Economic Impact Issue

Background

A Proactive Approach
These days, you can’t open the paper, turn on the radio or TV, or browse the Internet without hearing about the impact of the economic downturn on our community - including nonprofits and charities.

Recent CCVO survey results indicated that while many organizations saw stable revenue levels in 2008, certain categories including earned income, and corporate donations were trending downwards, while at the same time, demand for programs and services was going up. Heading into 2009, most organizations anticipated a drop in revenues, particularly from foundations, corporate community investment programs and individual donors.

In the face of a high level of uncertainty about the economy and its long term impact on their operations, many organizations are taking a “wait and see” approach before making any major changes.

However, with funders facing a reduced capacity to support organizations, and a poor outlook for Calgary over the next 12 months, organizations may want to take proactive steps to ensure your organization is well positioned to meet any challenges that may lie ahead.

On the funding side, private and community foundations, and corporate community investment programs have seen a significant drop in their investment values and many have a reduced capacity to meet funding demands. At a recent Alberta funders’ forum that focused on the economic climate, many told us they are reducing the amount they fund, assessing their funding priorities, and making contingency plans for the coming years.

Adding to the funding challenges, as we looking ahead into 2009, the economic landscape may not improve. Calgary Economic Development recently predicted that Calgary will be in downturn for at least 12 months and that conditions will likely get worse before they get better.

Updates

November 2009

The results of CCVO's third 'Impact of the Economic Downturn' survey have now been released. Thank you to the 472 participants of our survey. Stretched to the Limit: An Economic Impact Survey indicate that Alberta's nonprofits and charities have been adapting to the recession, but are now stretched to the limit with little capacity to adjust to increased demand or reduced funding.

August 2009

CCVO to Undertake Third "Impact of the Economic Downturn" Survey. This survey is scheduled for the end of August 2009. We would appreciate your participation. We had a tremendous response to February's survey, and due to the level of participation the information has been widely used by the government, the media, and other organizations.

CCVO Suggestions

Proactive Approach
While we can’t predict when the economy will turn around or how long it will take to recover, you can take some proactive steps. Here are some suggestions to help your organization move ahead:

(Some of the following suggestions are adapted from the Colorado Nonprofit Association report listed in the resources section of this article).

Governance
Discuss your organization’s financial situation with your Board. Consider different scenarios and potential solutions, and ensure they know about any legal implications tied to changes such as program reductions or staff layoffs.

Fundraising
If you have not already talked to your funders, reach out to them to discuss their situation and what they forsee in the coming years in terms of their funding capacity and priorities.

Financial Management
Ensure that both Board and staff have the financial data they need to analyze the financial health of the organization and make informed decisions.

Planning
When planning, consider the long term implications of any short term decisions you make, and be sure to develop contingency plans.

Public Policy
Share your concerns, and experiences with CCVO to help inform our policy work. Engage policy makers that determine the distribution of funding that you rely on.

Strategic Alliances
Consider partnerships, shared services, and other collaborative approaches to help to meet the demand for your services and programs.

Related Information

Below is a list of resources, articles, and practical tips that can help your organization weather the economic storm.

Assessment of Recession Risk and Preparedness for Nonprofit Organizations
http://www.nonprofitsassistancefund.org/news/118/Recession_Preparedness_...
A tool developed by the Nonprofits Assistance Fund to help nonprofits gain a better understanding of their organization and their recession risk factors.

AFP’s Survival Kit for Fundraising in a Bad Economy
http://www.afpnet.org/ka/ka-3.cfm?folder_id=2545&content_item_id=24683
A toolkit from the Association of Fundraising Professionals (AFP) that includes resources to advise and guide fundraisers in tough economic times.

Guide to Managing in Hard Times Institute for Conservation Leadership
http://www.icl.org/toolkits/documents/Managing_in_Hard_Times_full_000.pdf
While this publication focuses on environmental organizations, it provides practical advice about what information you should track; how to assess your situation; what options you have; how to proceed; and who to involve.

Cashflow Calisthenics: Maintaining a Cashflow Positive Organization in Uncertain Times VanCity Credit Union
http://www.enterprisingnonprofits.ca/resources/cashflow-calisthenics
This tool provides guidance to senior staff and boards on ways to improve cashflow during an economic downturn, from working with allied professionals to managing payables and receivables, as well as working with donors. It includes links to online resources and a cashflow worksheet.

Weathering the Storm: Challenges and Opportunities Facing Colorado Nonprofits During Recession
Executive Summary: http://www.coloradononprofits.org/documents/WeatheringtheStorm_Executive...
Full Report (large file- 11MB): http://www.coloradononprofits.org/WeatheringtheStorm.pdf
While the front-end of this report focuses on the impact of the economic downturn on Colorado’s nonprofits, it concludes by outlining practices to help strengthen organizations and enhance sustainability. Page 4 of the Executive Summary has a short list, and pages 24 to 29 of the full report has detailed recommendations.

Meyer Foundation Economic Crisis Resources
http://meyerfoundation.org/economyresources/
A library of tips, tactics, and strategies to help organizations navigate through the economic downturn.

Nonprofit Mergers and Acquisitions: More Than a Tool for Tough Times Bridgespan, February 2009
http://www.bridgespan.org/uploadedFiles/Homepage/Articles/Mergers_and_Ac...
This report notes that relatively few nonprofits are using M&A strategically, as a way to strengthen organizations' effectiveness, spread best practices, expand reach, and to do all of this more cost-effectively. This article discusses research conducted by the Bridgespan Group on nonprofit M&As.