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Opportunities in Lean Times
The economic crisis that's unfolding has a lot of us scared. The fallout will likely affect everyone.
When confronted with a crisis, it’s not uncommon for people to have knee-jerk reactions that may do more damage than good. But, in the midst of turmoil, there is also opportunity.
The disgust with Washington and Wall Street has people questioning (to put it mildly) government ethics, policies, and responsibility to the greater good. The time is ripe for the nonprofit sector to weigh in on the debates and decisions to come. People are listening.
We've compiled the following resources to help you frame the issues, find facts and trends, consider options, and arrive at the best strategies for your organization and mission.
We hope you find the information helpful. We'll be updating the page as new developments occur. If you have suggestions, recommendations, or requests, please email them to Becky Andrews at bandrews@fieldstonealliance.org.
Contents
By the Numbers: What's the Situation Really?
The Wall Street bailout
The national debt
State budgets
What's a Nonprofit to Do?
Near-term actions
1. Know where your money is
2. Look into emergency funding sources (20 ideas)
3. Use "kaleidoscope" thinking
4. Keep up on trends
Longer-term actions
1. Know thyself
2. Diversify revenue streams
3. Collaborate
4. Affect public policy
5. Communicate your value
By the Numbers: What's the Situation Really?
The Wall Street bailout
A lot of large figures have been thrown around lately. For some perspective, here's how the Wall Street bailout compares to other large sums:
Based on the U.S. Census Bureau's estimate of the current population of about 305 million people, each person would have to pay $2,300 to fund the $700,000,000,000. If each American (including children) paid a dollar a day, it would take more than six years to pay the money in full. This gives you an idea of the seriousness of the problem.
Sources
LiveScience.com
U.S. Census Bureau
U.S. Department of Health & Human Services
Learn more...
The Long History of the 2008 Financial Mess (LiveScience.com)
The Wall Street Bailout Plan, Explained (New York Times)
The national debt
As of October, 2008, the U.S. national debt stood at $10.46 trillion. That amounts to $34,311 per person in the U.S. (In September 2008, the Times Square National Debt Clock had to be modified to make way for an extra digit—the "1" in $10 trillion.).
There are different schools of thought on budget deficits. One group of economists suggests that deficits have their uses. Moderate, well-managed deficits can stimulate the economy, because additional government spending will create jobs. Other experts argue that it's a bad idea for anyone, including the government, to borrow money to pay year-to-year bills. When deficit spending gets too big or goes on for too long, that government borrowing inevitably raises interest rates, increasing the cost for such things as car loans and home mortgages, while making it more difficult for businesses to borrow money for expansion. Long-term deficits also cramp the government’s ability to create new programs and respond to new circumstances.
Sources
Bureau of the Public Debt, U.S. Department of the Treasury
PublicAgenda.org
Learn more...
Current National Debt
Do Deficits Matter? (PublicAgenda.org)
Times Square National Debt Clock
State budgets
According to BusinessWeek, 31 states may be experiencing up to $53.4 billion in deficits, based on data compiled by the Center on Budget and Policy Priorities. Every state in the union but Vermont legally requires a balanced budget, so state governments have begun cutting.
Here are the top 10 cash-strapped states and how their balance sheet is looking:
| Budget gap | Gap as a % of the total budget | |
| California | -$22.2 billion | 22% |
| New York | -$5.5 billion | 9.8% |
| Florida | -$5.1 billion | 19.9% |
| New Jersey | -$2.5 billion | 7.7% |
| Arizona | -$2 billion | 19.9% |
| Georgia | -$1.8 billion | 8.7% |
| Nevada | -$1.2 billion | 16% |
| Maryland | -$1.1 billion | 7.2% |
| Alabama | -$784 million | 9.5% |
| Rhode Island | -$430 million | 13.1% |
Sources
BusinessWeek
Center on Budget and Policy Priorities
What's a Nonprofit to Do?
While we don't have a crystal ball to foresee the future, we are in the business of helping others figure out how to move forward. To that end, here are steps we recommend.
Near-term actions
1. Know where your money is
The lawsuits are starting. Nonprofits (and others) are suing investment professionals for fraudulent and risky investments. If your organization has investments, do some checking to see what they're actually invested in. Don't rely on ratings.
Also, if you have a grant or other funds worth more than $100,000 parked in the bank, it would be wise to think about splitting the account up into smaller amounts to spread your risk if the bank fails. FDIC guarantees accounts up to $250,000 per depositor, per insured bank, but even they are running into funding problems.
Learn more...
