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Right now there are many things outside of our control. Something that is
within your control, and often distinguishes strong organizations, is the
ability to take decisive action and communicate those plans with key
stakeholders.
Key stakeholders include donors, funders, your constituents, but also your
banker. If you consider your banker a partner and ally for your organization, it
is easier to have a productive conversation about your organization's finances.
This is always in your best interests, but is especially important in
economically uncertain times. As Dave Swanson of US Bank put it, "I would
recommend that any client, nonprofit or for profit, be proactive in building a
relationship and communicating with their banker."
Communicating With Your Banker
We spoke to a number of bankers who work with nonprofits, and they all echoed
the same sentiment - bankers want to be a resource and partner for their
nonprofit clients. If you have a question or concern, they encourage you to pick
up the phone. And they all suggested nonprofits regularly share financial
reports with their banker. Having timely and comprehensive information will help
your banker make adjustments and better meet your needs.
If your organization is facing financial challenges, sharing that news will
be hard. It's human nature to try and delay difficult conversations. However,
the reality is that your banker will find out what's happening. And it's much
better if they hear it from you in a timely manner. In this economy, you are not
alone. Many organizations are struggling. Being direct, honest, and transparent
with your banker enhances their ability to help you.
A conversation about your financial situation also allows you to get feedback
from a trusted adviser who knows your organization. Your banker has valuable
experience and might notice something you did not see. As Ron Zweber from Bremer
Bank said, "It's about finding the appropriate solutions to move forward."
Sharing your organization's response to challenges can be an opportunity. Mr.
Swanson elaborated: "Be forthcoming about what happened and share your plan to
address the situation. Tell your banker what steps you have already taken and
what you are doing next. It shows that you're being smart and strategic in
responding to change. It also illustrates that you value your relationship with
your financial institution."
A valuable reminder from Carol Maloney of Western Bank is that "Even if you
have concerns, that doesn't mean nothing good is happening." Your banker,
especially a banker with whom you have a good relationship, knows that you are
doing good work. Ms. Maloney continued, saying: "Bankers are always happy to
meet with clients. Invite your banker to your organization, show them around and
tell your story - your successes and your concerns."
Suggestions for Proactive, Positive Communications with
your Banker:
- Understand and Comply with Your Loan
Agreement: Your loan agreement is a contract with your financial
institution. It's important to know the exact terms of this agreement. In
addition to laying out the interest and principal payment schedule, it often
includes covenants that specify what financial statements are required, as well
as other restrictions or conditions. If you are unable to comply, communicate
this with your banker and continue to fulfill the other terms. It's also
important to adequately maintain deposit accounts, with special attention to
avoiding overdrafts.
- Keep the Information Flowing: Bankers
appreciate it when their clients send them financial statements on a regular
basis, such as monthly or quarterly. If reports are delayed for some reason,
send a quick email that estimates when they will be available. It's a red flag
if the flow of information stops or becomes irregular; you are better off being
honest rather than withholding information. Bankers also welcome receiving other
relevant materials, such as financial updates from the board minutes. Put your
banker on the mailing or email list to send them information about other events,
fundraisers, and other organizational updates.
- Meet with Your Banker You want to be seen
as a smart and capable organization, responding to the economy strategically.
Identify ways that your organization can address your financial challenges. It's
ok if you do not have everything figured out. However, your meeting will be much
smoother if you can share a an outline of you plans. Update your banker about
your programs and activities as well the financial picture.
- Be Confident: Make sure you understand
your financial situation and are comfortable discussing your financial
statements. If it would be helpful, consider bringing the board treasurer or
other organizational leaders with you. Treating your banker as an ally and
stakeholder will enhance your working relationship and their commitment to your
organization.
How Nonprofits Assistance Fund Can Help
Nonprofits Assistance Fund can provide strategic guidance to help you work
with your banker. We can help you understand your current financial situation
and become more familiar with your financial statements. We can also help you
identify strategies to manage and adapt to the changing economy.
Contact
us to learn more about our Financial
Needs Assessment and other services.
Sustenance in Lean Times - a Resource Guide
Sustenance
in Lean Times is our resource guide to help nonprofits navigate the
recession. It includes a collection of materials from places such as The
Chronicle of Philanthropy, the
Foundation Center, and the Minnesota
Council on Foundations. It also includes helpful articles, blog posts, and
other resources from Nonprofits Assistance Fund and other groups in Minnesota
and across the country.
Upcoming Workshops
Calculating True Program Cost
March 10, 9:00am - 12:00pm
Do you know what your programs cost? This workshop provides an overview of
program budgeting and allocations.
- Learn to identify direct and indirect expenses
- Review different methods of allocating expenses to programs
Learn
more.
Register
today and begin implementing healthier financial practices at your
organization.
Financial Management Network
And don’t forget to participate in our monthly lunch series
for nonprofit leaders, the Financial
Management Network. Join us at noon on Wednesday, March 25, Managing
Restricted Grants, to share thoughts and ideas with your peers on this month’s
topic, Using Lines of Credit, Loans, and Mortgages. Just bring your lunch, your
business cards, and your ideas.
Notes
from previous discussions are available on our website. Whether or not you
are able to attend the network, you can benefit from the wisdom of your peers.
Learn
more about our workshops and other upcoming events.
Recession-Year Financial Leadership
Unfortunately, these times will test even the sturdiest organizations. To
help nonprofits navigate the challenging days ahead, MCN is hosting workshops specifically geared towards leading
in these troubled times.
Presented by Kate Barr and Jon Pratt, Recession-Year Financial Leadership will offer
strategies and tools to help you:
- Understand your organization’s current situation
- Develop and evaluate options
- Engage your supporters and constituents
- Promptly make decisions, communicate them and take action
For additional information and registration, please visit MCN's
website.
IRS 990 Workshops
The Tax Exempt and Government Entities Division of the IRS is
offering a one-day workshop in the Twin Cities geared specifically to
help small and mid-sized 501(c)(3) organizations prepare to file their 990s, as
well as other topics. There will be a special focus on the redesigned form and the filing requirements for the new e-Postcard.
These workshops are offered April 28, 29 and 30, 2009.
Pre-registration is required. For more information or to
register, please visit the event website.
The IRS also offers online training options at StayExempt.org.
Updates on the Economy
- Nonprofit Survival: Four Steps to Take Now
- MCF's 2009 Funding Outlook for Grantmakers and Nonprofits Program
Nonprofit Survival: Four Steps to Take Now
Kate Barr and Judy Alnes of MAP for Nonprofits wrote an article for MCF's
Winter Giving Forum, Nonprofit
Survival: Four Steps to Take Now.
- Focus
- Identify Your Most Important Work
- Seek and Speak Financial Truth
- Review Size, Scope and Structure
The entire article is available on MCF's website.
2009 Funding Outlook for Grantmakers and Nonprofits
Program
On February 13th, nearly 250 grantmakers and nonprofit staff attended MCF's
discussion of their 2009
Outlook Report. During the program, participants discussed issues facing the
sector and challenges impacting different fields of service - the arts,
education, healthcare, human services. They also shared ideas for moving
forward. Takeaways from the event are available on MCF's website.
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