Nonprofit Financial Crisis: 5 Best Ways to Handle it Now
Do you foresee an impending financial crisis for your nonprofit? It’s a scary prospect, especially with the current pandemic. Most know it doesn’t take much for a financial crisis to occur. Examples include a terrible weather situation, a major cash-flow challenge, a large financial investment gone awry, or a recession. If you see a financial crisis in the near term, what are the best ways to handle it? Here are five ideas that will help:
1) Assess the situation
Take stock of your current situation as it stands right now and determine how a financial crisis could impact things like your grants, donations, programs, upcoming events, etc. Meet with and openly communicate with all stakeholders (including employees and volunteers) who can help assess and address risks. Be transparent and keep the lines of communication open with all.
2) Understand your financials
Knowing your numbers inside and out is your first task at hand. That includes a thorough understanding of your cash flow, accounts payable, uncollected pledges, and your balance sheet. Are some of your program’s surpluses subsidizing deficits in others? Do you foresee demand for some of your programs increasing or decreasing in the future? How many months of your expenses are currently covered by cash? Having full comprehension of these critical scenarios and numbers puts you and your team in an optimal position for making better decisions. But remember, having easy access to accurate, real-time financial information is key.
3) Ask for help
Don’t be afraid to ask for help. Consider teaming up with experts to get a better handle on your accounting. Determine if board members can cover some shortfalls. Put out the call for extra volunteers. Ask donors (big and small) for a financial boost. You never know unless you ask. No matter what you request, be sure to thank everyone who lends a hand — and do so genuinely and often.
4) Budget conservatively
Stay on top of your cash flow projections. Investigate options for renegotiating current debt, leases, or payables. Avoid taking on any new debt, even if it means postponing financial investments in projects and programs. Take the time to brainstorm with your team and other stakeholders to discover creative ways to reduce expenses. Budget wisely and always assume bills will need to be paid sooner than expected, and cash will arrive later than expected.
5) Be prepared to make difficult decisions
Now is not the time to “fake it ’til you make it.” Survivors are the ones that strategize and plan. Survivors speak hard truths and challenge traditional thinking. As tough as it may be to consider, you may need to cut programming and personnel. But tough times call for tough measures, not to mention strong leadership.
For a nonprofit, a financial crisis can be one of the most challenging things to conquer. We’ve seen and helped many nonprofits do it — and we’d love to help you too. Our team of experts is happy to lend a hand if you need some advice.
Remember — it’s ok to ask for help.
Schedule a call today, and let’s chat about your situation. Together, we’ll see you through and keep you and your nonprofit on the path to success.
Non Profit Accounting Solutions
Qbix's goal is to provide the latest cloud-based accounting technology while delivering real-time visibility into your nonprofit's financials 24/7. Numbers are our passion, but providing your nonprofit with the financial expertise needed to facilitate growth and profitability is our top priority. And because no two organizations are the same, Qbix offers the flexibility you need to accomplish your nonprofit's goals.
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