How to Strategically Recession-Proof Your NonProfit
When most of us think of nonprofits, our minds go to places like billion-dollar charities like the American Red Cross, the Salvation Army or St. Jude’s. They’re great charities who have helped change millions of lives but the vast majority of nonprofits have budgets of under $1M annually. In fact, an astounding 92 percent raise under $1M.
In times of recession, these nonprofits are particularly prone. I Googled the topic on “recession-proofing your nonprofit” and got a lot of stuff back like blocking off more time for fundraising, accepting cryptocurrency for donations, doing more social media, and one blogger even said “just accept your losses”. But let’s assume we’re already making time to fundraise and we have a Facebook account. What can we strategically do? Here are five ideas on recession-proofing your nonprofit:
Organizational Partnerships - The number of foundations and sponsors requiring that requests include nonprofit collaboration is increasing by the day. Many government agencies and private foundations like Robert Wood Johnson have required nonprofits to work together in submitting grant requests for years. With about one-third of nonprofits getting most of their funds through government grants, it’s critical to team up with partners to collaborate on delivered services. Each organization can deliver on where they're strongest while sharing incoming resources. The benefits don’t end there. There are cost savings too. Organizational partnerships allow for shared tangible assets like software and equipment and enable coordinated efforts like the combined power of advocacy initiatives.
Volunteers - Most nonprofits don’t access the impact of their volunteers (Volunteer Hub). Some nonprofits even shy away from giving assignments to volunteers because it’s too difficult to hold them accountable. There’s too much to be done to make the world better for everyone. Let's give our volunteers a shot at getting us a little closer to realizing our missions - especially during times of economic uncertainty or being a nonprofit during a heavy growth-cycle. Besides, volunteers are far more likely to become donors than any other segment of our databases.
Drop the Office - Ditching a formal office these days is like dropping your home phone 10-years ago. It’s just plain redundant and it’s a cost burden. Every nonprofit needs an address for legal purposes but if the pandemic has taught us anything we don’t need as much office space as originally believed. Solutions like going fully remote allow for the recruitment from a national talent pool while saving on overhead costs. If you’re not ready to make that jump, other solutions like We Work also provide cost savings and get you out of escalation clauses on a long-term lease. Don’t shy away from asking your supporters or sponsors for office space. It’s a tax write-up for the supporter and chances are if those companies have gone to a more permanent hybrid work model, they have space to loan.
Stop using one-off technology - There are still too many nonprofits allowing themselves to find technology solutions from different vendors. For example, we have one place manage the backend of the website, another host our databases, and yet another one to automate our social media posts. There are loads of wonderful and capable companies able to do various services for us while enabling us to save thousands and it saves the effort it takes for staff to learn a vast array of operating systems.
Service fees - Most nonprofits provide services. Legal, education, medical, youth and children support, and veterans’ support are just a few of these categories. About half of all nonprofits now bring in a majority of their income through fee for services. That’s up from 33 percent 15 years ago. Taking this approach helps offset some of the cost and can enable nonprofits to help even more folks in need. Almost 100 percent of the time, nonprofits can provide these services at a far lower rate than people can get from the for-profit industry. There are three ways to set up a fee for service programming: A) Mandatory. This is where a nonprofit charges a fixed fee based on specific criteria like income. Examples of this include hospitals and state parks but it expands to many nonprofits. B) Voluntary donations or requested fees. This is a practice where participants are not coerced into paying a fee but are introduced to the costs involved for services; by stating realities like “due to decreases in funding, we are asking for your assistance in supporting this program”. Meals on Wheels, community health centers, and libraries all need to use this tactic. C) Membership fees where services are provided for a lump sum or annual fee. It’s not an approach for just any nonprofit because it takes great discernment to determine the level of participation. However, this approach works well if a nonprofit has a selection of a la carte services it provides its community. For example, a health nonprofit may offer free screenings or clinical trial placements for free but charge a nominal fee for something more complex like advocating on behalf of the patient with an insurance company.
