Charity is Facing an Extinction Level Event – Kathleen Robinson

Charity is Facing an Extinction Level Event is Dr. Kathleen Robinson’s insight into the precarious journey nonprofits must now navigate as a result of COVID-19. Here’s what she has to share:

A potentially extinction level event is occurring in the nonprofit sector.  All nonprofit leaders are faced with critical decisions about the survival and well-being of their organization, staff, customers and finances right now.  Many nonprofits nationwide have already made major changes as they attempt to stay afloat and service their customers.  The decisions they have made are governance decisions related to the strategic, fiduciary, and generative purposes of their nonprofit.

A recent study in New Jersey found that 78% of the nonprofits polled had already canceled programs and/or events, 17% suspended all operations temporarily, and 27% laid off or cut staff (New Jersey Center for Nonprofits, 2020).  The 207 nonprofits that responded to the survey had lost more than $46 millions as a result of the crisis already!  Over 4,200 positions in 88 nonprofits were laid off or furloughed, even though 40% of the organizations were providing services deemed “essential”.

In Central Texas, a similar scenario is present (Capital Mission, April 2020).  79.6% of respondents said their services had been disrupted.  35.6% of the nonprofit with grants said they could no longer meet the requirements of the grant.  35.4% had staff and volunteers who were absence for fear of exposure to the virus.  24.8% had reduced staff hours or furloughed staff.  21.8% had instituted a hiring freeze.  One of the major impacts has been on finance-related services.  65% had cancelled fundraising events.  57% had reduced their fees for services.  55% had experienced reduced donations.  21% had their grant funding reduced.  Yet, 49% said they had increased demand for services and 35.8% had an increased expansion for the type of services their customers needed as a result of the Pandemic.  Alarmingly, almost like the canary in the coal mine, 54.15% said they could only continue to operate for 2-6 months with 20% of this figure indicating they would have to close their doors within 1-2 months.

A survey in Massachusetts found even higher percentages on many of the same areas of disruption described above.  550 nonprofits responded to their survey (Massachusetts Nonprofit Network).

In San Diego California a similar picture is present (Detrick, et.al., March 2020).  80% indicated they have already experienced a disruption to services, 40% of whom said it has been a severe disruption.  57% said they were unlikely to meet payroll in the next 4 weeks with another 35% who will not meet payroll in 8 weeks.  In San Diego County, donations had dropped even more severely than reported in the above surveys.  75% of the nonprofits said they had experienced a decline in donations. 64% had lost fees for services. 54% had experienced delays in grant funding.  52% had laid off employees. 37% had government contracts and had performed services but could not be reimbursed.  29% said they could not pay their rent or utilities.

Nonprofits responded by switching to online mediums, using more technology, greatly increasing health and safety procedures, and providing mental health support for their staff.  In all surveys, fundraising was their top priority. Most were considering new fundraising strategies that did not rely on face-to-face contact.

Some leaders term what is happening to the nonprofit sector a ‘sea change event’.  Others call it an ‘extinction level’ event.  However, now is not the time for nonprofit leaders to freeze up. As has been done in the past, every crisis helps some people think creatively and innovate new ways to do business and meet need.  This Pandemic is no different, but the issues are perhaps the most acute many nonprofit leaders have faced in their career.

Each nonprofit is unique.  No one can tell you exactly what to do.  However, a few key questions may help guide your decision makers during these tough times.  We provide eight questions that may guide thinking. Based on the surveys mentioned above, many have already begun making hard choices.  Hard choices will continue because we are far from returning to ‘normal’.  It will take years.

Like no other time, who is involved in governance decision making needs to change so that decisions are made considering a wide range of people’s perspectives and contributions to change and how it may impact them and customers.  Now is the perfect time to design a new governance system.  All people affected by any given decision need to be involved in decision making about what is done and how.  Involving more will help you find solutions that factor into decisions the diverse impacts that are apt to happen if any given solution is chosen.  Governance decision making during these troubled times certainly involves a much wider group than the CEO and board!

