close relationship with your funders because you never know what kind of solutions may come to mind.

15. Instead of layoffs, consider shared services, secondments or a fifth-day EI option. We once worked with a client who had staff go on a four-day work week and the fifth day was paid by Employment Insurance – Work-Sharing program. EI preferred the more creative option of handling a crisis than the alternative: layoffs that would entail weeks, if not months, of payment. This way, you’re only drawing one-fifth of that amount and keeping people employed and happy. For more information, click on the link below:

Service Canada – Work-Sharing website: “Work-Sharing is designed to help employers and workers avert temporary layoffs. The measure provides income support to workers eligible for Employment Insurance benefits and who are willing to work a temporary reduced work-week when there is a reduction in the normal level of business activity that is beyond the control of the employer. Work-Sharing agreements must be approved by both employee and employer representatives and by the Employment Insurance Commission and can range from 6 to 26 weeks with an extension of up to a maximum of 38 weeks.”

Other tips

As many organizations approach April 1st as the new fiscal year, this last fiscal quarter of 2008 – 2009 can be used to proactively plan for next year and the year after. My recommendations are: to assess your situation, do it now, make a plan based on a careful assessment and involve your management team in the discussions, and follow that plan. Proactive steps today will help you manage the impact of any potential decreases in funding.

Steps to take to proactively assess your situation

Hopefully these tips will help you weather the upcoming financial storm. Another way to help cope is to keep yourself informed. Sign up for e-newsletters like this one and those from nonprofit experts, as well as related blogs. Pay attention to what’s happening in the economy. Are corporations taking a big hit? Is government cutting back on its funding to nonprofits? If so, by how much?

Keep abreast of the number of insolvencies in the nonprofit sector, as well as the increase in mergers. Stay in close touch with funders, such as government, foundations and corporations. If it seems they’ve been hit hard, organizations should proactively discuss collaboration and integration initiatives as well as sector-wide merger opportunities. And make sure during these tougher times to develop and/or keep open your lines of communication, whether with your staff, volunteers, stakeholders, or funders. Lastly, when it comes to developing your 2009 budget, be conscious of risk and proactive with revenue and funding projections.

As I mentioned in my previous article, fortunately, in Canada, we have the benefit of advanced hindsight. As we cautiously watch our American neighbours and their experiences, we not only gain invaluable insight, we also gain time. Let’s use it effectively.

Betty Ferreira is the founder of ReStructure Non-Profit Consulting, which provides a variety of consulting services, including organizational/financial restructuring to the nonprofit sector, as well as providing outsourced human resources and accounting services. Betty can be reached at betty@restructure.ca or visit www.restructure.ca.