The following post was written by The Nonprofit Institute and was originally published here.
Current and unprecedented events bring to mind the impact of the 2007 global recession on the nonprofit sector. At that time, research conducted by The Nonprofit Institute at the University of San Diego found resilient nonprofits credited their success to one common factor: a prepared and forward-thinking board.
As we consider and deal with the many effects of Covid-19 on our work and personal lives, we who serve on nonprofit boards must not forget our governance responsibilities.
Given the rapidly changing health and economic conditions in which nonprofits are currently operating, it is likely board members will be called upon to quickly make choices with important and lasting organizational effects. When the urgency of a situation calls for swift action, proactive leadership is essential.
Immediate To-Dos for Nonprofit Boards
Some things the board can do right now include:
- Engage in scenario planning. Determine short term impacts of things such as cancelled events, shifting donor priorities, and changes in demand for your services. Re-forecast your current budget based on any new assumptions.
- Consider the possibility of funding additional sick time for staff, including additional cash impact caused by reimbursement for any newly passed legislation for payroll tax cuts and sick leave reimbursement
- At any given time, most nonprofits have fewer than 2 months cash reserve on hand. Assess current reserves given stock market fluctuations and talk to your bank about loans. Consider drawing on any short-term lines of credit to increase balance sheet liquidity.
- Talk to landlords and other vendors about stretching payment terms should you predict or experience any cash flow interruptions.
- Review employment policies and risk management protocols to protect your employees and clients. Ensure that your nonprofit is positioned to follow all CDC guidelines.
5 Action Items to Guide Decision Making in the Nonprofit Sector
The following 5 action items provide guidance for nonprofit leaders and board members to navigate their organizations through these times of uncertainty.
- Reaffirm your Duty of Care for the organization by communicating a need for thoughtful, measured, and informed responses. Essential to the duty of care is sound decision making. Boards or committees may need to have special meetings or meet more often as conditions evolve. Now is a good time to establish virtual channels for regular communication, most likely using tools such as Zoom or teleconference. Discuss communication strategies with the staff to ensure the board receives all the information (especially financial and program data) needed to make decisions.
- Identify the primary risks facing the organization due to social distancing, stock market impact on reserves, and impact on program participants and staff from missed work or reduced funding.
- Communicate transparently and honestly about the expected impacts on your stakeholders and your organization. Speak honestly with your employees about their needs during this time. Employees with underlying health issues and those over 60 years of age may need special accommodations. At the same time, they may feel pressured by the need to earn a living or support the organization in its work. Create a culture of support and emphasize the need for open communication about employee needs. Plan for potential disruption should childcare become an issue for your employees and those that you serve. Make sure that the appropriate representatives speak openly and in a timely manner with major donors and contractors about your ability to meet your obligations given the demands of the current operating environment. If cash flow becomes a problem, be honest with funders about your needs.
- Coordinate with the larger community including other nonprofits, funders, vendors, staff, and local government to understand how to support each other through this period of turmoil. Your local county (e.g. The County of San Diego) and the CDC web sites provide detailed and up to date guidance for businesses, employers, and community sector support organizations. If you find you have an excess of capacity or a resource you can share with a different organization (e.g. space, volunteers, employees, technology, expertise) consider making it available to others.
- Keep your long-term mission at the forefront of decision making.
COVID-19 Resources for Nonprofit Management
The Nonprofit Institute at the University of San Diego is committed to providing education, training and research to build leaders and strengthen organizations that help meet critical community needs.
In the wake of recent events, we've collected resources and information to help nonprofit organizations in the San Diego region react to the crisis. Explore our COVID-19 resources here.
Want to learn how to manage and lead a successful nonprofit organization? Check out our comprehensive guide: How to Grow Your Nonprofit Career—A Guide to USD’s Master’s in Nonprofit Leadership and Management.