Below are a few basic principles that form the foundation for understanding why certain questions are asked.  Each nonprofit needs to identify their core values and beliefs about people, their treatment, and involvement in governance decision making relative to the dramatic changes required to meet the challenge faced because of the Pandemic.

Charity is Facing an Extinction Level Event

Some principles behinds the questions given below are as follows:

• All people affected by a decision are involved in decision making.
  • Decision making can occur quickly if various technologies are used.
  • Sound decision making is possible involving large groups with trained facilitators.

• Make timely decisions.
  • Decision making needs to be timely but not at the expense of involving the appropriate decision makers.
  • Make decisions that are consistent with the organization’s values and beliefs.

• Base decisions on clearly articulated issues and relevant information.
  • Frame issues for which decisions are needed in writing. Present all possible perspectives on the issues as well as solution alternatives.
  • Organize background information thoughtfully. Present it in ways that are easy to understand.
  • Send all relevant information to decision makers ahead of time so that they have time (if they wish) to thoughtfully consider the information presented and how it affects them and others.
  • Identify in writing what decisions are required. Give the decision listing to decision makers in advance.

• Facilitate thoughtful, skillfully lead decision making sessions.
  • Use skilled volunteer or staff members known for their facilitation competence. They can lead decision making processes in consultation and under the direction of the executive team.
  • Organize and make available to decision makers all relevant background information needed to understand the issue and context.
  • Choose a competence person(s) skilled at accurately recording various decision makers contributions. Record all comments using their words. Record what was said, not an interpretation of what the recorder thinks was said or what they want said. (Not everyone can do this so some sort of screening for competence is needed.)

• Crises affects people differently and inequitably. Base decisions on equitable treatment of individuals within your organization and serviced by your organization.
  • Use the equity principle to guide choice of the best solutions. Consider who is the most affected by the crisis and the adjustments that might be made to the organization.   Consider what biases may be present in potential solutions generated by decision makers.
  • In solutions chosen regarding changes in operations, program, and organization do the least harm to customers and employees. People with the greatest inequities need extra attention.
  • Consider the new needs and opportunities present because of the Pandemic.

• Make decisions that support a practical theory of change.
  • Clearly define the organization’s outcomes sought to accomplish mission. Remind all decision makers of these outcomes and your mission before discussion on issues begins.
  • Develop a practical path for change (i.e. basic strategies that leaders will pursue) to accomplish outcomes given the new realities present.
  • Best practices related to your interventions should guide modification of existing programs and services.
• Base decisions on whatever data is available.
  • Base decisions on the evidence of the effectiveness of current services, programs, operations.
  • Base decisions by comparing your organization’s outcome effectiveness with to those doing similar work.
• Make decisions that are consistent with the mission of the organization unless a new or altered mission is required, given the nature of the Pandemic’s effect on your organization and opportunities present.

• Identify, recruit and activate all people and organizations that are passionate about your cause. They are the best hope for your organization’s future
• Harness your leaders fears by identifying what they are, thoughtfully considering solutions, and together mustering courage to face the crisis together. You are better together than trying to go it alone or with just CEO and the board. 

Charity is Facing an Extinction Level Event

Eight Key Questions To Guide Making Tough Decisions

Below are some questions that many nonprofits have used to determine what changes they have made in their nonprofit because of the Pandemic.  For each basic question there are a series of key follow up questions, for those that may need more insight.

