Preparing for an economic downturn: How Not-For-Profit organisations can mitigate the uncertainty
By Clensy Appavoo, Global Not-For-Profit Leader
Experts predict the financial crisis triggered by Coronavirus to have an enormous impact on world economies. Since no one can be certain how long the virus will impact global businesses, predicting the recession’s scope is impossible, but experts agree that it will be steep and unprecedented.
Not-For-Profits (NFPs) have not been spared and we can even say that they have been badly hit in terms of financial support reduction and resource allocation. The not-for-profit sector can assume that their fundraising will be more challenging during the financial crisis. During the 2008/2009 recession, giving in the UK fell by 11% overall, according to the Charities Aid Foundation. About half of the charities the Foundation interviewed in Q2 of 2020 had already begun to seek out emergency funding to survive the crisis.
Government aid is available
Governments around the world are responding to the crisis in different ways. Many have earmarked funds for the nonprofit sector, and some have established new rules to enable not-for-profits (NFPs) to raise funds directly from the public as well. For example, the UK has pledged £750 million to voluntary, community, and social enterprise organisations to continue their work during the coronavirus outbreak. Much of this support is earmarked for coronavirus health responders, but there are funds available to other sectors as well. Russia has declared a tax holiday for NGOs providing social services. Canada and the United States are both offering low-interest loan programs and lending guarantees to not-for-profits and social enterprises. Both nations also have support available at the state or provincial level.
Other funding sources
The civil society — private enterprises and private as well as institutional donors — have been in the front line to help NFPs meet their challenges during these hard times. In Egypt, for instance, government hospitals appealed to the private sector for Ramadan donations to alleviate some of the expense of COVID treatment. The general public seems to feel a strong desire to give at this time, and donors who haven’t lost income due to the virus are willing to support causes that can show a need. This is especially true if an organisation can demonstrate a need that is related to COVID-19. In a recent survey, 57% of respondents agreed or strongly agreed that charities should engage in fundraising during the crisis, so NFPs shouldn’t hesitate to ask donors for funding at this time.
Demand for volunteers is skyrocketing, and people are stepping up to provide the help needed during this period of hardship. When the NHS announced a need for volunteers back in April, over 750,000 people signed up in just four days.
However, NFPs need to ensure that they are providing sanitary and environmental conditions that protect volunteers. Volunteers, like paid staff, need:
- Clear information about safe practices
- Options to work remotely, where possible
- Socially distanced workspaces
- Sanitary workspaces
- Flexible shifts
- Encouragement to stay home if they are not well
The role of the NFP board
NFP board members will have to manage several responsibilities in order to sustain their activities through the crisis. They may need to:
- Assess the needs of the populations they serve
- Find ways to safely and effectively deliver services during the pandemic
- Keep volunteers and employees safe while maintaining services
- Reengineer the organization’s purpose or programs, if necessary
A research project by the Centre for Social Impact and Philanthropy found that nonprofits of all sizes in India are struggling to cope with the pandemic in terms of adjusting to digital platforms, losing progress on their existing programs, and dealing with the financial stress that the pandemic has wrought. Above all, NFP boards are under pressure to navigate their organisations financially through this time of economic uncertainty. Boards will need to anticipate the financial impact on their organizations, locate government and civil society resources, and strategize their fundraising activities. Advisors can play a crucial role in assisting and advising NFP boards through this process. We can assist with approaching governments for financial support while at the same time helping NFP boards to review their operational framework to keep their operations cost-effective.
NFPs, like other organisations and individuals, are facing an uncertain future. Since experts can’t predict the pandemic’s depth or duration, it’s impossible to estimate its economic impact. NFPs need to remain transparent about the challenges they face during this financial turbulence. Transparency builds trust with donors, grantors, staff, and the general public. A project-oriented communication approach that showcases the organisation’s purpose, activities, and goals will keep the board, staff, and funding sources aligned. Financially, NFPs will need to monitor expenses carefully while pursuing all financial relief possibilities, including government and private sector sources.
The final word
NFP boards have a weighty responsibility during these uncertain times. Most organisations will need to change their usual fundraising practices to take advantage of the government and private resources available. Volunteers and staff need to be protected while serving new needs among their populations, and boards may need to consider changes in operations and programs. NFP boards should be working with their trusted advisors proactively to anticipate changes and create plans to sustain their organisations.