So what can churches do to weather this environment? Here’s a few suggestions:

1. Don’t abandon your mission, and certainly don’t abandon your message. Despite this economy, I believe (and have seen) that people still want to give generously to causes they are passionate about. The problem caused by the economy is that more nonprofit organizations are providing more services to more people in need with less available funding. That’s why it’s so important to trumpet a compelling vision to your contributors. There are simply more options for donors to consider, and with limited resources, they give to causes they are the most passionate about.
2. Communicate, communicate, communicate. Churches (and lots of other organizations) make the mistake of not wanting to communicate negative financial trends and results. But if you don’t communicate, how will your contributors know there’s a need? Many churches also make the mistake of talking about money only when the numbers are down. Generosity is ultimately a spiritual issue not a financial one, and that message is lost if you only talk about money in a bad economy.
3. Rethink budgets. Churches are generally very slow to make difficult decisions about (i.e. cutting) budgets, minstries, and staff. The line between faith and stewardship is often very faint, but in a giving environment like we’re experiencing now, churches must consider the efficiency of their ministries. When giving is up year after year after year, churches often add a little more “flair” to ministries than is really needed and let certain ministries linger on a little longer than they should. Spend some time thinking strategically about your ministries in light of your mission and your investment in those ministries, and you might be surprised what you find.

The economy we’ve been dealt presents its share of challenges for churches and ministries, but there are opportunities to impact the quality and direction of your ministries. And who knows – you might even find youself in the 9% next year.

If we can be of any help or answer any questions as you wrestle through these issues, please don’t hesitate to call me.

The above is a summary of an article titled “Nearly 30% of Nonprofit Leaders Took a Pay Cut This Year; Pay in 2008 Grew Quickly” from The Chronicle of Philanthropy authored by Noelle Barton and Ben Gose, which can be found at the following website: http://philanthropy.com/free/articles/v21/i22/22000107.htm.

According to the organizations that responded to the survey, 60% are having difficulty managing cash flow, 30% have no lines of credit, and 67% have no endowment. Of the organizations that responded that had endowments, 73% saw decreases in their endowment. 53% of these organizations were forced to cut staff in order to cut costs. Some of these organizations have had to cut programs and those that have not are considering this option to cut costs.

While these statistics were gathered from organizations in the New York City metropoliation area, the current economic crisis is putting a great deal of strain on human service organizations around the country that rely a great deal on public funding.

The information above was summarized from the article “Governments Cutting Back on Social Service Spending” from NPT Weekly, a publication of The NonProfit Times. For more information, see www.nptimes.com. 

THE MAN WHO SOLD HOT DOGS

There was a man who lived by the side of the road and sold hot dogs.
He was hard of hearing, so he had no radio.
He had trouble with his eyes, so he read no newspaper.
But he sold good hot dogs.
He put signs up on the highway telling how good they were.
He stood on the side of the road and cried “Buy a hot dog, Mister?”
And people bought.
He increased his meat and bun orders.
He bought a bigger stove to take care of his trade.

He finally got his son home from college to help him out.
But then something happened.
His son said, “Father, haven’t you been listening to the radio?”
“Haven’t you been reading the newspaper?”
There’s a big depression.”
“The European situation is terrible.
The domestic situation is worse.”
Whereupon the father thought, “Well, my son has been to college: he
reads the papers and listens to the radio, he ought to know.”
So his father cut down on his meat and bun orders, took down his
advertising signs, and no longer bothered to stand out on the highway
to sell his hot dogs.

And his hot dog sales fell almost overnight.
“You’re right, son.” the father said to the boy.
“We are certainly in the middle of a great depression.”

Now I am not advocating not listening to the radio and not reading the newspaper. I am not saying you shouldn’t prepare for and make decisions about your organization in light of the economy. What I do think this story is saying is if your hot dogs are still selling, why take down your signs, why stop spreading the word. There are still opportunities out there to sell hot dogs!

According to Gaberman, the following represent board recommendations, addressing the crisis:

1. Don’t panic – remain calm and collected.
2. Strategize – examine and re-examine the organization’s goals and objectives
3. Open your eyes – evaluate financial assets/resources
4. Be creative and plan an alternative (a contingency budget; potential merger or acquisition if needed)
5. Work closely, communicating frequently with CEO or ED
6. Ask for more (from management and from the community)
7. Go on a diet (reduce expenses – especially administrative discretionary expenses)
8. Meet the test; be constructive partners with management holding the organization accountable
9. Evaluate compensation and effects of negative publicity
10. Guard the organization’s mission. Don’t forget the why.

According to Goldman, “no one has a crystal ball. The economy may only dip, then recover quickly, or we may be headed into a prolonged recession. While we all hope for the former, boards that prepare for the worst – strategically, financially, and operationally – will be in the best position to fulfill their mission now and when recovery does occur.”

Can your organization whether this crisis? Post comments on other solutions or thoughts.

For further information, see BoardSource’s November/December 2008 Magazine, or www.boardsource.org.