Just as it did for businesses, the COVID-19 pandemic created lots of uncertainty for nonprofits, causing many organizations to have to lay off members of their staff and cut important services. With government programs including the CARES Act providing financial assistance and opportunities for these organizations to push through the difficult circumstances, many endured and are continuing to thrive today. However, certain challenges remain, and some elements of this uncertainty continue.
In honor of National Nonprofit Day, here are a few tips to help nonprofits continue to enjoy sustainability and success as they continue to navigate the post-pandemic world:
Conserve cash in any way possible.
There are several assessments and analyses that can be used to conserve money. We recommend taking actions including:
- Conduct an accounting assessment to address any bad financial habits
- Prepare an 18-month cash projection to identify and solve any instances of cash leaks from your organization
- Perform a cost savings analysis on overhead areas
- Shorten the amount of time it takes to get cash into the bank (also known as the cash conversion cycle)
- Create efficiency in bill paying to allow your money to work for you long before it is sent to a vendor
Take full advantage of all government programs still in play.
This includes the Employee Retention Tax Credit, which rewards and encourages companies to keep employees on their payroll by providing financial relief to those who are able to avoid laying off their staff.
Strengthen your board, utilizing M.A.R.L.I.N.
This acronym names six important sectors of professionals to include in your board of directors: marketing, accounting, real estate, legal, insurance, and nonprofit. This ensures that your organization will be led by a well-rounded group of professionals from a multitude of backgrounds, which is important to providing a comprehensive view of the market.
Strengthen compensation plans to keep talent.
The largest portion of a nonprofit’s annual budget typically goes toward the salary and benefits of their staff. In order to keep the talent they have on their team, it is important for nonprofit organizations to shore up their compensation plans. They should also come up with other ways to strengthen the productivity of their workers without alienating them, which can be accomplished through a human capital assessment.
Learn to stretch the dollar as much as you can.
As we prepare for an impending recession and continue to experience higher inflation rates, this will likely reduce both the amount and number of contributions that nonprofits receive from donors, who will be feeling the stress of the economy on their personal budgets. To make the best of this, it will be important to do everything you can to maximize your money to yield the same results with fewer donor dollars.
Although challenges remain, PBO Advisory Group is optimistic about the future of nonprofits in a post-pandemic world. There is a great need for service organizations that utilize their network, skills, and resources to strengthen our communities.
For more information about preparing for the future and ensuring the success of nonprofit organizations in the post-pandemic world, contact PBO Advisory’s Consulting CFO Rick Dahlseid.