In these particularly uncertain economic times, many nonprofits may be facing 2009 with more dread than optimism. Regardless of industry, size, or type of work, community based nonprofits are faced with a variety of crucial challenges in 2009:

• Maintaining their mission
• Offsetting unanticipated funding loss
• Keeping their doors open
  

To find some answers, we enlisted the help of our fellow co-workers at ParenteBeard LLC and you, our readers in the nonprofit community. The result:

Seven Essential Financial Questions to Ask Yourself Now!

1. How do we do the same, or more, with less? All organizations should be as prudent as possible during this economic downturn. What is some possible low-hanging fruit?
   
   • Personnel
   • Reduce or restructure benefits, such as vacation and sick leave, medical co-pays, or medical insurance premiums. Explore options to reduce costs to the organization by asking employees to pay a portion, or by raising deductibles.
   • Put your 401K match on hold.
   • Consider offering retirement incentives.
   • Explore staff who may be interested in early retirement, unpaid leave, job-sharing, or moving to a part-time or contract status. Redesign roles and responsibilities.
   • Suggest your employees take one to two weeks of unpaid leave.
   • Consider cutting back to a four-day work week.
   • Temporarily cut wages and defer payment of the balance to a later date. Consider salary or hiring freezes. Eliminate year-end bonuses.
   • Explore staff working from home one day a week using their own equipment, close the facility, and turn down the thermostat.
   • Layoffs are a difficult decision to make. However, personnel costs are a major expense and cuts may need to be considered.
   • Contracts/Vendors
     • Review your vendor contracts and software costs.
     • Explore alternative server options that may be less expensive.
     • Inquire about an early-payment discount.
     • Re-negotiate payment schedules with your vendors and offer smaller but regular payments.
     • Send your audit and insurance out for bid.
   • Invoicing
     • Invoice promptly. Contact slow payers. Ask for an advance or pre-payment of out-of-pocket expenses.
     • Call slow-payers. Work out a payment plan if necessary. Charge interest for late payments
     • Offer a discount to early-payers.
   • Incidental Expense Management
     • Tighten purchasing policies and spending. Little expenses add up quickly.
     • Limit or eliminate travel and conferences.
     • Choose webinars or teleconferencing for meetings.
     • Cut out snacks at meetings.
     • Replace paper newsletters and board reports and packets with electronic versions.
     • Ask board members to chip in for the cost of meeting refreshments.
   • Transportation
     • Examine your transportation costs and cut travel and parking expenses.
     • Is your service delivery efficient or can you consolidate routes?
   • Facility Management
     • Renegotiate your rent if possible.
     • If you own your building, sit down with your banker and see if your might renegotiate the mortgage terms.
     • Go green. Conservatively adjust thermostats, use timers, or turn off lights when not in the office. Monitor your cost savings and let everyone in the organization (and your funders) know how much you are saving.
     • Identify unused space for sub-lease.
     • Explore moving to less expensive space or cohabitating with another organization.
     • Have a “Project Saturday” where staff, board, and volunteers do minor maintenance, office moves, or clean-up. (Great idea from the Fieldstone Alliance.)
   • Shared Services
     • Are there opportunities for shared services with other organizations such as personnel administration, financial management, development, training, purchasing, and marketing? Is it possible to provide these services for a fee?
   • Internal Controls
     • Review your internal controls. Unfortunately when people’s financial situations become more complicated, the temptation of expensing personal items or “keeping the change” may mount. Beware of potential situations which could lend themselves to embezzlement or other fraud.

2. How do we work with what we’ve got? When considering your options, be strategic and involve your employees and stakeholders in decision-making and keep them informed whenever possible.
   • Funding. Is there a way to ‘repurpose’ those restricted funds? Meet with your funders and discuss potential opportunities. Your current funders may also award small discretionary grants through senior staff. Additionally, determine your eligibility for emergency grant funds.
   • Endowments. Is it time to dip into your endowment? Can any funds be released? What are the policies and procedures for spending your endowment?
   • Assets. Are there opportunities to sell some of your assets? Review useful and idle assets. Revaluate or redirect your investments.
   • Reserves. Is there an option to spend down your operating reserve to meet unbudgeted expenses or cash flow issues?
   • Debt management. Explore options such as short-term loans, a line of credit, nonprofit loan funds, and loans from foundation emergency loan pools. Can you borrow against future revenue commitments (i.e. government grants or individual pledges)?
   • Morale. Pay attention to employee morale, which may fall along with revenues, pledged funding, and bank balances. Consider setting aside “time-out” space in the office, giving employees the opportunity to reflect and be quiet. At the same time make sure you are getting the proper rest and nutrition.
   • Talent. Identify where talent exists and cultivate it. Are you fully utilizing your low (or zero) cost interns and volunteers? Find ways to harness out-of-work skilled volunteers. Look into regional partnerships that provide alternative forms of staff, primarily internship programs. Examine the marketplace talent pool. Is it time to upgrade internally? Such opportunities have the capacity to bring fresh and energetic ideas into your organization.
   • Board of Directors. Your board is there to help you raise and save money by appealing to their own contacts or by sponsoring a project or event. This is a time to increase the engagement of your board!
   
   
3. Are all of our programs really necessary and serving their intended purpose? What would happen if you stopped providing certain services? Which programs are crucial, could be restructured, closed down or expanded? Is anyone else doing it better? What is the cost/benefit of individual programs?