Tips to Reduce Uncertainties and Provide More Stability in 2021

By Hope Goldstein  |  November 23, 2020

Tips to Reduce Uncertainties and Provide More Stability in 2021

During this time of COVID-19, nonprofits continue to work relentlessly to serve their stakeholders and clients while meeting their missions in circumstances that were previously unthinkable. The good news is the election is behind us, and there are some promising vaccines that will hopefully be entering the market soon. However, the stress of the uncertainties still exists, and some organizations may be finding it hard to plan in this ever-changing environment. 

How Can NPO Leaders Realistically Think About 2021?

Tip #1:  Nonprofits Need to Budget on a Cash Basis and an Accrual Basis

One tip that can help provide some stability is through budgeting, both on a cash basis and an accrual basis. You should budget for both this year.

In normal times, the creation of a sound budget, one that’s reflective of realistic revenues and expenses timed by month, is an accomplishment. Such budgets can be used to understand how your organization has performed and expects to perform over the course of the fiscal year.

Often, organizations use their accrual basis budget to (quickly) make estimates that can be used to guide crucial decisions about programming and operations. In an ordinary world, using accrual basis budgets in this manner makes complete sense and provides true benefits. But, as we all know, the world we live in today is not the norm. While an accrual basis budget will help your organization anticipate how a future month’s Statement of Activities may look, it may not help you understand whether you have the cash to pay your bills.

If you want to utilize your budget amid the current uncertainty, a cash basis budget (or cash flow projection) will help you truly understand your cash impacts in ways that an accrual basis budget just can’t project.

While there isn’t a right or wrong way to arrive at both an accrual basis budget and a cash basis budget, many organizations take the accrual basis budget and layer in adjustments for cash basis accounting. This year though, with cash flow being particularly important, you may find it easier to start with a cash basis budget and then back into your accrual basis budget.

Additionally, you should consider building your budget using a flexible structure, so you can change inputs and assumptions easily without having to rebuild the whole budget.

Tip #2: A Reevaluation of Programs Offered Can Help Calm the Uncertainty

A second factor in helping NPOs calm the uncertainties ahead is reevaluating programs, especially considering that budgets are tight and community needs are increasing.  Organizations need now more than ever to understand whether the services they offer are truly what communities and their clients need most right now.  Organizations can test their own assumptions by doing needs assessments to determine if what they are offering is really what will have the greatest benefit for their clients – whether it’s a school, a museum or a conservation organization. This is especially true for nonprofits that are currently experiencing significant shifts in their programming.

To know if your organization is headed in the right direction, you need data to provide insights into performance, effectiveness and impact. This is especially important when you are operating in a new or unexpected environment. A performing arts center, for example, may no longer be able to measure success by ticket sales, but it can still collect other data – such as online engagement with virtual performances or surveys of client satisfaction – to measure what’s working well and where further adjustments may be needed.

Tip #3: Accepting the 2020 Fundraising Trends as the Trends for 2021

One of the biggest impacts of the COVID-19 pandemic on the nonprofit industry was the cancellation of in-person fundraising events. In response, there has been an explosion in the number of events that made the pivot from in-person to virtual. These virtual events were a display of innovation and resiliency from organizations that were forced to evolve in a matter of days and raise much-needed funds in new ways.

The move to online giving and growing your online recurring giving program can ultimately drive recurring donors.  Having repeat support each month is a win-win situation whereby donors feel more connected with the impact of your organization and the organization is creating a more predictable revenue stream that enables more consistency during these uncertain times.

We’ve also witnessed an incredible move to a more virtual world in 2020, which underscores the need to double down on your efforts and meet supporters in the places where they spend the most time – online. Start by strengthening your social presence on established platforms like Facebook, Instagram, LinkedIn and Twitter, while initiating a presence on new platforms like TikTok. Livestreaming is also an area to explore in 2021 given the trends we’ve seen.

Tip #4: Never Stop Seeking Advice From Others

Seeking advice from subject matter experts is always a good idea no matter what the circumstances are.  Nonprofits benefit from having a wealth of good resources to help them learn how to be resilient. The S.D. Bechtel Foundation has published an invaluable guide for nonprofits to thrive in difficult times. The Center for Effective Philanthropy recently offered great tips on scenario planning for foundations that are also useful for grantees. The Stanford Social Innovation Review provides sound advice on organizational learning. Public Profit offers approaches for teams to reflect on data, and the Center for Evaluation Innovation explains how to build a culture of learning.

Tip #5: Remaining Nimble is Now the Norm

This past year has been one of the most challenging we’ve faced as a sector, but that doesn’t mean we can’t take away some good lessons from it. In many ways, the sector came together in the face of adversity on a scale never seen before.  As we reflect on the lessons learned, remember that the future is never set in stone. The future is what we make it and to that I say, “We got this!”

Click here to continue to read Nonprofit & Government Times, November 2020.

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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