State Policy Network
How a CFO navigates a crisis
Two state think tank CFOs share their tips for keeping teams and organizations healthy through a crisis.

What does the coronavirus pandemic look like through the eyes of a Chief Financial Officer? We sat down with Georgia Center for Opportunity’s Jim Eckstein and Texas Public Policy Foundation’s Louis Stone to find out how they are leading their staff through this crisis and what advice they have for other state think tanks.

Meet the experts

Jim Eckstein is the Executive Vice President at the Georgia Center for Opportunity. Before joining GCO, Jim spent 25 years working in the technology industry, where he founded and ran several successful fintech firms. Jim studied finance and information systems at the University of Cincinnati.

Louis Stone is the Chief Financial Officer at the Texas Public Policy Foundation. Before joining the nonprofit space, Louis worked with owners and lenders of distressed companies—advising on turnaround or other measures needed to maximize enterprise value.

As you navigate this crisis, what’s on your mind?

Jim: I’m evaluating our cash situation—how much we have and how many months of life we can live off of it. I’m also modeling various scenarios of incoming cash and outgoing cash. We put together a model that shows, given the cash we have today and assuming we have no more for 90 days, how long we will last. We have five or six of those types of scenarios that we’re monitoring and building out on a daily basis.

Louis: I’m also doing the modeling of cash and forecasting, but what I’m trying to focus on is this question: What is our core business? If we stripped away everything and said, this is who we are, this is what our donors want from us, and this is how we serve the community—what would that look like? That’s going to inform all the other decisions we make. Is this program core to our mission? Is this really what we are trying to accomplish as an organization? That’s how I’ve been approaching it.

What’s the first step state think tanks should take in a crisis like this?

Jim: First and foremost, you have to figure out how to survive. Beyond that, you have to think about how to take advantage of opportunities that will help you survive longer. In the first couple of weeks in a crisis, there’s not much going on other than triage—fixing the hole in the boat before it sinks. As time goes on, you realize crises have cycles to them. In certain stages there are opportunities that you will want to take advantage of. For example, in the first few weeks of this pandemic, we were calling donors to check-in and see how they were doing. A few weeks passed and a top donor of ours called to see what our situation looked like and how much we needed. For us, that was an indication that we’re moving from one stage to the next, and this stage might present opportunities for us.

Louis: The first step is to find out what things look like coming in. Talk to your development folks first. You need to have an idea of what your top line looks like before you make any adjustments to your cost structure or how you are organized. The development team will know when funds tend to come in and from which donors. I like to work in 13-week chunks. Figure out what the next quarter is going to look like. Then, assuming things are looking a little bit better, or worse, you can ballpark what the following quarters will look like. That will at least give you some sort of directional indicator in terms of how things will play out.

Both of you have experienced similar crises like this—including 9/11 and the Great Recession. How are you leaning on that experience to get you through the coronavirus?

Jim: When 9/11 hit, I was working for a financial services technology company. The company went from 32 million in revenue one day to 4.5 million the next. For three or four months, we had to figure out how to survive. This crisis presents similar challenges. You have to figure out how to stretch the cash. It’s important to remain optimistic and remember that things will get better. Manage what you can in the meantime. Also, leadership is crucial. If you’re someone who’s worked through 9/11 and the Great Recession, it’s important to reiterate to others that this too shall pass. Having that confidence is a huge benefit to a team that might be walking around right now with a dull gaze trying to figure out when the rain is going to stop.

Louis: The hardest thing I ever did was work through the 2008 financial crisis. I was working for a company that did direct mail solicitations for all the major banks. We shrank from a 36 million-dollar organization to six in just a few months. You can imagine the trauma that was involved in that. Remember that it’s all about working with the best information you’re able to assemble right now. Make decisions based on that information and communicate those decisions to staff so they understand what’s going on.

How should state think tanks communicate financial decisions to staff?

Jim: At GCO, we’re a staff of twelve, so it’s much easier to communicate than if we were a big organization. As this crisis started to unfold, we hopped on a Zoom call and senior leadership reiterated that we’re taking things one day at a time. For us, communication as a force is straightforward—it’s the message we have to work on. And we refine that message every couple of days as things evolve. It’s also important to remember we’re all people. Our president and CEO, Randy Hicks, brought the entire staff together for a Zoom cocktail party shortly after things started to get bad. We talked about life and things outside of the office. Everyone took a deep breath.

Louis: You have to be honest. Tell your staff that we’re not exactly sure what we’re facing yet, and we don’t know how our donor pool is going to look this year. Communicate that your organization is not going to be signing any large contracts right now, you’re not going to be hiring anyone or giving raises. Those things should be obvious, but you’ll want to spell it out for people. As long as staff feel like you are communicating with them, that will help calm them down. It’s when they see all the closed-door meetings with no communication—that’s when people get skittish.

What advice do you have for smaller organizations trying to navigate this crisis?

Jim: Smaller organizations need to be standing right next to their closest constituents and funding sources right now. These organizations should let those constituents know what’s going on and be frank of where they are without their support. Our Development Director left a few weeks ago, so I’m doing that job right now too. I get to play the cost containment guy for half of the day and the development guy for the other half. Smaller organizations often have a similar situation. They are the manager of the checkbook as well as the person asking for more checks to come in.

If you have a million-dollar budget, there’s only so many things you can do to contain costs, shift costs, and extend cash. The smaller the budget, the more limited the strategy. It’s important for smaller organizations to focus more on the development side right now. Do what you can, find ways to add value, and become part of the policy discussion in your neighborhood. Find a greater constituency that might care. For smaller organizations, spending 70 percent of your time in development is probably not a bad idea.

Louis: During this time, big and small organizations need to evaluate what their core business is. What makes your organization unique? How are you serving others? Make sure you articulate that core business to your employees, donors, and stakeholders. Make sure that they know that you are here, you continue to be a resource for them, and you’re in it for the long haul. We can provide the leadership and solid footing people are looking for right time.

Key takeaways for state think tanks

Organization: State Policy Network