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Tools You Can Use

Tough Times Strategies: Moving Beyond the Bake Sale

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

Contents
Is This the End of the Bake Sale?
Guiding Principles on Strategies
    Develop a package of strategies
    Get input from new people
Advice for Collaboration in Tough Times
    Agree on the goal
    Start small
    Do quick cost-benefit analyses
Conclusion

Where to Learn More

 

Photo of Sandy JacobsenFrom Sandy Jacobsen, Principal Consultant, Fieldstone Alliance

NONPROFITS HAVE HAD to weather tough economic times before. Back in the 1990s, it was government funding cuts.

At that time, many organizations tried to fill the revenue gap by ramping up their fundraising efforts. There was also a smattering of other strategies applied, most often around cost-cutting. Nonprofits found some success with fundraising, but, ultimately, they limited their potential to dramatically improve their situation. Why? Because too many went to the same wells for funding.

A decade later, research showed that some nonprofits were implementing a more diverse mix of strategies including expanding programs, adding fees for services, and building coalitions. But still, most organizations were relying too much on the same thing—fundraising!

Now more than ever, nonprofits need to develop a broader spectrum of strategies to provide a cushion against economic downturns and to meet mission goals long-term.

In this issue of Tools, I'll share advice on strategies that I share with my clients. Then, I'll take a deeper look at one strategy in particular—collaboration. Many organizations turn to collaboration in tough times and I have some tips for doing this well.

But first, let's take a look at what strategies nonprofits have been using and see if these are sufficient for the future.

Is This the End of the Bake Sale?
Photo from the 1960s showing two women decorating a cake. Caption reads: Milly and Doris may need to hone more than their fundraising skills.Belt-tightening and fundraising measures can be enormously important in helping you deal with short-term crises. But they're just two strategies.

Even before the recession hit, growing competition for donor dollars was motivating many nonprofits to look beyond long-standing practices toward new options. In short, the bake sale just wasn't raising the dough that it used to.

In the future, I believe nonprofits will need to find previously unimagined ways to meet mission goals. This will likely include implementing strategies in at least three of these four categories:

  • Increasing revenues
  • Decreasing expenses
  • Reviewing structural strategies (changing the mission of the organization, its internal structure, or its culture)
  • Participating in engagement strategies (collaboration is one type of engagement strategy)

 

Guiding Principles on Strategies

Develop a package of strategies
Identifying and implementing strategies in more than one category is better than putting all of your eggs in one basket. After all, what if all of your cost cutting efforts aren’t enough?

I recommend that nonprofits develop a package of inter-woven strategies. As I mentioned earlier, they should involve at least three of the four categories listed above. Also pay attention to blending short-, medium-, and long-term needs. Long-term strategies often cost money in the short-term, and you don't see payback for 18-24 months. Therefore, you'll need to have a strategy for dealing with this gap.

Here’s a strategy mix example:

Category: Increase Revenues
Add a new fee or change the current fee structure for an existing service. Depending on the market, the impact of adding or changing fees will be felt in the short- or medium-term.

Category: Cut or Control Costs
Reduce staff salaries by 10 percent. This can be done immediately and will have an impact in the short-term.

Share space with another nonprofit. This can probably be accomplished in the medium-term, once space is found and an agreement reached.

Category: Engagement Strategies
Establish cooperative programs with other nonprofits to increase the number of stakeholders in each organization. Developing a cooperative program takes time; it’s a long-term strategy but one that can have a huge positive impact on the nonprofit.

Get input from new people
If you try to develop strategies with the same colleagues, you're likely to get the same old ideas. Lately, I see the positive trend of more and more board members becoming actively involved and offering fresh ideas. An article from McKinsey Quarterly, "The crisis: Mobilizing boards for change," suggests that to meet the challenges of the economic crisis, boards must change the way they work. This article states, “Among the group who say their boards have been effective in responding to the crisis, 60 percent credit the development of new strategies to manage risk and take advantage of new opportunities.”

Advice for Collaboration in Tough Times
During tough times, many nonprofits turn to collaboration as a strategy to do more with less. Collaboration can be powerful, but working together has its challenges. More than any other strategy, collaboration requires innovation and openness to new ways of working. That said, here are key tips that I share with my clients.

Agree on the goal
In considering collaboration, the first step is to ask, What can be better accomplished with others than by ourselves?

For example, the goal might be to improve service to a low-income neighborhood by sharing information, referrals, and transportation services. Or, it might be to fill an unmet need, such as creating a dental clinic to serve immigrants and refugees. Whatever it is, the goal must be clearly stated and embraced by all the partners.

Start small
When resources are scarce, nonprofits need to be careful about leaping into a collaborative before testing whether it is likely to pay off. It might be wise to start small, with a single, trusted partner on a specific issue. After you achieve some success, you can consider building a more complex collaborative.

A good example of this strategy is the Chattanooga Museums Collaborative. What started out as a fee-for-service arrangement that allowed two organizations to improve their administrative operations and save money, has grown to include programs and fund-raising. For a synopsis, read: "A Rising Tide Lifts All Boats:Collaboration Among Museums in Chattanooga."

Do quick cost-benefit analyses
At each step of the way, the partners should do a quick cost-benefit analysis to answer this question: In this collaboration, are the benefits—the efficiencies, larger market, program innovations—likely to exceed the costs—the use of money, staff time, and other resources?

Regularly testing your organization’s answer to this question will confirm whether collaboration has a place within your package of strategies.

Conclusion
In times of crisis, we tend to mind our own store first, and we need to act fast. Structural and engagement strategies may take more time than some nonprofits have. However, engagement strategies may ultimately do more to accomplish the organization’s mission and preserve its health than the quick-acting financial strategies.

All of us share a commitment to improving our communities and doing our best to keep our organizations reasonably healthy. Developing a complete package of strategies can help us achieve goals for both the immediate and long-term future.

Where to Learn More
Here are some related resources that you'll find on the Fieldstone Alliance web site:

Collaboration
Articles

Books

Strategy
Articles

Books

Finances
Articles

Web page Books

General mental health
Articles

Consulting services
Fieldstone Alliance consultants help funders and nonprofits plan and navigate changes. We can help you understand your organization's core capabilities and business model, gain greater understanding of your market and competition, develop criteria to guide strategy decisions, and help you formulate and test strategies. For more information, please contact Sandy Jacobsen at 651.556.4510 or sjacobsen@FieldstoneAlliance.org.

 

Best Regards,

Sandy Jacobsen

April 23, 2009

 

About Sandy Jacobsen
Sandy is a consultant with 30 years of experience in cross-sector collaborations, capacity building and organizational transitions in both for-profit and nonprofit organizations. For 20 years, Sandy was in a leadership position in the financial services industry, involved in cross-sector relationships with corporate, nonprofit and government clients throughout the U.S. She served as president of two banks and launched a national community development initiative. Sandy was also a contributing author on A Funder's Guide to Organizational Assessment. Sandy can be reached at sjacobsen@fieldstonealliance.org or at 651.556.4510.

 

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