How to check on a bank's health
Nonprofits sue Wells Fargo for risking assets while holding them hostage
FDIC failed bank list
FDIC gets ready for bank failures
Building a Better World—One Balance Sheet at a Time
Related books
Consulting and training services available
Financial Strategy Planning Contact Tom Triplett at ttriplett@FieldstoneAlliance.org or call 651.556.4504
Financial Webinar Series
2. Look into emergency funding sources (20 ideas)
Our consulting staff has put together a list of revenue sources that can be accessed quickly—usually within 30 days. Not all of these sources are available to all nonprofits, and some of them carry great risk. Nonetheless, we hope you find the list useful and thought-provoking. read more»
3. Use "kaleidoscope" thinking
If you're looking for new ideas, but you're asking for input from only your board and staff, you're likely to get the same answers that you've gotten for the last two years. Harvard Business School professor Rosabeth Moss Kanter says that what savvy leaders really need to do is: "think across borders and through boundaries, almost as if turning a kaleidoscope to examine the same basic set of circumstances in a hundred different new ways. The kaleidoscope is a symbol of ever-changing patterns and endless new possibilities, powered by human imagination," explains Kanter. "Leaders who want to stimulate more innovation within their companies need to look beyond the organization's walls. It's not reality that's fixed, its our view of reality that is fixed."
Here's how you can start putting kaleidoscope thinking to work:
- Convene local nonprofits to talk about the issues and brainstorm options
- Network with small and midsize businesses with a personal stake in the local community
- Hold community issues forums; discuss community goals
Learn more...
Example of community forums in action (from the National Council of Nonprofits "Economic Vitality Center"):
Telling the Story - how the Michigan Nonprofit Association shined the light on challenges being experienced by nonprofits
Providing Understanding and Building Community - how the Oklahoma Center for Nonprofits brought nonprofits together
Creative Uses of Community Forums
28 Factors for Successful Community Building
Related books
Consulting services available
Community Planning Contact Gordon Goodwin at ggoodwin@FieldstoneAlliance.org or call 651.556.4502
Collaboration Services Contact Sandy Jacobsen at sjacobsen@FieldstoneAlliance.org or call 651.556.4510
4. Keep up on trends
If you don't pay attention to macro trends, your hard work may end up being as useful as rearranging deck chairs on the Titanic. When you stay abreast of market trends you stand to gain the following:
- Better knowledge of the external environment and its impact on your nonprofit
- Greater sense of control over the situation
- Identification of trends before they are “old news”
- Improved decision making and improved strategies
In short, when you become adept at recognizing trends, you improve your decision-making abilities and you become more effective at forming effective strategies.
Learn more...
Tracking Trends—How to Turn Your Hunches into Good Decision Making
Six Generational Trends that Will Affect Your Nonprofit
Related links
Related books
Consulting services available
Strategy Development Contact Gordon Goodwin at ggoodwin@FieldstoneAlliance.org or call 651.556.4502
Longer-term actions
1. Know thyself
In tough times, it's even more important to be crystal clear about your mission, your competitive advantage, and your strategies.
Having your organization's mission foremost helps you make decisions that are best for the people your organization serves.
You also need to understand your competitive advantage.When undertaking significant strategic work, the organization must know itself (Who are we?), its position in the market (Where are we?), and its history (How did we get here?). Then, when it gets caught up in the complex possibilities inherent in most Big Questions (Where do we go next?) and in finding successful strategies (How do we get there?), it is less likely to lose its way.
Learn more...
When Times are Tough, Get Creative and Strategic
Avoiding Knee-Jerk Reactions to a Crisis
Stewardship Helps Get More Mission for the Money
Why Traditional Strategic Planning Isn't Strategic
Real-Time Strategic Planning in a Rapid-Response World
Related books
Consulting services available
Strategy Development Contact Gordon Goodwin at ggoodwin@FieldstoneAlliance.org or call 651.556.4502
2. Diversify revenue streams
Growing competition for donor dollars is motivating many nonprofits to look beyond long-standing practices toward new revenue models. Fieldstone Alliance consultant Tom Triplett specializes in helping organizations assess their current revenue streams and look at new options.
Learn more...
Financing for the Long-Term
Collaborating with a For-Profit: Some Risks but Huge Potential
Does Your Organization Have What It Takes to Start a Business Venture?
Related books
Consulting and training services available
Financial Strategy Planning Contact Tom Triplett at ttriplett@FieldstoneAlliance.org or call 651.556.4504
Financial Webinar Series
3. Collaborate
In lean economic times, it's hard to be creative. Most nonprofits turn to the 3 Rs: raise funds, reduce costs, retract services. Very few consider options such as collaborating with others or advocating for public policy changes. Yet these options may actually work better and help you down the road as well.
Learn more...
Collaboration Factors Inventory
Four Keys to Collaboration Success
Lower Intensity Alliances: When Less is More
Related books
Consulting services available
Collaboration Services Contact Sandy Jacobsen at sjacobsen@FieldstoneAlliance.org or call 651.556.4510
4. Affect public policy
As Marcia Avner, Public Policy Director for the Minnesota Council of Nonprofits says, "If you not at the table, you'll be on the table." With state budget cuts coming, it's even more important to work with your state association and other nonprofits to make the case for your services.
Learn more...
List of free tools and articles
Related links
Related books
5. Communicate your value
We believe that the nonprofit sector’s greatest asset is its value system as expressed in the question What good do we do for whom? We think that nonprofits need to assert this value—when communicating with the public, when collaborating with others, and when weighing in on public policy.
Learn more...
Five Keys to Creating Motivating Messages
Assessing Your Communication Goals
Related books
