Dec. 1, 2016 12:54 pm

On planning against uncertainty

Nonprofits that rely on government funding should expect the worst under a Trump administration. Here's how to prepare for it.

Bundle up before the storm.

(Photo by Julie Zeglen)

Tivoni Devor’s “Getting Good Done” column focuses on new models of enacting impact.

Nonprofits may be entering a new era of scarcity.

Nonprofits have been slowly recovering from the recession along with the rest of the economy under an Obama administration — one that partnered deeply with the nonprofit sector, creating partnerships such as My Brother’s Keeper and Play 60. But the incoming Trump administration and the Republican House and Senate have been very vocal about undoing much of that work, and more.

The Affordable Care Act will probably face major changesPlanned Parenthood will likely lose its funding, and Medicare and Social Security as we know it may fundamentally change as well. The social safety net is threatened. That is going to put enormous pressure on nonprofits to serve people who will be pushed off that net. On top of that, with Philadelphia as a sanctuary city, Mayor Kenney will be under enormous pressure from both the state and the federal government to end this practice — and by pressure, I mean funding cuts. Those cuts will affect many nonprofits doing good work in the city.

Nonprofits that rely on any level of government funding — and that’s most of them, either directly or indirectly — need to prepare for more cuts and more demand for services.

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Simply put: Get ready to be overwhelmed.

Do you have a plan? What does your budget look like with a 20 percent cut? Thirty percent? Don’t expect to be able to go to funders and ask for more money: Everyone will be asking them, and their money, tied up in the stock market, faces its own uncertainty.

Thankfully, scarcity of resources is what drives evolution and innovation. We have a few months until the new administration takes power, so you have time to innovate.

Here are three areas where nonprofits should focus their short-term planning efforts:

1. Diversification

How diverse are your funding streams? Are you balancing out your government grants and contracts with individual giving and earned revenue?

Growing your earned revenue stream will likely be the best way to counteract the impending cuts your organization may face; after all, earned revenue is unrestricted cash in your hand. Don’t be scared of unrelated business income tax (UBIT) or paying sales tax — be scared of closing your doors.

Tip: SCORE Philadelphia is a great resource if you are looking for some free business planning work

2. Consolidation

Who are the two or three nonprofits you consider your “competitors”? Who are you benchmarking your organization against?

It’s time to reach out to these groups and consider merging. Your organization does similar things; they have similar funding and are under the same pressures to perform.

Tip: Look to resources like the Repositioning Fund to help make it work.

3. Optimization

What is your nonprofit doing that it doesn’t need to be doing?

If your executive director isn’t spending all of their time raising money and creating partnerships to ensure the sustainability of your organization, then your organization’s survivability is at risk. If your ED is also the bookkeeper, office manager and janitor, then your organization is already at risk. If you can’t afford to outsource this work or hire someone to take this off your ED’s plate, then you should take a deep look at point two above.

Consolidating with a likeminded organization or coming under the umbrella of another larger organization will free up your ED’s time to do the real work required in these uncertain times.

Tip: Try creating a matrix map to help pinpoint the most sustainable elements of your work and focus there.

Nonprofits should always be focused on these three areas, even in good times.

But often diversification, consolidation and optimization only become an organization’s priorities at times of crises. While we should be considering the three points above all the time, when things are good and stable we tend to relax and focus on the routine of our work.

But if you’ve been in the nonprofit sector long enough, you know stability is a rare luxury.


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