How to Stick Your Landing in a Free Fall
Nonprofits navigating the financial fallout of COVID-19
For many of the nonprofit leaders that my colleagues and I have been advising recently, the current COVID-19-related turmoil feels like the financial and emotional equivalent of a free fall. With programs ceasing, revenue streams slowing or disappearing, and organizations struggling to adapt to the new virtual workplace, the drop off has been swift and steep. The only real hope is to react rapidly and, as much as possible, choose wisely how and where to land.
Because most nonprofit leaders I know are amazingly resilient and creative, I imagine the landings they are engineering as equivalent to the artistry of talented gymnasts like Simone Biles and Nia Dennis. If you have ever watched one of their floor routines, you may have found yourself alternately holding your breath, wringing your hands, gasping with surprise, and shouting out with joy. With no experience in gymnastics myself, the flurry that is Biles’ signature triple-double in the floor routine appears as a flash of anxiety and confusion. Even though I may not comprehend her technical genius while she is in air, I can easily recognize her landing as a tremendous demonstration of strength.
How and where you land will determine the future of your nonprofit
As nonprofit leaders, the current chaos may seem like it has you caught in an uncontrollable downward spiral. As impossible as it seems, choosing your landing spot on the fly is incredibly important to your organization’s future. While you may not consider yourself as technically skilled as an Olympic gymnast, you have more say over how and where your organization lands than you may first imagine. Fortunately, you are not without support, tools, and resources. Here are some steps to help guide your landing and ensure that you can launch again successfully after the current circumstances have past.
Guiding your nonprofit to a strong landing
Step 1: Figure out exactly where you are in the present moment
It is tough to know which way to turn, which twist to make, or how much change you need to make to your current programs and financial situation unless you know precisely where you are at this moment. For nonprofits, that means taking a clear-eyed look at your current financial state and accessing how your programs are affected. Basic cash flow projections are crucial to gauge what resources you have at your immediate disposal. These two resources can help you assess your current fiscal reality.
Step 2: Identify your desired landing place by looking past it
A longer-term view is necessary to pick the best possible landing spot. Even though emergent needs can seem the most important, focusing your strategies on both the present and the future will make even your most pressing decisions more effective. A good modeling tool can be extremely valuable in visualizing your financial needs in both the short and long term.
The diagram below shows the likely trajectory of many nonprofits given the current circumstances. At the bottom of the DIP (the fall), your organization will begin a TURN, when you slowly begin to resume operations and your funding starts to flow again. Though it may seem difficult to imagine in our current circumstances, at some point your organization will reach a NEW COVID REALITY. Map your way to that new reality purposefully, bringing your mission, values, and strategies to bear on what you want your organization to be after this crisis is over.
Launching again after landing
Step 3: How to stop the fall
Using the immediate cash flow analysis suggested in Step 1 above, determine your cash needs for the near term. The gaps you identify in your analysis become your goals. Cutting operating expenses and delaying some accounts payable are simple steps to take. For many organizations, applying for stimulus and disaster relief funding is another option to meet immediate cash needs.
Step 4: Scaling your interventions to achieve your long-range goals
Keeping a view to the future allows you to strategize about the best interventions to get you there. In Step 2, you looked further out to see what resources your organization needs to get to its new, post-COVID reality. You will want to search your current revenue streams to determine which you can maintain, which will fade away, and if you can increase any of them by making special appeals or identifying new sources. If you lack capacity to generate additional revenue, consider investing in short-term, outsourced grant-writing support.
Step 5: Short-term sacrifices may be needed
While your first hope is to navigate the DIP and TURN of this crisis without cutting programs or staff, those difficult choices may be required eventually. If your analysis and long-range modeling show a gap that stimulus funding or emergency fundraising cannot cover, you may need to consider reducing personnel costs. Though we see this as a last resort, if you face these choices, be sure to consider a wide variety of ways to reduce salary expense. Some creative personnel strategies might allow you to preserve your staff and your organizational culture while still reducing expenses significantly.
- Personnel Strategies in the Face of Impossible Choices
- Human Resources Consulting and Outsourcing page
Becoming a strategy gymnast
Nothing about this pandemic and its effects on public health, the economy, and our social fabric is welcome. The scale and uncertainty of the crisis is likely challenging your leadership skills and strategies. Interruptions in fundraising and program activities are straining many organizations and the wonderful people who staff them. It really can feel like a free fall. To counter any pull towards despair, know that you are not alone and there are many resources for you to use to stop the fall, choose your landing, and turn your landing spot into the launching place for the next successful iteration of your organization. The strategy gymnastics you are displaying now are inspiring many of us in much the same way that an exquisitely executed triple-double does. Please stay in touch with your peers and reach out to any of us here at CLA. We are all in this together.
Curtis Klotz is a CPA serving as director of nonprofit innovation at CLA. His writing is inspired by his work in CLA’s nonprofit consulting and business operations practice and more than 30 years of industry experience. Before joining CLA, Curtis was vice president of finance and CFO at Propel Nonprofits, where he was a frequent online contributor to Nonprofit Quarterly and other blogs. He was named Minneapolis/St. Paul Business Journal’s Nonprofit CFO of the Year in 2017, and is past chairperson of the Montana Nonprofit Association. Curtis graduated summa cum laude from St. Olaf College with majors in women’s studies and religion.
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