Strategies for leading in an ever-changing world.
Welcome to 2024! In part V, the last of this series, there is much concern about inflation and interest rates in the non-profit world, so it’s no surprise that the current financial environment made the list of top 5 challenges organizations will face in 2024. In addition to operating in a post-COVID environment, managing staffing issues, navigating board engagement, and fostering collaboration, the rise in the cost of money, goods and services is top-of-mind. If your organization is feeling the financial impact of inflation, here are a few steps you can take to help minimize its effects – not just survive, but thrive in this new year:
- Get an independent Financial Analysis – Consider contracting with a professional to complete an independent analysis of your organization’s financial position. This includes your operational budget, cash flow, assets, and liabilities management. I know this sounds similar to your annual audit, but this analysis goes beyond a detailed representation of your financial position. This analysis takes all those details into account to assess your organization’s financial strengths and weaknesses – and even further, to develop a financial strategy with contingencies to help your organization weather the challenges you will potentially face. You might ask why an internal analysis wouldn’t suffice. Two reasons: perspective and objectivity. Changing perspective and being completely objective is hard when you are forced to consider things like closing or even just altering a long-standing program in your organization, liquidating or consolidating assets that might impact your mission both positively and negatively, or the dreadful work of restructuring staffing to stay within budget.
- Ramp up your Donor Engagement Plan – When budgets are tight, funds previously devoted to grant writing, public relations or even donor management are often the first budget cuts to be considered. These positions are invaluable to donor research, cultivation and relationship building. Of course, none of these efforts can be successful without the involvement of the organization’s leadership. Donors give when they are shown the specific impact of their investment on your mission, but they invest long-term based on relationships – that’s where you, as the organization’s leader(s), must step in. You must be willing to make phone calls and host meetings ahead of grant submissions, donor events or public relations campaigns to speak confidently and passionately about your work, why it means so much to you and to those whose lives you are impacting. You must be willing to answer hard questions with transparency and truth, even when the answer to the question may mean you aren’t funded. Truth builds trust and long-term relationships, and you will need both to weather this economic environment.
- Diversified Funding Sources – The Key to Longevity. Whether you are a relatively new non-profit or your organization has been around for years, continually finding ways to diversify your funding streams are important to longevity. Continuing to build and transform your annual fund campaign to meet the needs of a wide demographic of donors should be the first step when evaluating your fundraising plan. Remember, annual fund dollars are not restricted. Don’t apologize in your campaign for using these funds to support your organization’s operations. That is what an annual fund is designed to do! Special project or program funds can be solicited through a variety of ways – one of which is crowdfunding (though some fees may be excessive) if you have a short-term project that is compelling and impactful. Larger or long-term projects are best funded through major donor cultivation (more on that subject in 2024). Developing a revenue stream is also a great way to diversify funds. For example, can you lease an underutilized area in your office to another like-minded organization? Can someone benefit from using your space at night or on weekends for events, meetings, or training? How about intellectual knowledge? Is your organization an innovative leader in a particular area? Can you develop training and charge fees? Many organizations have developed re-sale stores using donated items. There are lots of ways to get creative.
These are just a few ways to help curb the impact of inflation on your organizational budget and help your organization thrive in 2024. If you would like to talk more about these or other ideas not shared here, feel free to send me a message on LinkedIn or click the Contact Us tab at the top of the page. Remember to always lead well!