Insights | Blog
The Great Recession storm looms overhead for many Not For Profits
Many not for profit organizations continue to face great uncertainty as dark clouds formed during the great recession continue to loom overhead. It is hard to believe that Not For Profits continue to weather this storm post recession when for-profit sector performance, personal income levels and unemployment continue to improve, while, financial markets hit new records (DJIA broke 17,000 in July of 2014). Not For Profits continue to be plagued by the impact of government funding challenges and a scarcity of overall resources, making the outlook bleak for many groups, which serve vital roles in our communities.
Indeed, financial resources are becoming scarcer for Not For Profits due to financial instability at state and local levels. Agency budgetary cutbacks have impacted funding for many Not For Profits, which provide services to these same state and local entities. And, these agencies continue to try making up for budgetary shortfalls by increasing taxes and fees in their communities; in turn pulling discretionary income of potentials donors out of coffers that had traditionally been earmarked for Not For Profit donations.
Other resources, such as human capital, are also becoming scarce, with many organizations experiencing holes in leadership to run the business side while programming continues to fulfill the mission. Baby boomers are retiring at an exponential rate; thus, leaving key positions within the organization vacant, including board members. Such vital roles are not easy to fill due to the uncompetitive nature of Not For Profit compensation packages and the rare dedication, skills and attributes needed by such individuals for fundraising and visionary leadership.
Additionally, there is increased scrutiny over Not For Profits by government regulators, donors, and strategic partners, like the organization’s lender(s), to make sure the organization is compliant with all applicable rules and regulations; resources are invested appropriately to fulfill the mission; and that increasingly rare assets are protected.
Now, more than ever, board members and leadership of Not For Profit organizations need to assess the health of their respective organizations. Do they possess the resources necessary to continue to fulfill their mission and attract and retain talent? Risk mitigation strategies and regulatory compliance issues should also be assessed as should relationships with banking partners. The demand for Not For Profits services within each of our communities is infinite, while, resources are not. Having a strategic plan in place for sustained longevity can be the equalizing factor.