Running a non-profit has never been an easy job, driven by a mission, dictated by a Board, and more often than not scrambling to pay the bills each month. In a rural economy, non-profits often fill the necessary gaps in social services when local governments and private enterprise cannot. In Mendocino County there are more than 600 non-profits serving a county of 89,000 people. Federal funding supports more than 30% of these organizations. With the recent federal government shutdown of 35 days, and now a three-week reopening, the non-profit sector is feeling the pain. “Federal government funding typically makes up roughly 25% of our revenues and food. We have been told we’re probably good for another month – with uncertainty after that,†notes Nancy Severy, Executive Director at Fort Bragg Food Bank.
While some of Mendocino County’s non-profits will be able to tap into their reserves, the reality is money may not flow quick enough into the organizations as the government returns to normalcy, placing many of our organizations in a more precarious state than ever. Anyone who has filled a Federal request form understands the complexity. Many non-profits are finding they could not even submit their online requests forms during the shutdown, and once everything is up and running the backlog is sure to be substantial.
If an organization has not been making reserve funds a strategic priority now, is a good time to add this to annual plans. Use this time to begin discussions and setting goals on a long-term revenue strategy with your Board so you can weather this, and other storms to come.
While every non-profit is different, every Executive Director has experienced a flutter of financial panic at one point or another in their tenure. Here are a few strategic pointers I’ve picked up along the way that helped me as CEO of West Business Development Company.
Begin Expense Reduction Now
Any financial management begins with a plan. And planning for the worst case scenario doesn’t mean you are all doom and gloom. It’s a potential reality all businesses face. If you haven’t started already, make a list of what you can do without in the short term. Ask vendors if they can wait for payment for 45- 60 days. Consider non-essential items that can be cut. Then take a hard look at what you must give up to keep providing services.
Approach Foundations
Our wonderful Community Foundation of Mendocino has some emergency funds that may be accessible if the non-profit in question meets specific conditions. Their community grants assist non-profits by responding to urgent needs and emergency situations that impair the organization from fulfilling its mission. This grant program is made possible through the Community Endowment Fund. You should spend some time each month seeking other grant opportunities that are not part of your current revenue stream. Subscribing to newsletters from places like the Foundation Center can help.
Think About Emergency Bank Loans
Contact the bank that your organization works with to see if they will work with you on short-term accounts receivable loans. They may be able to use the federal grant award as proof that the nonprofit has secured dollars coming in and just needs to bridge the gap in time until the federal money is released.
Consider Crowdfunding
This non-traditional option, could be a good one for a non-profit that doesn’t need a large sum to be able to wait out the shutdown. If you go this route remember it’s all about the message. Tell your story and your mission. Donors often don’t understand the long circuitous route that we must make to access government money so that we can provide the services needed. Nor do they want to know. So it’s important that your message focuses on the mission.
We all try our best to help the community and the environment where we live. I’d love to hear your thoughts about creative ideas for non-profits to keep thriving in the face of federal shutdowns or other cash squeezes. Post on our Facebook page, Instagram, or LinkedIn and share some of your ideas to weather the storm.
