State Policy Network
Nonprofit fiscal health in an ailing country

By Ann C. Fitzgerald, Founder and President of AC Fitzgerald. This post was originally published by AC Fitzgerald and has been shared here with their express permission.

The 2008 recession taught nonprofits some hard survival lessons—and the COVID-19 crisis is shaping up to be much worse. Here are some actions leaders should take now:

Throw away your budget from January. That budget doesn’t apply anymore. Many individual and corporate donors will at least pause their giving until they have more confidence in the economy. Develop a much more conservative budget for the lean months ahead.

Recognize that some expenses will go away naturally. If you look at your profit and loss statement, you might notice that your travel and conference costs have disappeared, there are fewer meal expenses, and you are ordering fewer office supplies. This will help.

Mitigate big expenses. The biggest expenses for nonprofits are typically salaries, benefits and rent. It’s time to tighten belts now before you need to make more difficult decisions down the road. In 2008, many groups cut salaries by 10-15% and paid the money back in bonuses when the economy improved. This is a hard decision, but it is better than widespread layoffs.

Talk to vendors. Your vendors are in the same boat as you, but even minor savings on expenses will help for the next three months. Ask everyone to do their part.

Consider a loan. The Small Business Administration, as well as various banks, are making loans to nonprofits to help them get through these months. Of course, a loan has to be paid back, so consider this move carefully after making other obvious budget cuts.

Ratchet up donor interaction. The nonprofits that succeeded in recessionary times were “near, dear, and clear” to their donors. Without travel clogging our schedules, and with donors at home and less busy, it is time to get on the phone or hold a video chat. People want to talk and want interaction.

Don’t stop fundraising. Be sensitive to the new reality but also share with donors how you are adjusting, the importance of your mission, and the help you need now. We will get past this crisis, and we want to be as strong as possible on the other side.

Stay safe and be well.

Ann C. Fitzgerald is Founder and President of AC Fitzgerald, using her decades of experience in fundraising, management, leadership, and sales to help nonprofits build their capacity and achieve success. She is a sought-after speaker, writer, and advisor.