



The spread of COVID-19 and its light speed pace around the world has left us all reeling. Businesses are scrambling to put together alternative work plans while public health officials urge all of us to stay at home and practice social distancing. Meanwhile, the U.S. government is working to unlock billions of dollars in federal funding to buttress food assistance and unemployment programs. However, one thing is clear: while our reaction is necessary, it is also unprecedented, and we will very clearly face some level of economic backlash as a result. Indeed, some experts say that the backlash isn’t coming- it’s already here.

If you are an Executive Director or work in the nonprofit industry, this recession probably has you a little unnerved. After all, common sense dictates that a dried-up budget means a populace making cuts to nonessential payments like charity donations.

The good news is, you don’t have to panic. Economic recessions are just part and parcel of the American Capitalist system, and we experience them about once a decade. If you plan ahead of time and grit your teeth, you can come out the other side intact.

So, how can one exactly prepare? Here are three things you can do right now to prepare:

1. Create a targeted approach to fundraising:

Donations go down when a recession hits, but that doesn’t necessarily mean your revenue should too. Instead, rely less on philanthropy and develop a more targeted approach to fundraising. For example, now is a good time to review and update your CRM and create a donor analysis.

A donor analysis is an analytical approach to organizing your CRM. Typically, the analysis combines the donor’s willingness to give, total ability to give, and other factors such as retention rate to find your best and most valuable donors. For this recession, you should also include the donor’s industry into the analysis.

For example, a donor who gives moderately but works in the travel industry should be scored lower since that particular industry is currently suffering; conversely, a grocery store owner who gives only once in a while could be scored higher since consumer staples are typically considered recession-proof. This way, you can determine the length of time and investment you should put into cultivating relationships with each donor for a more targeted approach.

2. Tighten your budget

The worst part about a recession is the layoffs. No one wants to hear that their job is on hold because their boss didn’t have the funds to pay them, and no one wants to have to tell their employees that they can no longer provide for their families. Sometimes layoffs are inevitable, but there are a few key steps you can take ahead of time to prevent it from happening.

The next time you get to your office, schedule an appointment with your accountant or go through every item on QuickBooks. Scrutinize each expense. Is there anything nonessential you can cut? Is there any service you’ve been meaning to cancel but didn’t have the time? Do you have more than one grant database subscription? Now is the time to cut, coalesce, and tighten. Be ruthless with your budget.

If it’s possible, every dollar you save should go right into an emergency reserve. Recessions typically last about 6 months, so the best thing you can do is to have 6 months’ worth of expenses saved up. However, even just a month’s expenses can be the saving grace you need to hold you over and keep your employees.

3. Develop a contingency plan

Although I hope you never have to use it, developing a plan for a worst-case scenario can be just what you need to keep you sane during all of the uncertainty. Your plan should include contingencies for recovering your systems and files, procedures for communication, emergency board resolutions, succession planning, and cross training employees to perform emergency tasks. Developing a business continuity and disaster recovery plan lets you know that even if the worst thing were to happen and your organization was on the brink of destruction, you can still make it back.

It would also be a good idea to have Business Impact Analysis (BIA), which determines which facets of your organization are the most susceptible to economic backlash in order to create contingencies. Look at every function in your organization. How long can your organization go without performing this function before it seriously hurts your operation? Use that as a litmus test to find and grade your most essential functions when creating your plan.

You might find yourself experiencing more sleepless nights as we enter this recession, but just remember; you will make it. Just keep pushing and keep planning. The world needs you.



