By Cecilia Yontz, OSCPA marketing and communications intern
Nonprofit organizations with underlying organizational concerns are experiencing harsher effects since COVID, said one CPA.
“What you did before COVID is not what you're doing now,” said Helen Weeber, CPA, senior manager at HW&Co. “The same holds true in nonprofits and how they do business. If they didn't shift, weren't flexible, and didn't have those processes and procedures in place around development, I think they're struggling to figure out where to go from here.”Weeber is the director of nonprofit services at HW&Co. and works exclusively with clients in the healthcare industry. She has witnessed these organizational fractures firsthand.
For nonprofits that once relied on a consistent source of government and grant funding, weaknesses were revealed when that funding was suddenly cut or lessened. For many organizations, government and grant funding had been shrinking in the years leading up to COVID. COVID has increased the need for nonprofit services, but the funding has remained the same or continues to decrease. This left a lot of nonprofits looking for other options, said Weeber.
When evaluating options for getting out of this tricky situation, she said there are many steps that could be taken but chose to highlight two.
Separate the stretch goal from the budget
There needs to be a difference between a development and fundraising budget and a development and fundraising goal, Weeber said. Both must be rooted in reality.
“Sometimes organizations budget the stretch goal and then when it doesn't come in, it's the mad scramble. And the scramble is usually at the end of the year to get those extra dollars that you need.”
The development person responsible for managing the budget is usually the one that faces the consequences when goals are not met – oftentimes facing termination. In the long term, this is not viable.
“I see it sometimes where roughly every two to three years there's a new development person because they weren't able to meet the development budget which was a goal,” she said. “When it comes to development, it's about fostering and building relationships and somebody's not going to be able to do that in six months or even a year.”
Consider donor-advised funds
With funding shrinking because of COVID, nonprofit organizations are scrambling for more funding. Donor-advised funds are not an appealing option for many because of the risk and time commitment, but Weeber advises that it is worth considering.
“If you look at total giving in the Giving USA report, 76% of all dollars going to nonprofits are from individuals,” she said. “Are you spending 76% of your time fostering those individual relationships? Sometimes, I do not think that is the case.”
While it is a long-term option, Weeber insists that it is worth the time and effort.
Weeber mentioned that reassessing current practices and adapting to the changing environment can prove beneficial.
“Many nonprofits did a virtual event, and they were very successful,” she said. “Everybody's going back to work in person, but I think organizations need to think before they run back to that.”
It is important for organizations to remain flexible and aware in case a situation such as COVID occurs again. If an emergency management plan is not already in place, it is worth creating one, said Weeber.