Essential Considerations for Nonprofits in a Post-Pandemic World
As seen in Crain's New York Business
After more than a year into the pandemic, nonprofits continue to experience both financial and programmatic challenges in this new world.
Office and site closures, lost revenue, canceled fundraising events and changes in the need for certain services are just a few of the impacts on nonprofits. While these conditions continue to pose financial challenges to all nonprofits, certain subsectors saw a renewed increase in the demand for their assistance, especially in health care and social services. As a result, since the pandemic, nonprofits have needed to modify their operations and seek new and creative ideas to position themselves to survive and sustain their mission. Many organizations obtained economic assistance from federal funding, reduced their workforce, created alternative revenue streams, moved to virtual platforms for events, implemented strict cost-containment measures, and used other strategies to sustain programs and ensure the viability of their organizations.
Nonprofits that were able to adapt to their changing environment and swiftly enact operational adjustments typically positioned themselves better than those that did not. As we enter the final three months of this year, a majority of boards and management executives remain cautiously optimistic about their organization’s future, but they also recognize that their work is not yet done. They need to develop and evaluate longer-term strategies and put them into action, irrespective of how successfully their organization maneuvered through obstacles earlier in the pandemic.
We offer these considerations to assist your organization in its postpandemic strategic planning:
Board engagement and leadership
The pandemic has re-emphasized the importance of maintaining a close relationship between governing boards and executive management. Since the pandemic, boards and management have sought ways to stabilize their organizations while continuing to deliver on their programmatic missions. As the pandemic appears to decline and nonprofits re-emerge, boards and management should consider whether the shifts or operational tweaks made earlier in the pandemic should be kept for a longer term or even modified again to meet the ever-changing landscape. Board members and management will undoubtedly have a host of significant questions and matters to deliberate regarding the future of their organizations. As such, ensuring that they are properly equipped with the appropriate mix of resources, digital tools, education, and overall talent to guide them along the process will be necessary. Boards will need to continue to provide careful oversight in fulfilling their fiduciary duties by engaging in meaningful and timely discussions with management and executives regarding the organization’s strategy, vision, programmatic mission, and any changes that may be required going forward.
A robust and flexible strategic plan is critical in enabling the advancement of a nonprofit’s priorities. Strategic plans should involve the ideas and thoughts of both management and board to gain mutual agreement on measurable goals, approved priorities and a commitment to continuously review the strategies. Planning involves carefully considering the various internal and external factors that organizations must contend with on a daily basis and how to navigate them successfully. Some considerations for approved strategic plans may include an assessment of the underlying assumptions, the budgets, the impact of societal changes (such as pandemics or natural disasters) and other matters that affect the overall landscape of the organization’s mission. Revisiting the plan periodically, making adjustments and adapting the plan is generally a best practice. Strategic planning yields more organizational resilience because it allows management and governance the flexibility to pursue large-scale goals and impacts while still being able to adjust for challenges and opportunities.
One of the pandemic’s most significant impacts on nonprofits was the effect on their cash flow. The steady inflow of cash suddenly stopped as physical offices were closed and entities were unable to process even the most basic transactions. As a result, many nonprofits started preparing cash-flow projections and modeling. The ability to generate an accurate projection was necessary for governance members and management to determine when cash shortages may occur and to plan for an appropriate response. The primary objective of cash-flow forecasting is to assist organizations in managing liquidity and to provide a vision as to whether the organization has the necessary cash to meet its obligations and avoid funding issues. In general, cash forecasting should be frequently evaluated, and models should be adjusted for new factors as they are encountered, even in a post-pandemic world. Although the economy is moving to a new normal, major uncertainties remain with Covid-19. Entities should continue to monitor and manage cash flows.
The roles that digitalization and information technology play within nonprofits was steadily increasing before the pandemic. Many organizations often discussed the benefits of replacing antiquated systems with newer technology to become modern and stay competitive. The rapid shift in response to the pandemic lockdowns only reinforced and, in some cases, accelerated the need for further digital transformation at organizations.
Even before the pandemic, nonprofits saw strong growth in online donations via various social media platforms and channels. These capabilities provided a more convenient channel to increase the rate of giving and a source to reach different donors and geographies.
Technology provided another mechanism to showcase the nonprofit’s programmatic outcomes, successes and overall mission. For nonprofits that rely mainly on traditional revenues from in-person events, conferences or fundraising events, incorporating future virtual offerings and fundraising should be considered as an additional revenue stream.
Covid-19 caused a significant shift in the way nonprofits conduct their operations with a workforce that had to adapt to working remotely and operating in a digitalized world. One of the latest issues facing organizations is the Great Resignation in which millions of employees have quit their jobs after reassessing their work-life balance since the pandemic. As nonprofits begin to bring their workforce back to the office, the need to embrace a new operating model will require organizations to assess technology tools aimed at supporting their staff. Technological investments in remote work can provide a means to retaining current talent by improving efficiencies through upskilling or reskilling employees in their daily tasks; such investments also function as a mechanism to attract top talent applicants from other geographical regions.
Every nonprofit’s information technology transformation will be different, depending on its digital sophistication, capacity and ability to invest.
Technology will continue to change the way nonprofits operate, and those that are more proactive in embracing new tools can better position themselves to be less reactionary to future challenges.
Enterprise risk management
The pandemic made the need for enterprise risk management planning abundantly clear. When crises occur, having an appropriate ERM plan of action in place can assist in stabilizing and continuing your operations into the future. An ERM plan is a process wherein a nonprofit will outline its operations, goals and financial health before performing systematic planning for worst-case scenarios to avoid unwelcome surprises.
An ERM plan should be a proactive, multidimensional process of identifying, assessing, documenting and preparing for potential negative outcomes. The goal of such an assessment should be to reduce business and reputational impacts and aid the organization in meeting its goals and mission. In addition, a well-designed ERM plan should include assessments of the organization’s people, operations, technology, asset safeguarding, and internal and external communications.
Reimagining your nonprofit in a postpandemic era should demonstrate the critical role your nonprofit plays in today’s world and how your services benefit society. The ability to navigate this ever-changing landscape will be imperative to ensure the long-term sustainability and financial health of your organization so you can focus on what counts: your mission.
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