Nonprofit Harvest

Are You Concerned About Cash?

Blue Avocado’s new issue includes the financial management article, Finance Fear Factor Ratios.  Unfortunately, a number of people can probably relate to this experience:

A CFO at a troubled organization told me, “The first and last thing I do in the morning and evening is look at our bank balance and see if we have enough cash to meet our next payroll. The budget looks fine, but cash flow is our biggest problem.”

How do you know whether or not you should worry?  Read the rest of the article for ratios and four key questions to help you recognize red flags.

You can also read Cash is Cash, Sometimes for information on what could impact your ability to access your organization’s cash.  And our handy Cash Flow Template is available to help you craft your own cash flow projections.

Calling All Minnesota Social Entrepreneurs

Don’t miss your opportunity to enter the Social Entrepreneurs Cup – a joint venture of Social Venture Partners Minnesota and the Minnesota Cup.  This competition “seeks out, supports, and celebrates Minnesota’s most innovative and effective social entrepreneurs and the nonprofit organizations they lead.”

The deadline is Friday, April 24th, so you have one more week to enter.  It’s an opportunity to win a $20,000 general operating grant and 40 hours of consulting from Social Ventures Partners.

In the News: This Week’s Harvest

• The Pohlad Family Foundation announced $20 million in grant support to businesses and nonprofits.  (Our loan fund is generously supported by the Pohlad Family Foundation.  Our complete list of funders is available here.)

• USA Today launched a new feature specifically for the nonprofit and philanthropic community.  Check out the Sharing section for news on our sector.

• The Foundation Center-Cleveland’s online librarian, Katie Artzner, live-blogged a recent conference session, Navigating Your Nonprofit Through Challenging Times.

• Updates from the Social Enterprise Summit (via the Chronicle of Philanthropy):
  • Nearly Half of Charities Operate Businesses
  • New Legal Status for Socially Oriented Business Gains Ground

• White House Appoints Head of Social Innovation Office

Alan at Not-For-Profit Accounting sees a silver lining in the recession – a greater focus on nonprofit operations:

I have read more articles about not-for-profit operations, administration and finance recently than I think I have in the last ten years. And they have been positive. They have spoken of the need for organizations to look at how their finances and operations are handled, to make sure they have the systems in place to be able to figure a) out exactly where they stand financially and b) what to do going forward as far as budgeting, cash flow and capacity.

While I’m not happy about the pain that will be felt by many organizations and the populations they serve I am pleased that these discussions are taking place and that we will end up with a stronger sector once this crisis passes.

Check out his post,  Money Managing in Challenging Times, for a collection of tools and resources to help your organization.

HR Resources

COBRA Updates

• Health Insurance: A Bit of Good COBRA News (Blue Avocado)
• COBRA Premium Reduction in the Recovery Act (MCN)

Ask Rita

A regular Blue Avocado feature is Ask Rita in HR:

Rita in HR is actually two HR attorneys in one: Ellen Aldridge and Pamela Fyfe, both of the Nonprofits Insurance Alliance Group. They advise nonprofits on wrongful termination, wage & hour, discrimination, harassment, and other employment issues.

Recent topics include: 

• Downsizing from Employees to Independent Contractors?
• Nonprofit Layoffs and Furloughs: Do Them Right
• A Family and Medical Leave Act Checklist

Innovation

This week has been a mix of optimism and pessimism. When I saw a blog post titled Innovation in a Recession, I had to read more. It directed me to this post, which summarizes the opportunities Tim Draper, a venture capitalist, sees in the current economic climate.  Although I don’t agree with all of his ideas, I appreciate his willingness to reframe this moment:

Don’t panic and don’t cling to the past as it will be a new game. We need to all stick together to solve our current problems. We face not only a crisis but many opportunities for new innovation.

I think that this framework segues nicely with Blue Avocado’s suggestion to declare an emergency:

An emergency doesn’t mean people should panic . . . an emergency means considering the bold and wacky ideas that are either brand new or used to be off the table.

Transformation

For some thoughtful analysis on what the future could hold for the nonprofit community, I suggest reading Paul Light’s recent article in Nonprofit Quarterly, Four Futures.  The entire piece is worth reading, but for the moment I want to focus on the forth possible future:

Transformation. This fourth scenario is hopeful but different, and it is likely only if nonprofits make it so. As has been noted in several of this issue’s articles, nonprofits could use the faltering economy and its impact on the sector as an opportunity to reinvent themselves. But this approach requires examining all possible options quickly and creatively. In state budgets, should certain services be saved over others? Are there ways to redesign organizations to achieve greater synergy between community players? Are there ways to involve communities in rethinking and reenergizing our work? A transformation-oriented approach requires deliberate and collective action by the sector’s stakeholders: communities, philanthropists, governments, intermediaries, constituents, nonprofit associations, and boards.

He goes on to list some strategies for moving towards this more hopeful future.

This Week’s Harvest

Considering the Inauguration

• America’s Greatest ‘Public Works’ by Clara Miller in Chronicle of Philanthropy

• Foundations Should Step Up as Obama Steps In by Mark Kramer and Amber Johnson for Chronicle of Philanthropy

On the Proposed Stimulus Package

• Economic-Stimulus Package to Help Nonprofit Groups Meet Social Needs from Chronicle of Philanthropy

• State fiscal aid key part of federal economic recovery package from Minnesota Budget Bites

• Economic Recovery Bill Would Add Little to Long-Run Fiscal Problem from CBPP

On the State Budget

• Minnesota Budget Bites

• MPR’s coverage of Minnesota’s budget shortfall

• Pawlenty’s deficit plan: Freeze, cut from the Star Tribune

Additional Articles and Resources

• When Good Data Goes Bad from Minnesota Budget Bites

• When the Ax-Man Cometh: What to cut out of your budget from Katya’s Marketing Blog

• A giving recession? from The Economist

• Great Depression Giving- Data sources part two in Philanthropy 2173

Unhappy New Year?

