Tuesday, May 10, 2011

Reducing The Impact of Funding Cuts

While the jobs report that was released on Friday sparked optimism for the growth of the US economy, Federal and State governments are still struggling with budget crises.  Some of the budget cuts proposed on both the local and national level have targeted government grants to nonprofit organizations.  These cuts are going to be tough for nonprofits to deal with but, luckily, there are ways for them to survive.  The NonProfit Times recently posted an article with some tips on how to adapt to the funding cuts:

Consider establishing a separate finance committee that has a charter to review financial forecasts and possible variations within it. Other possibilities to consider: a conflict of interest policy will safeguard against the possibility that employees and their families might benefit from organizational decisions; a compensation committee will help to establish appropriate pay scales; and an audit committee can help increase organizational stewardship and accountability.

*Don't just budget; continually plan. One in five chief financial officers will tell you that by the time a new year begins, their budgets are already outdated; by June 30, an alarming two-thirds of CFOs admit that their budgets are obsolete. This is because they are simply budgeting, not really planning.

By using a continuous planning model, budgets and business plans continually reviewed throughout the course of the year help determine how you're faring at that point in your budget cycle and what adjustments need to be made. An effective plan answers such questions as: Where are we going?; How do we get there?; What resources are required?; What assumptions do we have about key internal and external factors impacting our business?; and, What happens if things don't turn out as assumed or planned?

*Embrace nontraditional, low-cost means of communication and staffing. Don't hesitate to use the Internet to cut your costs: non-traditional and free means of communications, such as JUMO, Twitter, and Facebook, can significantly increase public awareness and understanding of your nonprofit's cause.

While waiting for an economic turnaround, nonprofits will continue to deal with decreased federal and state funding and finding solutions to help them remain operational. For some, an increased reliance on volunteers and corporate partnerships have become a stop-gap to the human capital and fiscal crises they face. The nation's high unemployment rate -- which in December 2010 hovered at 9.4 percent -- has also been an indirect boon to some nonprofit groups, which have seen an increase in unemployed professionals volunteering their time, lending their professional prowess and keeping skills sharp while filling the needs of a local charity. Likewise, non-traditional and free means of communications, including such social media networks as Facebook and Twitter, are being used for increased public awareness and understanding of their cause.

To read the rest of the tips, visit NPTimes.com.

No comments: