Six months into COVID-19, businesses and nonprofits are still figuring out how to navigate the financial impact the pandemic has had on their organizations. This isn’t just limited to for-profit businesses — every type of organization has had to pivot in recent months.
With the economic downturn and looming recession, the financial health of nonprofit organizations is a serious concern. Eighty-three percent of nonprofit organizations saw revenue decline across the board, whether that was from events, individual giving, or grants. And without a steady stream of income, nonprofits are struggling to fulfill their missions and retain employees.
In other words, nonprofits need a full-fledged contingency plan when disaster strikes.
Contingency Plans for Nonprofit Organizations
No matter how much you plan, you’re dealing with a situation that changes daily (if not by the minute). Guidelines for events vary from city to city, and what might work one day isn’t allowed the next.
One example is Love INC’s Over The Edge event in Columbia, Missouri, which features dozens of individuals rappelling down the side of a hotel in the downtown area to raise money and awareness for poverty in Columbia. The event is set to take place again this fall, but with COVID-19 still very present in the area, a contingency plan is a must-have. Without this event — which previously raised over $60,000 on just one Saturday — Love INC will have to find alternative ways to make up the difference in funding.
Risk Management for Nonprofits
COVID-19 presents just one risk to nonprofit organizations, but the reality is that you have to think about giving your organization a safety net that covers a variety of situations.
Usually, these are divided into internal and external risks. Internal risks could include computer server crashes and accidental loss of data or perhaps confidential information being leaked outside of the organization. External risks are things like the weather, cyberattacks, partners not being able to supply the materials for events, and, of course, a global pandemic. Investing some time in contingency strategies for your organization might just save your events — and your nonprofit — from disaster.
Developing Your Nonprofit Risk Management Plan
When creating a contingency plan for a nonprofit organization, it can be tough to figure out where to begin. You have an organization and a mission — now you just have to make a plan to protect it.
Business principles are universal, though. As a profiting organization, you want to play to everyone’s strengths. The same goes for your nonprofit’s risk management plan. It’s all about using the resources at your disposal and thinking outside the box to craft a risk management strategy that helps mitigate disruption when disasters happen.
Contingency strategies within an organization will change based on the nature of the disruption, so you should have a few different plans in place:
- An emergency plan for situations where you need to ensure the safety of your volunteers and employees (e.g., a storm or a fire)
- A mobilization and engagement plan that can help you mobilize volunteers to assist with recovery efforts both with your nonprofit and with other relief groups in your area
- A business continuity plan that helps you manage the business processes that keep your nonprofit organization afloat and get back on track quickly when disruptions happen
Within each plan, it’s important to know the steps that you need to take to minimize disruption. These actions should fall into one of the following categories:
- Multi-scenario actions that can be used in almost any scenario to help your organization support itself financially and continue to make a positive impact (e.g., reducing discretionary spending or shifting programs to a virtual format)
- Small actions that can be done quickly and reversed if necessary (e.g., reducing executives’ salaries by 15%)
- Large actions that are more permanent and are harder to reverse (e.g., taking money from nonprofit reserves to offset the reduced contributions for the year)
While the virus is the sole focus at the moment, it’s not the last disaster that your nonprofit will face. Planning for an inevitable disruption — and knowing how to handle it — will help your organization stay up and running, or at least get back on track faster when things take a turn for the worse. You aren’t able to avoid risk or predict this. But if you plan for it, you can protect your organization and its mission, no matter the circumstances.