Survey: Many Nonprofit Recession Strategies Become Permanent
During the economic downturn of the Great Recession, the unemployment rate peaked at 10 percent, and many nonprofit organizations lost donor investments, leaving them to come up with creative ways to keep their doors open and support their mission. Now, many of these temporary changes have become long-term sustainable solutions.
In October 2015, CLA sent out a survey to nonprofits to find out how they stayed afloat during the recession’s stormy weather. Here are several areas where organizations reported making significant changes:
Of respondents, 90 percent acknowledged that they made changes related to people to remain sustainable. Most commonly, this included shifting internal roles and responsibilities to accommodate for a decrease in staff. In some cases, additional staff was brought on board to provide overhead support needed to establish new services. Some organizations hired new leadership to evaluate the company’s mission and efficiency from a new vantage point. We heard from organizations that transitioned seasonal positions to permanent staff to reduce turnover costs. Others reduced employees’ hours and only kept on staff those who were necessary for operation, while using interns and volunteers in a greater capacity to keep costs low without losing work force.
More than 75 percent of respondents acknowledged that they re-evaluated their use of technology to become more efficient. Many organizations even invested dollars up front to save money in the long run, such as purchasing new accounting software to help with reporting requirements. Moving from paper to online billing and deposits and implementing technology that reduces time in submitting donor acknowledgment cut back on labor costs. A few nonprofits also incorporated file sharing and cloud computing to minimize security issues and increase the efficiency of backups to their system.
Products and programs
Tight budgets and economic uncertainty led to almost half of the surveyed organizations reviewing contributions and focusing their products or programs to the interests of their main donors. Others looked for non-traditional revenue streams. One organization enrolled an employee in training, then turned around and offered the training as a service; by establishing consulting work, which was unrestricted income, the organization found that revenue increased and continues to grow at a high rate.
Revising products also made a significant impact to budgets for some nonprofits, such as switching from paper plates to dishware in schools and researching additional financial assistance for those interested in the organization’s memberships or services. By paying attention to the surrounding community, organizations were also able to cater to emerging needs and attract more customers and volunteers.
Taking small steps to reduce expenses, such as adjusting temperature in the building, recycling, and turning lights off in empty rooms, was reported by 60 percent of organizations. Structural movement in these organizations, such as outsourcing an entire department to a third party contractor, also helped to cut costs during seasons of light workloads.
Changing up workspace helped many organizations to cut back on costs. One nonprofit negotiated with their landlord to switch to a cheaper space under the same building ownership. Entering a space sharing agreement, sharing administrative resources with other organizations, or moving to smaller office space likewise increased sustainability. One organization even consolidated their multiple buildings into one, which reduced maintenance costs and bettered the ability of their staff to accommodate for sicknesses or absences from the office.
Nearly half of the surveyed organizations changed their overall goals or purpose during this time. Investing in market research helped nonprofits to recognize new, unreached audiences, and helped tap into the interests of younger crowds who might not have been equated for in the organization’s initial mission statement. Moving from event to donor-focused fundraising also helped to bring in the funds needed to operate during this time of economic stress. While it was a significant financial investment, rolling out an enterprise risk management (ERM) process helped to increase efficiency and was often effective enough to pay for the initial up-front cost.
One organization encouraged their staff to brainstorm efficiency saving methods, and rewarded those who brought successful ideas to the table. This benefited both the organization and their staff, as it gave increased transparency into the organization and allowed staff to be educated and involved in the ownership of the budget.
How we can help
These examples are just some of the solutions that nonprofits have created to adjust to a new economy. Whether your organization still feels financial strain from the recession or just wants to be prepared for the future, CLA can help to balance mission, money, and accountability in your internal system to save time and money. By assisting with ERM, establishing outsourcing needs, or hosting industry events, CLA can provide you with a team of professionals with the broad experience needed to help strengthen and guide your organization.