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Cutback Strategies for Nonprofits - responding to financial crises and funding cuts

185 Cutback Strategies

Excerpted from: Coping with Cutbacks: The Nonprofit Guide to Success When Times Are Tight

Author's notes:

We offer this checklist as a thinking tool and as a route to direct action. A more in-depth list is in the book. We hope that you can use this list to help you think creatively about your organization, its culture, its mission, its future, its response to immediate financial crises, and its long-term preparation for the changing culture.

Use these suggestions as a starting point for your own brainstorming, and use the categories to help you organize your thinking and analyze your current approach to fulfilling your mission. But don't get locked into any one strategy--cut them up, pull them out of a hat, mix and match them. Do whatever helps you spur new ideas that fit your specific situation.

Here's our caveat: Just because we've listed a strategy, don't think we endorse it. In fact, we dislike some, and some may conflict with your mission, values, or human resource policies.

No doubt you'll think of many more strategies than we've listed here, as well as other ways to organize them. Tell us about them, ( and we'll include them in the next edition of Coping with Cutbacks.


Financial Strategies A: Cut or Control Costs

Analyze purchasing

  1. Improve purchasing procedures
  2. Seek in-kind contributions
  3. Network to get better prices on supplies
  4. Seek new competitive bids and new suppliers
  5. Analyze purchases to see if they are necessary
  6. Simplify paperwork and forms; use electronic files
  7. Refurbish and reuse supplies

Adjust payables

  1. Consolidate or restructure debt
  2. Negotiate delayed or reduced payments
  3. Barter for needed services

Evaluate facilities and infrastructure

  1. Share space or maintenance costs
  2. Delay maintenance
  3. Save space by moving, reducing size, using home offices, or using split shifts
  4. Negotiate a decreased rent with your landlord
  5. Find a cheaper phone system; eliminate toll-free lines
  6. Eliminate or consolidate newsletters and brochures
  7. Eliminate vehicles or shift to less costly vehicles
  8. Save energy

Modify staffing and related costs

  1. Reduce hours or work week
  2. Cut, freeze, or delay wages
  3. Lay off staff; offer voluntary separation; offer unpaid leave; remove poor performers
  4. Freeze hiring
  5. Share jobs, consolidate staff, increase workload
  6. Use volunteers and graduate interns
  7. Hire temporary staff or consultants
  8. Remove management layers; don’t funnel high performers into management merely to reward them
  9. Reduce benefits, staff training, and staff development
  10. Limit or eliminate travel
  11. Cancel subscriptions; use the Internet and libraries
  12. Cancel professional association memberships
  13. Switch to a direct reimbursement status for unemployment compensation
  14. Ask board not to submit expenses for reimbursement
  15. Convert some paid staff to volunteers
  16. Share staff with other organizations

Reduce services

  1. Analyze your programs and services against your mission and financial goals
  2. Reduce or eliminate non-core programs
  3. Limit eligibility for programs; reduce the number of clients served
  4. Reduce or eliminate core programs
  5. Temporarily shut down some or all services
  6. Plan to go out of business humanely


Financial Strategies B: Increase Revenues

Manage money differently

  1. Speed the inflow of cash by invoicing promptly or offering incentives
  2. Try to get grants in the door earlier than the promised date
  3. Change management of cash reserves to improve unearned income
  4. Sell assets
  5. Spend down reserves
  6. Borrow money
  7. Diversify your sources of income

Increase fees

  1. Analyze all the costs of providing a service
  2. Change fee structure to result in increased income

Initiate or accelerate fund-raising

  1. Research the larger community and current donors to improve response
  2. Hire development director or staff
  3. Add special events, fund drives, charitable gambling
  4. Increase board involvement in fund-raising
  5. Increase planned giving
  6. Build an endowment
  7. Find new donors and diversify funding base
  8. Reach out to under-asked populations
  9. Collaborate on fund drives; join a federated fund drive
  10. Mobilize everyone in the search for new resources
  11. Link with a business or credit card company to receive a percentage of sales
  12. Seek in-kind contributions that can be converted to cash
  13. Increase the search for foundation and government grants