Unfortunately, the start of this year doesn’t feel bright and shiny.  We’re worrying about survival and how we can maximize our impact with limited resources. How can we respond to the challenges of 2009?

This is not the first challenging time the nonprofit community has experienced.  However, even if this economic crisis is not different, it feels different.

The folks at Blue Avocado have hit the nail on the head with some outside the box thinking, And Now for Something Different About Nonprofits and the Economy.    I suggest you read the full post, but here are my two favorite suggestion (the bold italics are mine):

1. Declare an emergency. When people have permission to think and act out of the normal grooves, they can be bolder, more creative, energized, or at least more ready to accept changes. So say it out loud: “We are in an emergency period (or we are going into an emergency period). Our funding looks okay through the next four months, but there’s a good shot we’ll get some bad news starting then. We need to start making changes and coming up with some contingency plans that go beyond what we’ve done before.” An emergency doesn’t mean people should panic . . . an emergency means considering the bold and wacky ideas that are either brand new or used to be off the table.

3. Do less with less. Of course there is more need, more demand, and we probably have less money. And we love the gritty heartfelt nature of the cry, “We need to do more with less!” Pause. But it’s not only unsustainable, it probably means you will be able to do even less in the future. If a program’s funding has been cut by 30%, you may need to do 30% less. The best decision may be to be open fewer days a week, hold fewer performances, or stop taking children over 5. On the other hand, working harder might be necessary, at least for awhile, but only if it’s to get to a different business model.

What I like about both of these suggestions is their honesty. We have to be honest with ourselves about what we can accomplish. The same old tactics (not to mention expectations) are not realistic.  2009 will be a time of change, because it must be.

Nonprofit and Foundation Resolutions

Speaking of change, what are your New Year’s Resolutions?  Here’s my response:

Our #resolution? To help nonprofits manage & adapt to changing circumstances – we’re using all our tools, incl social media #npecon #npfin 

To get you thinking, here are some resolutions from others in the nonprofit community:

• 2009 Resolutions for Foundations from New Voices in Philanthropy

• Ten Resolutions for the New Year from Leading By Design

• Cheers to the New Year… and its Resolutions from the Case Foundation

For more resolutions, check out Philanthropy Potluck.

2009: A Year of Action?

Hopefully this will spark some creative thinking at your organization.  However, thinking outside the box is not enough. We must also take action to implement necessary changes.

There is an interesting discussion on facebook about nonprofits ability to act quickly and decisively. What do you think?

State Budget Update

• Pawlenty plans to cut funds for local governments

• Minnesota Budget Bites has the rundown on the unallotments: Ready, set,cut!!

• More from Budget Bites, House asking for your ideas on how to close the budget deficit

Here’s what the Minnesota Budget Project will be saying this session: State policymakers must take a balanced approach to the state’s budget deficit and avoid policy choices, like excessive spending cuts, that make the economic downturn more painful. The deficit is simply too large to take raising revenues off the table.

• Update: Pawlenty announces short-term budget cuts

• MinnPost asks Deficit spending: Why shouldn’t Minnesota do as the feds do?

But some are asking, what good is a balanced budget if it means widespread slashing and burning to eliminate jobs and services, especially in tough economic times?

• CBPP’s article on the long-term impact: Restoring Fiscal Sustainability Will Require Major Changes to Programs, Revenues, and the Nation’s Health Care System

While the long-term problem should not deter policymakers from dealing with the short-term crisis, policymakers will need to demonstrate to the public and the lenders who finance our short- and longer-term borrowing needs that they are prepared to move the budget toward a sustainable long-run path when the economy improves.

We encourage you to share your ideas with the Minnesota House.  You can chime in about the federal budget and spending priorities on change.org and change.gov.

MCN’s Forum on the Economy

On Tuesday, MCN hosted a forum on the Nonprofit Fundraising and Economic Outlook in 2009.

It included updates from the 2008 MCN Salary and Benefit Survey, the 2008 Minnesota Nonprofit Economy Report, a new 4th Quarter survey of nonprofit fundraising, and the state’s November Economic Forecast.

More on the Forum

• Economic briefing for nonprofits offers some optimism, plus reality checks and strategies, for 2009 from Scott Russell at MinnPost

• Notes from MCN’s Economic Briefing from Philanthropy Potluck

•  Nonprofit Survival: A Special Broadcast on MPR’s Midmorning with Jon Pratt from MCN, Jim Farstad of Intermedia Arts and Melissa Brown, director of research at the Center on Philanthropy at Indiana University.

Read the Reports

• Nonprofit Current Conditions Report

• Nonprofit Economy Report

• The Economy and Charitable Giving: Special Briefing November 2008

Other Resources

• Blue Avocado brings you Twelve Blue Avocado Days of Christmas, our favorites:
  • Seven pairs of bad shoes
  • Two unbalanced budgets

• 20 Emergency Funding Sources for Nonprofits from Fieldstone Alliance

• Kristin Giantris of NFF offers advice in the New York Nonprofit Press Dec. 2008 issue.

• Join the Discussion: Service Response

Paul Schmitz, a member of the Transition’s Innovation and Civil Society Team, kicked off the Change.gov discussion on service by asking to find out more about the social causes and volunteer efforts making a difference in your communities.