What to Do When Your Nonprofit Budget Gets Blindsided

With quickly evolving community needs and the ever-present possibility of a climate event or economic downturn, nonprofits know how to be nimble. But sometimes supporting your community in their moment of crisis can upend a well-strategized budget.

When faced with a radical disruption to your organization’s budget due to an emergency or unforeseen disaster, how can the finance office lead the charge to rally and reset? Here are eight tips to help your nonprofit finance office navigate a major budget disruption.

Keep the focus on your core mission.

Resource constraints often lead to difficult financial decisions and funding reductions. Rather than making blanket budget cuts—or shifting funds to address a new and urgent need—make sure that your core programs are properly resourced. During times of crisis, it is important to take an informed, measured approach that supports the long-term success of your organization’s mission.

Prioritize cash flow in short-term planning.

As you assess potential budget scenarios for the coming months it will be important to put an emphasis on protecting cash flow. New scenarios should be driven by how they affect your current revenue and forecasted against commitments. As you are able, identify new ways to generate revenue and reduce expenses.

Assess your available levers with an emphasis on timing.

Times of crisis often come with a lot of uncertainty. Be realistic about knowns and unknowns as well as what is—and isn’t—in your organization’s control. And plan around shorter periods of time to ensure that your organization is able to respond with agility to unforeseen events as they arise.

Evaluate your current business model.

Consider the various impacts the current situation has on your business model, such as staffing, fundraising, and service delivery. Identify ways your organization can minimize disruption to operations. For example, think of strategies for engaging your base through new, low- or no-cost channels, or implement automated processes to speed up operations.

Communicate openly and often with stakeholders.

Reach out to steadfast supporters and communicate your needs. Treat your funders and stakeholders as partners—be transparent about the need to fund operations and infrastructure during challenging times. Be open about where you are and what kind of support is most critical to your organization.

Lean on your board of directors.

Keep your board members aware of the situation and its impact on your organization. Leverage your board’s expertise and experience from other domains or sectors. For example, a board member with a communications background can help with stakeholder transparency whereas a board member with legal expertise can assist with legal issues around program-delivery safety and, in the event of a weather event, how best to work with employees on returning to work.

Gain efficiencies through process improvement.

Assess your current operating procedures, identifying areas to improve processes and increase productivity not only in the near term, but also moving forward. Make this an initiative with documented objectives and quantifiable goals and expectations. To create lasting change, make communication a priority and leave room for continuous improvement post-crisis.

Plan for long-term mission success.

As you plan for sustainability post-crisis, think through your priorities. Did any of them shift because of this emergency? Looking at issues you ran into during the crisis, what can you do to plan for those in the future? Consider this an opportunity to re-evaluate your business model going forward and make any adjustments to best serve your community.

Cost Containment Is More Than Cutting Expenses

Looking for more guidance on how to take a measured, intentional approach to cost containment while still driving impact and serving your community? Check out our white paper, Cost Containment Guide for Nonprofit Teams: How the Nonprofit Finance Office Can Drive Impact While Facing Inflation, Wage Increases, and Recession Fears.