Expand or add services

  1. Boost enrollment in or expand offerings of successful services
  2. Sell staff expertise and time
  3. Add income-generating product or service that fulfills mission
  4. Rent office space or equipment to others
  5. Sell valuable information that others need
  6. Seek related niche markets
  7. Charge others for a service you also use (for example, maintenance)
  8. Develop a catalog of products used by your organization and other nonprofits
  9. Charge a fee to serve as the fiscal agent for other organizations

Increase productivity

  1. Provide incentives for productive staff
  2. Simplify production or service without loss of quality
  3. Invest in an educated staff; provide training as needed
  4. Research and implement "best practice" in all functions
  5. Upgrade staff while cutting back
  6. Invest in technology that improves productivity


Structural Strategies

Modify the mission

  1. Reexamine the mission and realign the organization accordingly
  2. Modify the mission to build clients' capacity to solve their own problems
  3. Change the mission to enable the organization to respond to rapidly changing conditions
  4. Move out of direct support services and into prevention services
  5. Be a pilot site for some foundation, academic, or government program

Modify the organization's structure

  1. Eliminate programs that are redundant with those of other organizations or combine them to improve services
  2. Position yourself higher in the "food chain" when intense competition accompanies a changing environment
  3. Respond to a changing environment by changing programs
  4. Spin off a struggling or "orphan" program to another organization where it has a better chance to thrive
  5. Merge with or acquire a competitor's or an ally's program
  6. Relocate with a group of related organizations to form a one-stop shop
  7. Become a for-profit; add a for-profit subsidiary; be acquired by a for-profit

Modify the organization's culture

  1. Enlist the support of potential funders as you modify your programs, and then request funds to support changes
  2. Share resources and expenses with other organizations that have similar needs
  3. Make your services more culturally sensitive
  4. Educate the board of directors to make them more effective
  5. Mobilize everyone in the organization to help market its mission, message, services, and needs
  6. Tear down bureaucracies that interfere with the creative flow of ideas
  7. Replicate rather than reinvent
  8. Link with a complementary but different organization to bring resources into the organization
  9. Take a more entrepreneurial approach to accomplishing your mission


Engagement Strategies

Engage other nonprofits

  1. Work with state and national nonprofit associations
  2. Form associations to negotiate with contracting agencies as a block
  3. Establish cooperative programs with other nonprofits to increase the number of stakeholders in each other's organization
  4. Collaborate with like-minded nonprofits; seek funding to support collaboration
  5. Develop a bartering resource system among nonprofits
  6. Create a nonprofit organization to insure nonprofits; return surplus income to policyholders
  7. Pool funds with other nonprofits to get a better return on the investment of capital
  8. Acquire or merge with another nonprofit whose services complement yours
  9. Establish national goals and standards for nonprofits to increase sector quality, public awareness, and public support
  10. Form a consortium with other nonprofits to take advantage of federal block grants
  11. Facilitate networks and collaboration by making your space available for such activities
  12. Find ways to work with local providers of educational services at all levels

Engage the community

  1. Seek funding to help those constituents least able to represent themselves have a voice
  2. Involve all members of the community in teaching children the value of community involvement and philanthropy
  3. Connect with local media to inform the community about issues related to your mission
  4. Show the community that your crisis is a community crisis
  5. Hold community issues forums; discuss community goals

Engage the business community

  1. Form partnerships with businesses; find a host that will provide space, staff, funds, resources, or technical assistance
  2. Advocate for your organization's values and goals while seeking business involvement
  3. Know the people, values, and goals of the businesses you are engaging
  4. Share your vision of the future with businesses so they can see how they and their community will benefit
  5. Link with businesses that will benefit from the positive public relations your organization's cause will generate
  6. Network with small and midsize businesses with a personal stake in the local community
  7. Show businesses how to get involved in community issues that affect them
  8. Collaborate with businesses and other nonprofits to create "incubators" for new, innovative organizations
  9. Form nonprofit/for-profit partnerships to advocate for common interests

Engage the public/government sector

  1. Advocate for tax incentives that encourage businesses to be involved in community efforts
  2. Use the public schools to teach philanthropy; set up student-operated philanthropies at schools and universities
  3. Seek ways to work with educational institutions at all grade levels, public and private, nonprofit and for-profit
  4. Advocate for a nonprofit contribution check off on tax forms
  5. Advocate for making charitable giving a tax credit rather than a deduction
  6. Use publicly owned facilities as a site for delivering nonprofit community services


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