What We Can Learn From Our Peers
By Sidni Shorter In Podcasts Posted November 19, 2013 0 Comments

What We Can Learn From Our Peers

“Head Start programs across the country eliminated services for 57,000 children in the coming school year to balance budgets diminished by the federal sequester, cutting 1.3 million days from Head Start center calendars and laying off or reducing pay for more than 18,000 employees…,” reports Michael Chandler in The Washington Post.

If you’ve read some of my recent posts, you may be noticing a trend we’ve observed in the news. Longstanding nonprofits and historically well-funded organizations are not immune to the tough financial decisions required of their leaders. In addition to the recent Head Start article, we’ve seen the following:

  • Former President Bill Clinton defends his family’s charity, the Bill, Hillary and Chelsea Clinton Foundation, and its finances amidst media scrutiny while hiring new leadership to turn around deficits and mismanagement.
  • Share Our Strength makes the unimaginable choice to reduce short-term grantmaking so it can make internal infrastructure investments to ultimately serve greater numbers in the future.
  • PBS announces it is cutting “noncritical production positions” to compensate for a drop in corporate sponsors. It eliminates staff in San Francisco and Denver to save more money and streamline technical operations.
  • In an effort to reap the benefits associated with economies of scale and lowering overhead, the Girl Scouts merges 312 councils into 112. New CEO Anna Maria Chavez and her fellow national and local executives experience increasing financial pressure.

Most of us believe the harder decisions are more prevalent among the 70 percent of nonprofits in the sector with budgets below $500,000. At Execute Now!, we would argue tough financial challenges don’t discriminate among nonprofits with small or large budgets. That’s why I think it’s necessary to underscore these examples in the sector so we can learn what possible challenges lay ahead, observe how some of these organizations have rebounded from their circumstances, and apply lessons learned. For example:

  • The Clinton Foundation case story emphasizes the importance of strong leadership.
  • Share Our Strength supports the choice of saying “no” to restricted, short-term grants in an effort to realign the organization with the appropriate overhead to increase our sustainability.
  • PBS demonstrates the value of proactive decision making, a willingness to make tough choices to balance the budget, and the necessity of a diversified revenue plan.
  • The Girl Scouts emphasize the need for buy-in from board members, donors and stakeholders when reorganizing a blended staff- and volunteer-based structure.

Though you may not be facing the ripple effects of a federal sequester like Head Start, what proactive measures can you adopt from the case stories I have revisited above? How involved is your board in helping you fundraise and monitor the financials? What internal investments are you making to strengthen your long-term sustainability? How diversified is your revenue plan? If you’re in the process of considering reorganization, do you know how your donors’ investments would change accordingly? These are tough questions you should be considering with your leadership team and board. Better tough questions now than tough choices later.

By Erica McGeachy Crenshaw, CEO of Execute Now!

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