Jamie Lontz is an audit director in Citrin Cooperman’s Philadelphia office with over 14 years of experience. Her areas of expertise are in the not-for-profit and employee benefit plan industries. Jamie provides a broad range of assurance services, including financial statement and compliance audits of not-for-profit organizations and public sector entities, as well as audits of employee benefit plans, real estate entities and middle market companies. Here, she answers questions on the current climate in the not-for-profit industry.
Not-for-profits face unique challenges after the turmoil of 2020. What sustainable measures can be taken to thrive in 2021?
Not-for-profits have experienced a range of both negative and positive impacts from the pandemic, and organizations were forced to assess their programs and services and prioritize limited resources to those that made the most impact to the public. Traditional fundraising campaign events that typically provided additional revenue became impeded and organizations were required to pivot, not only in carrying out mission activities, but finding means to generate revenue in the down economy. Innovation and usage of technology led some to quickly switch to virtual events, while others continued to seek support from board members and close donor relations built throughout the years. NFPs should reflect on how the pandemic has been managed so far and focus on future strategic plans and frameworks to recalibrate themselves for the “new” normal.
How have the legislative changes of 2020 affected the NFP industry, and what steps can be taken to maintain successful operations?
The Coronavirus Aid, Relief and Economic Security Act (CARES Act) provided significant assistance to not-for-profit organizations, which allowed them to continue operations and maintain programs during the pandemic. The Paycheck Protection Program, Economic Injury Disaster Loan program, and one-time charitable donation deduction provided additional options for NFPs to manage cash and liquidity. These legislative changes and expanded relief have provided cash infusion to allow not-for-profit organizations to maintain their course. As often is the case in a recession or downturn in economies, organizations were required to assess their cash flow models and business continuity plans. The ability to not only project cash flows from all sources, and control expenses on a day to day or month to month basis, became a necessity.
What can NFP organizations do to protect themselves in the current unsteady economic climate?
NFPs should evaluate appropriate action steps to limit future exposure and maintain sustainability. As such, a business continuity plan should be developed or updated based on what has been learned from the pandemic. NFPs should reassess their short- and long-term strategies and seek ways to leverage the initiatives enacted during this pandemic to the extent possible. Further, understanding cash flow is always a top priority; having reliable and timely information to make decisions based on cash flow projection is vital to an entity’s success. Budgets should be revisited to determine if underlying assumptions are still correct or reasonable. Finally, establishing an enterprise risk management program can greatly assist in assessing vulnerability and risks within an organization’s business and operations and should be developed and monitored.
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