Let’s be really honest – year-end giving wasn’t exactly what we hoped for. In a recent study conducted by the Barna Group, 57% of pastors surveyed said the economy had negatively impacted their church compared to last year. The good news is that only 8% of church leaders said the economic impact was “very negative,” and 9% actually described last year as financially positive. Even if your not one of the 57%, you’re probably not as comfortable going into 2010 as you’d like to be.

So what can churches do to weather this environment? Here’s a few suggestions: Read the rest of this entry »

According to a survey conducted by Human Service Council (HSC) and Baruch College: School of Public Affairs in New York City, human services organizations in the New York City metropolitan area are being squeezed from both sides of service and funding. Human services organizations are seeing increases in demand for services and decreases in government funding, donations and endowments which all relate to the present state of the economy. For 84% of the organizations responding to the survey, public funding accounts for more than 40% of their operating budgets.

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. 

According to the February 3, 2009 edition of the WSJ.com, UPS is reacting to the down-turn economy. With revenue and volume decreasing UPS has reported fourth-quarter profit, but the company said it is “freezing management salaries and suspending its 401(k) matching contributions to cut costs.” The company has “also consolidated its operating districts, reduced air segments and eliminated some package handling operations“.

UPS and FedEx are considered a barometer for the state of the U.S. economy. The two companies combined move an average of 22 million packages a day. UPS has had to respond to the market as more customers are shipping in bulk shipments via railways. According to Kurt Kuehn, UPS’s financial chief, 2008 will undoubtedly be one of the most difficult in our history. “Since economists do not expect any meaningful recovery until2 010, earnings in 2009 will suffer. Lower volume levels will put further pressure on margins.”

So if UPS and FedEx are indicators of our general economic conditions, how is your T-E organization addressing the pressure on profitability? What operating costs can be trimmed, without significantly affecting program services? Is fundraising events important? Is marketing?

2009 will be a difficult year for many companies, private and public, for-profit and non-profit. Be aggressive in understanding your organization’s operating needs/margins, budgets and donor/grantor requirements. Communicate to your employees, vendors, bankers and significant donors. Don’t hide from this recession. Be stewards and provide public benefit in accordance with your exempt purpose.

On February 19th, as the Dow drops to a new low more than 6 years, how are tax-exempt managers evaluating the economy? As our public markets decline, how will this impact charitable donations? How will public programs be impacted?

Tarrant County United Way Agencies have been eager to understand how the global economy will impact the local economy. As local employers are forced to reduce the workforce, household incomes (funds available for public charity) will be affected. For how long? Where is the crystal ball? No one can accurately estimate the length of this recession. According to Forbes.com, February 20th article, the public investor is not positively responding to the recent stimulus and economic plans issued this week.

How will your organization respond to this type of public speculation? Can you modify your operations? Or will you bury your head in the sand? Respond with integrity and leadership. Your donors will be glad.

How has your organization responded to this recession? Comments are always welcome.

On Wednesday, January 7th, RCO sponsored the Executive Exchange at the Funding Information Center. At the beginning of the presentation Colleen Colton, Executive Director of Guardianship Services in Fort Worth, stood up and told a story she had heard during her childhood. We believe it is a very important concept to remember for these economic times. She graciously gave us permission to share it on our blog. The author is unknown. If you know who wrote this please let us know so we can give proper credit. It is a story of a man who sold hot dogs during the Great Depression.

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 Barry Gaberman, Board Chair of BoardSource, getting out of bed, turning on the television, reading the newspaper, going to the local coffee shop…all forms of communication tell us that our economy is in turmoil. Tax-exempt organizations look to their senior leadership to provide vision during recessionary times.

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.