[Editor’s note: This is the first article in a series by PJ on how North Carolina nonprofits are adjusting their operations to cope with the lingering effects of the recession, and how funders are supporting that work.]
The recession of 2008 and 2009 was hard on nonprofits across the U.S.
Skyrocketing community needs coupled with plummeting income forced many organizations to cut staff and programs to stay aloft.
Now that the turbulence appears to be lessening, North Carolina nonprofits are taking stock and figuring out how to proceed.
“We’re seeing that 2009 was a time when folks were watching to see what the impact was going to be of the economic downturn — and they were hoping for a quick turnaround,” says Kim McGuire, director of Western North Carolina Nonprofit Pathways in Asheville. “What we see in 2010 is that folks are more in a mode of ‘okay, we’re in a new reality.'”
Nonprofit Pathways is a collaborative effort of four mountain-area funders — Community Foundation of Western North Carolina, Cherokee Preservation Foundation, United Way of Asheville and Buncombe County, and Mission Healthcare Foundation.
Many nonprofits entered 2010 with depleted reserves and now are realizing post-recession reality means less income from all sources, says McGuire, whose organization’s helps mountain-area nonprofits boost their effectiveness.
That realization is driving an increased interest in organizational-development work that helps nonprofits figure out how to retool.
Nonprofit Pathways has received a record number of requests for organizational-development grants, says McGuire, an indication that nonprofits are looking for ways to learn and adapt.
“The challenge is how to do this internal infrastructure work at the same time you have all of your external service to the community,” she says. “That’s now more challenging than ever as well.”
Fundraising is a perennial challenge for nonprofits, even during economic booms, and it has remained firmly at the top of the list over the past year-and-a-half, says McGuire.
But she’s seeing other top concerns as well, including the increasing importance of board leadership.
“There’s a new understanding of the importance of boards taking ownership of the changes that need to happen and the difficult decisions that need to be made,” she says.
Given the devastation the economy has wrought on many nonprofits, she says, it’s important that a board is well equipped to help strengthen its organization’s financial standing.
That means nonprofit staff must present boards with detailed financial information and be willing to have in-depth conversations with their boards.
“It’s no longer rubber-stamp mode,” she says. “Nonprofits want boards to understand the financial picture, and all board members want to understand it because they’re seeing what can happen if they don’t.”
Nonprofits also are taking a look at “mission creep,” with the goal of paring away out-of-scope efforts and becoming more intentional about the future.
“These are very difficult decisions and they need to be made with board and staff working together,” says McGuire. “How can boards help organizations as they’re finding their way through this?”
And given that the economic recovery likely will take years, more and more nonprofits are considering restructuring, collaboration and even mergers.
“Most of the smarter groups are asking themselves who’s doing similar things and can we share expenses and responsibilities,” says McGuire.
To deal with these changing needs, Nonprofit Pathways updated its own approach in early 2009, adding contingency-planning training and reemphasizing financial reviews.
The organization currently is recommending a five-pronged approach for nonprofits: get a firm handle on finances; identify available options for reducing expenses and adapting programs to operate in the new environment; make the changes that need to be made; monitor progress by identifying trigger points and understanding choices that need to be made; and adapt continuously.
And to support that work, Nonprofit Pathways provides sustainability consulting to put all those pieces together.
“Our message to organizations has been ‘if you don’t do things differently, you may not survive,'” says McGuire. “It wasn’t easy before and now it’s even more challenging.”
Other stories in this series: