How Does Your Nonprofit Prioritize During a Crisis?

By Hope Goldstein  |  March 30, 2020

We continue to hear how these are unprecedented times that no one could have planned for. NPO leaders will agree that even though their organization-wide risk assessment included a pandemic event as a possible risk, such an event was thought of as something that would not or could not stop the world from moving – but it has. Leaders have had to halt everything and employ crisis management tactics at a time when many organizations were doing so much already with scarce resources.

As a leader, the question is what do you do first? The priority is about your employees’ safety and employing remote working strategies and your external and employee communication strategies, frequently communicating the evolving situation with your staff, board, funders, donors and vendors.

This is as good a time as any to get your social media house in order to ensure messages are consistent and reaching all. You should have someone continually monitoring your social media platforms and responding to anything readers post there. That way, you can get on top of inaccurate information and build credibility with your followers. For now, social media may be the best way to show the human face of your organization and shore up its reputation for being kind, sympathetic, polite, accurate and a source of unbiased information. Consider also the possibility of soliciting donations through social media at this time.

Facing a worldwide pandemic of indeterminate duration, many more stakeholders will need services provided by our nonprofit community, creating financial uncertainty for every organization. With cancellations of fundraising events, programs on temporary hold and market uncertainty, the resulting loss in revenue will have a major impact even for the most financially secure organizations.

After the initial SWAT team phase has passed, your attention needs to be focused on the financial aspects of providing service to your stakeholders. Our Nonprofit experts are suggesting several best practices NPO organizations should consider as they continue fulfilling their mission during our “new normal” working conditions, which include:

Setting Up a COVID-19 Committee

  • Create a COVID-19 Committee of your senior leadership to manage this disruption and communicate with stakeholders. Include key advisors in your task force discussions, including attorneys, accountants, insurance brokers, human resources consultants, investment managers and information technology specialists. Include your Board members in your discussions as well.

Determining Cash Flow Needs and Contingency Plans to Address Any Shortfalls

  • Update your cash flow projections for all your operations that will be impacted by current events. Consider preparing cash projections that include your organization’s mission-critical programs and focus resources accordingly.
  • Calculate liquidity needs for the next 30 days and three-month and six-month periods. Because of the new financial reporting guidance required to be implemented by all NPOs, this will be easy for most to do. By recognizing liquidity problems timely, you’ll be in a better position to work with your credit facilities to modify payment terms.
  • Consider calculating your organization’s burn rate since much of your revenue will be reduced for a period of time.
  • Identify how negative financial results will affect your ability to service debt and remain compliant with your covenants.
  • With the government mandate to stop the spread of COVID-19, organizations have canceled programs that may require you to refund payments previously received (e.g., room and board, registration fees). Many organizations have incurred costs for travel, meetings and programs that have been canceled. Identify these costs and communicate as soon as possible with the event sponsor to maximize the amount of refunds. For certain events, organizations may consider making the ticket sale price 100% contribution, limiting the need to make refunds. If organizations are reluctant to do this, then they should use the cancellation of an event as an opportunity to do a Call to Action. Just because the event was cancelled doesn’t mean it won’t be a hardship if they request refunds – be thoughtful in your words and re-communicate to your donors your mission needs.
  • Revisit your asset allocation strategy and consider whether it is appropriate under the circumstances. The decline in market value may cause donor-restricted funds to go “underwater.” Your Board may need to consider spending down the principal of certain endowments and/or using Board-designated funds to help manage liquidity needs.
  • Review your insurance policies to determine whether your business interruption coverage will cover any of your anticipated losses.

Cybersecurity Risks

Among all of the concerns facing businesses in the COVID-19 crisis, cyber threats loom larger than ever. Predators are looking to exploit overlooked security measures within businesses under intense pressure to operate during the pandemic. Right now, nonprofit organizations need to enhance and communicate their IT security policies, especially regarding security standards for the remote workforce. The same level of security controls that exist in an office setting need to be managed across a distributed team.

Software as a Service (SaaS) Cloud Considerations

  • In the wake of the COVID-19 crisis, organizations are evaluating their current business application environment to determine how effectively recovery strategies were executed, especially for in-house supported applications. Organizations are considering benefits such as the reduction of dedicated internal IT resources, both personnel and hardware, while easily promoting the ability to work from any location.

These are trying times for us all. Employees are working in makeshift home offices, coupled with their significant others, roommates and possibly children who are unable to go to school. Patience and kindness will go a long way during this crisis. Consider providing employees with Amazon gift cards or set up a registry on Amazon for employees to purchase equipment and office supplies to help them turn their home office into more of what they may be accustomed to in their work office.

For updates and guidance on COVID-19, including loans and other financial assistance for nonprofits, please visit our Pandemic Resource Center.

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About Hope Goldstein

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Hope Goldstein, CPA, is the Co-Partner-in-Charge of the Nonprofit, Government & Healthcare Group at Marks Paneth LLP. Ms. Goldstein brings to her role the skills she has developed during more than 27 years of providing accounting and auditing services to her clients in the nonprofit, higher education and public sector industries. She co-leads a team of more than 60 professionals who specialize in the nonprofit industry and focus on ensuring the accuracy and transparency of... READ MORE +

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