Even though I am nearly a quarter-century beyond my economics degree, I read the many articles in recent months on the possibility of a double-dip recession—or just a long-term shaky economy—with more than a little bit of hyperventilation.
But to avoid real panic, I have learned a few coping mechanisms, and one of the best is to stare down the thing you fear as the first step toward being able to manage it. Here are my three biggest fears–and suggestions for how all us who manage nonprofits can face down these worries:
What will happen to nonprofits? The last two years have been among the most difficult in recent memory. Organizations made difficult choices and hard sacrifices, and some came up with creative ideas—all to keep operating and serving their communities. I fear many have very little powder dry for another assault. Some will fail, and others will have to make deep cuts that will permanently shrink organizational capacity that was built up over decades of hard work, sweat equity, and a relentless focus on important charitable missions. It’s not clear to me how, if ever, what is lost will be rebuilt.
How to face this fear. Think about what makes up the fabric of a community: Does every part have to be rebuilt in exactly the same way? New ways of approaching our work are a must, collaboration is a given, and putting those we serve ahead of our institutional habits and loyalties is paramount. What emerges will be different, but in some cases, that just might be OK.
What will happen to nonprofits’ clients? When nonprofits shrink or fold, families, children, and entire communities will be left behind. While it’s politically expedient to talk about the nascent recovery, the reality for virtually every low- to moderate-income community ravaged by foreclosures, unemployment, and disinvestment is that the recovery is nowhere in sight. Another recessionary jolt could make it impossible for these neighborhoods, which have fought so hard for safe, low-cost housing along with jobs and services, to regain the ground they have lost.
How to face this fear. Let’s all take on a little more risk—potentially for a lot more return. Individual donors, banks, foundations, and organizations like mine that lend money to nonprofits all have a role to play in making more capital available and sharing the risk associated with doing so.
What will happen when the scarcity mentality takes a more-lasting hold? For many of us who came of age in the more prosperous times of the late 1980s and the tech boom of the early 1990s, it’s hard to imagine organizations having to fight to the finish for the few crumbs that are left. I fear a future in which we have individually and collectively lost confidence in our ability to solve problems, overcome challenges, and create our own, better reality.
How to face this fear. Continue to think “abundantly.” This is perhaps the hardest but the most important challenge. This is less about data, statistics, and interest rates and more about faith, hope, and determination. After all, one of my favorite sayings has always been: “The facts, though interesting, are frequently irrelevant.”
Despite the sobering facts of our current time, the lesson of our history is that from great crises are born equally great solutions and new innovations. And I believe that our time will be no different.
4 Responses to 3 Big Concerns About the Economy—and How to Fight Them
aronan - December 16, 2010 at 2:04 pm
I agree wholeheartedly. The opportunities that arise from the need to collaborate and the need to challenge “the way it’s always been done” will only make nonprofits stronger.
And yes, though some may scoff at your call to think abundantly – a quote I love from Eric Butterworth: “There is no such thing as a lack of faith. We all have plenty of faith, it’s just that we have faith in the wrong things. We have faith in what can’t be done rather than what can be done. We have faith in lack rather than abundance but there is no lack of faith. Faith is a law.”
Ann Ronan
http://www.grantright.com
lizortiz - December 17, 2010 at 2:56 pm
Thanks Ann,
Let the scoffers scoff! Faith and determination are not so quantifiable as profits and losses, but they’ll always be critical for managers who face the hard decision to let go of institutional habits and embrace new solutions.
Best, Liz
nicole_simoneaux - January 6, 2011 at 3:06 pm
In terms of how nonprofits themselves can face the fear of ‘what will happen to the nonprofits,’ I believe that one of our strongest tools is understanding and improving the way that we respond to our challenges, whatever they may be.
I’ve seen just as many high-performing, financially healthy nonprofits over the last 2 years as I saw before the recession. (or maybe I should say just as few) What these nonprofits have in common is an ingrained habit of timely decision making that constantly strives to balance mission with long-term financial health. These nonprofits have a history of managing to a surplus and building their reserves. When the recession hit, did they access reserves to replace lost revenue? Actually, no! They faced the changes and uncertainty head-on and made decisions that would keep expenses in line with falling revenue. They’ve built their decision-making discipline over time and it proved to be a key factor of their survival. These organizations will survive any number of jolts.
Granted, maybe 10% of nonprofits look and perform like this- but there’s an optimistic message in this for the rest of us. Creating a culture where decisions are made in a timely manner and those decisions are turned into action is something that every nonprofit is capable of. It has nothing to do with the industry you’re in, where your funding comes from, or how well you use social media. It’s our leadership, our people- and there is no shortage of passionate, committed, smart leaders in this sector.
And, yes, the organizations that I see having the most difficult time adapting, contingency planning, and addressing short term problems with appropriate solutions are the ones that, even in good times, had difficulty developing financial discipline and balancing money and mission. My wish for these organizations, as the economy remains shaky at best, is that in addition to understanding the actual challenges that need to be addressed (e.g., lost contracts, fewer donations, fewer staff) they also reflect on their own history of turning knowledge into action. The way that we face our challenges is just as important as the nature of our challenges.
I don’t mean to minimize the very real problems that nonprofits face right now, or oversimplify what it takes to survive. But when all nonprofits face the same challenges and some are able to thrive, I think there’s a lesson to be learned and I’m happy to see that one ‘common thread’ is something that is within reach of all of us.
alessahilton - January 7, 2011 at 5:31 am
Despite the sobering facts of our current time, the lesson of our history is that from great crises are born equally great solutions and new innovations. And I believe that our time will be no different- I agree
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