1. In what ways are our decisions guided by our mission? Do we need to change our mission considering the new realities? Mission-related Questions:

• Given our current mission, is customer demand for our services expanding or declining?
• Are their new customers emerging out of the Pandemic that we must respond to?
• Are the organizational strategies we are using the best, given customer demand and financial strains? (note an organization’s core strategies are different from a program it may offer. Strategies get at the heart of the way you address you mission such education, research, consultations, therapy, remediation, care, materials development, etc.)
• Can you switch how you activate a given strategy (e.g. move from face-to-face formats to an online options, etc.) and still accomplish your strategy (e.g. providing training)?
• Are there programs and services that have not been successful in achieving significant outcomes that can be terminated?
• Is there a revised mission that better meets current need and potential future realities?
• Have we identified our core values and beliefs relative to our mission? Is it time to reconsider them? How do they help guide us in our decision making?
• With the social distancing that is apt to continue for some time, what changes do we need to make now in services and operations?

2. How might we make wise, timely governance decisions (strategic, fiduciary, generative) that ensure our survival and innovative responses that help us thrive despite the Pandemic? Decision Making Facilitation Questions:

• Is there an intentional strategy used to conduct decision making sessions?
• Are there two or three volunteers, staff or community members that are noted for their skills in decision making facilitation who are willing to work with leaders to conduct participatory decision-making processes?
• Should we be training up a few individuals to facilitate decision making sessions in the future?
• Are there a few people who are skilled at framing the issues present, and organizing information needed by those involved in making the decision? Are they willing to work with leaders?
• Can we put technologies in place to involve groups in decision making in constructive ways? (e.g. zoom, conference calls, Facebook live streams; concept mapping software; decision making meeting software, dashboards, etc.)

3. In what ways should we use the principles of equality and equity to guide our decision making? Equality and Equity-based Questions:

• Do we believe all people (staff, board, CEO, executive team, volunteers, customers) are equal in their ability to determine what is right, wrong, good or bad for themselves and others in this current crisis and relative to the decision we must make?
  • If not, why not?
  • What biases might be involved in people’s answers to this question and what will be the corporation’s stance on this?
  • How do we plan to involve all people affected by the decisions we need to make relative to the Pandemic’s effect on our organization?
  • Do we believe that some people will be more injured by the current crisis and our response to it than others? In what ways do we treat them equitably by what we do to adjust our organization’s services and operations, wages, benefits, job switching opportunities?
  • Are people treated equitably with current services and strategies given the Pandemic and its affects on operations? How might adjustments be made?
  • Are we overlooking staff and volunteer talent that might be useful in light of anticipated changes?

4. What principles and guidelines should we use to make tough staffing decisions considering less revenues, the need to social distance, the need to pay greater attention to health and safety of staff, as well as customers. Staffing Considerations:

• What principle do we apply when determining how staff are treated during the Pandemic?
• What is our principle for determining when people are laid off? (e.g. reduce salaries before laying off anyone; lay off some but retain core staff at full wage; reduce salaries of higher salaried individuals and apply saving to retaining lower waged individuals, etc.)
• If you offer health benefits, what might we do to ensure their healthcare benefits stay effective even if there is a need to layoff or furlough employees or the inevitable need to reduce staff size?
• Can staff assigned to programs that are going to be terminated be reassigned to new opportunities? What training and re-tooling are involved?
• What are our individual staff’s life circumstances? Who may be more vulnerable to homelessness, disease, hunger, etc. than others?  Does this information help us know what is more equitable in terms of staff layoffs, furloughs, or terminations?
• Do we want to play a role in helping terminated staff find another job? Who will we assign to this effort?
• Can staff hours be reduced?
• Can we afford to pay staff even if they cannot work? For how long?
• Are we in a position to hire more staff?
• What health and safety plan do we have for staff that are doing essential services during this dangerous time?
• Do they have needed equipment and supplies to operate safely? If not, who might be found to champion this area of need so that supplies increase rapidly?
• Are we harnessing people who want to help because they are now unemployed but want to stay relevant and actively involved in helping respond positively to this crisis? What might they do for us?
• What relevant corporation, labor and liability laws do we need to be aware of relative to possible decisions we would like to make?

