subject: Build Your Financial Strength to Overcome Budget Cuts [print this page] Build Your Financial Strength to Overcome Budget Cuts
Many nonprofits are receiving budget cuts for the next fiscal year as part of the state budget cutting process. If you have received cuts, here's what we recommend you do:
1. Review each program area that has been cut and determine what you can do to reduce program costs with the least possible affect on your services. For example, some counseling programs have made a shift to more group sessions. Some children's programs have shortened hours or simplified offerings.
2. Develop a new budget as soon as possible, and discuss it with program managers and board leaders. Develop strategies for managing with a reduced budget. Know what you are cutting and the impact it will make on programs. Ensure that program managers have been involved and understand the rationale for the cuts.
3. Create fund raising strategies to bring in some more revenue, and soften the blow of the budget cuts. The best option is usually building the donor base through increasing individual donor gifts and expanding the base of donors with new people. Building the donor base with increased gifts from current donors will be faster for most nonprofits. And, all work with donors tends to be some of the most effective and long lasting of fund raising strategies. Work with your board to develop a plan for increasing donor income. Prepare a list of current donors and some donor database analysis to move the discussion with the board. Get board members to commit to fund raising, identify people to be contacted, and develop activities and assignments. Set targets, and monitor them. Have the leadership stay in touch with individual board members on a weekly basis to provide support and gentle prodding. If you move quickly and with purpose, you can bring in some new revenue within a month, and build on that for subsequent months.
4. Some nonprofits will be able to develop earned income. If your nonprofit provides services to different income groups, some of which have the ability to pay a sliding fee or market rate, then it might be possible to develop earned income. It will take a few months. With your finance staff and board treasurer, investigate whether you can charge a sliding fee scale for any of your services. Analyze your customer or client base in terms of types of service and income levels (if known). Research earned income strategies in general, and those that relate to your type of service. Check to see which nonprofits in your region have instituted a sliding fee scale payment in the last few years. Talk with them about their experiences. Develop strategies for either phasing in some earned revenue, deferring the initiative.
I'll share more information later. Check out my website for additional articles: www.nonprofitsonline.net. Or, email me at: advisor@nonprofitsonline.net.
Anne Hays Egan
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