Getting on the road to resilienceMarc Schultz
The immediate phase of the COVID-19 response effort is behind us, and by now you’ve likely heard the term “resilience” in reference to the next phase. But what does planning for resilience actually entail, and what are the conditions we should be planning for?
Among the challenges we must face: the probability of a 20 to 40 percent revenue decrease in the near term, uncertainty about how and when to reopen, and a recession that is expected to last at least another 24 months.
Through the Resiliency Planning Cohorts program, GCN consultants will lead small groups in a resiliency planning process, newly-developed for this critical moment.
Adapting and persevering in this environment means developing resiliency – the ability to absorb a shock and come out better on the other end. That requires concerted planning and organizaiton-wide effort akin to strategic planning, but with a different set of priorities and considerations.
For that reason, GCN's Nonprofit Consulting Group has developed a process and a method to help you execute it: Through the Resiliency Planning Cohorts program, GCN consultants will lead small groups of nonprofits in a resiliency planning process, newly-developed by GCN for this critical moment.
Participating nonprofits will take away a plan for the next three years, covering everything from revenue and budgets to workforce needs, development, technology recommendations, and board recruitment. You can learn more about the process here, and see the full set of details here. In addition, we've secured enough sponsor funding to offer 75 percent off the program fee for the first 50 organizations to sign up – bringing the cost down to $500 or less.
In anticipation of the Cohorts program launch, EVP and Senior Consultant Kathy Keeley hosted a discussion of resiliency planning in May as part of our member-exclusive CEO Forum series, where nonprofit directors can glean expert knowledge and discuss their specific challenges confidentially. Here are some of the highlights from that discussion.
Lessons from the last crash
Looking to the last recession first, Keeley discussed what nonprofits did to stay viable, and what’s different now.
“Most nonprofits survived, but they had to change,” said Keeley. In the wake of the 2008 crisis, Keeley was hired by a foundation to help 34 nonprofits persevere. The most successful, she said, were those that adjusted as early as possible and managed their cash flow proactively.
“You’ve got to have a cash flow statement, and be on top of it, to make it through,” said Kathy. She noted that experts predict a big drop in nonprofit revenue due to factors like decreased individual giving and earned income, government shortfalls, and a flattening philanthropic response. “Foundations can’t make up for all the government cuts coming, and most are helping organizations already on-board – not taking on new grantees.”
"You've got to have a cash flow statement, and be on top of it, to make it through."
The formula she recommends for managing cash flow and revenue requires a balance of creativity and realism. Those that rebounded successfully were able to avoid “overreaching” by combining realistic revenue projections with new initiatives. “Some found new opportunities for programs, like in housing,” said Keeley. “The opportunities to find this time would be in emergency services.”
The board will also be key to your changing approach. Keeley cautioned that board members will likely have an emotional response to these adjustments, as they did in the Great Recession: “Once the immediate crisis was finished, they needed to see a vision for the next 3 to 5 years, and an action plan to get there.”
What’s different this time
“The last recession was about white-collar unemployment, as opposed to low-wage unemployment,” said Keeley; combined with the fact that unemployment will be ongoing this time around, instead of the early spike we saw last time, that means “the need for emergency services is huge, and will continue.” It also means, according to national experts, the possibility of a 20-40 percent drop in individual giving by the holidays. Corporate giving, meanwhile, is a big unknown.
“It took Georgia 76 months to recover from the 2008 crash,” said Keeley. “This recession will be far deeper.”
Additional costs will also need to be considered, including technology for ongoing remote work, PPE and other protective supplies, and reopening activities. Increased liability issues will also present a challenge.
“It took Georgia 76 months to recover from the 2008 crash. This recession will be far deeper.”
Planning for a changed world
In terms of planning for resilience, Keeley suggests thinking carefully about your position and pursuing one of three “roadmaps” for moving out of the immediate crisis: Reemerge, reorganize, or restructure. You can find a detailed explanation of each one here; in short, they are:
- Reemerge: Picking up where you left off. This approach largely applies to those whose reentry depends on outside factors: whether it’s safe to gather large crowds, schools reopening, etc.
- Reorganize: Rethinking how you deliver services, and to whom, based on the way your stakeholders’ needs and expectations have been changed by the crisis.
- Restructure: Changing your model to deal with significant and lasting loss of revenue, such as sharing processes for service delivery or client intake. The hardest-hit areas, like refugee services and the arts, might need this approach.
“Each organization needs to sit down, ask the tough questions, and decide which category they fit in. That will define the process going forward” said Keeley.
To structure that process, and aim your nonprofit toward its new 3-to-5-year vision, Keeley suggests the RISE methodology, consisting of:
- Revenue and Risk Analysis
- Impact Analysis and Program Retooling
- Strategy Development; and
Execution will depend on realigning resources in terms of development, workforce, facilities, and technology to fit the new plan.
“We know foundations are going to be talking about mergers again, but mergers are difficult,” said Keeley. However, “Having a lot of nonprofits working solo in the same communities is probably not going to work in terms of funding.”
Instead, she encouraged nonprofits to consider “impact coalitions” as a way to adapt and attract funding: “Small groups working together, sharing the same impact measures, and maybe more – back office functions, space, grant-writing, databases.”
Consider "impact coalitions" as a way to adapt: "Small groups working together, sharing the same impact measures, and maybe more."
The new Resiliency Plannin Cohorts program is designed to facilitate that coalition-building as well as the organization-specific work of resiliency planning. This four-part series will bring together groups of five organizations each to develop and complete their resiliency plans side by side. Participating organization will come away with a complete plan and new allies to help them carry it out over the months and years ahead. (Again, you can learn more about the process here, and see the full schedule and other details here.)
You can also learn more in the upcoming half-day Nonprofit University course Strategies for Resiliency, taught by Kathy Keeley.
“There will be a lot of uncertainty to deal with, definitely until we have a vaccine and a treatment,” said Keeley. “It’s time to start planning for a changed world.”
Marc Schultz is communications editor at GCN.