5. In what ways do we need to change our operations given the changes occurring in our programs and services? Operations Questions:

• Are there operations that can be scaled back?
• Are there operations that are inefficient given the service cutbacks anticipated?
• Can other organizations offer all or some of same services at a reduce cost?
• Can we develop new operations that provide services in ways that reduce costs?
• Do staff and volunteers have talents that have not be used by the organization (e.g. internet communication; video development; donor relations; etc.)?
• Can we get real time data on the financial activity of the organization so that we can monitor effects on a daily basis? Can they be placed on a dashboard for review 24/7, password protected?

6. In what ways do we need to change our services and programs in light of federal, state and local guidelines for health and safety and given the revenue reductions we have? Service-related Considerations:

• Are our services considered essential? Is this designation and its ramifications clearly defined in our case for support to donors?
• Which and how many services can be done remotely?
• Have we clearly identified the impact of the Pandemic on our customers?
• Have we sought partnerships with students and/or faculty at nearby universities to help us conduct surveys, compile information, outline best practices, create or improve our website, create a case for support, etc.?
• What stops staff from providing some of our services remotely (e.g. equipment, licensure issues)? Are there possible solutions to these issues if experts are consulted?
• In looking effective practices related to our interventions, are there alternative strategies that can accomplish the same results that cost less or that rely on different social contact procedures?
• Do we count on other organizations for some of our component services? Can a new partnership help both organizations survive?
• Can some programs be suspended temporarily?

7. What should be our immediate actions relative to raising revenues? What does this current economic situation tell us about the need to build revenue generation capacity in the future?

            Financial Considerations

• Do we know the effects of the Pandemic on our customers well enough to form a case for support?
• What funders, government, and capacity builders can be identified to act swiftly with dollars, resources, and advocacy to help navigate the rapid changes your organization is going through?
• What are your core expenses that need to be maintained?
• What programs and services are the most expensive? Are there ways to reduce or change what is done or how they are done that will be less expensive?
• Do we need to reduce the fees on services so that some revenue still comes in? Or can we find donors willing to pay for customers who can not longer afford services but need them?
• Are there operations and programs that can be terminated because they are not that effective or there is no evidence of outcomes or impacts?
• Do you have contracts with state or federal government? Are you able to meet the terms of the contracts or will doing so prevent you from making the cuts you need to make?  If so, is there a termination clause that can be pursued?  Are contractors willing to allow modifications to existing terms of the contract?
• Do you have state contracts or federal grants that are delinquent in sending you agreement upon funds? Is there a termination or redress clause that can be pursued?
• Do you have bank loans? Are they willing to forgo payments for two or three months until the worse of the Pandemic is over in your state?
• Have you read Built Financial Capacity and Boost Financial Capacity (two of NANOE’s Guidelines) and done some of the basic things mentioned in them to position your organization for present and future fundraising and revenue generation?
• Have you established a rainy-day reserve that will get you through at least six months of really hard times like the one you’re in now? If not, now is the time to plan how this can be achieved in the future.
• Do you have a person or people assigned to develop and lead fundraising and revenue generation planning and actions?
• Can you quickly put together a case for support related to your current critical needs due to the Pandemic?
  • Have you found ways to hold an awareness event from a distance?
  • Do you know who your champions are relative to your cause?
  • Can you identify 15 people who may be your top givers? Can you find creative ways to meet with them via distance means but that involve face to face interaction so that you can share your case for support?
  • In what ways are you relying on others to raise funds for you when you should be developing direct contact and follow up with donors? Is it time for a course correction on this?

8. (For those who have experience a relative no growth situation prior to the Pandemic.) Should we consider identifying a nonprofit that is doing the same or similar things and seek to merge with them, dissolve and move services to them?

          Merger or Dissolution Decisions

• Does it look like we will have to close are doors? Have you already closed our doors?
• Can the organization jettison its facilities-related expenses by seeking another organization that has room for our organization’s services, staff, equipment?
• Can we contract with another nonprofit for some of the services that you provide which they do too?
• If we have decided to close, who should be notified? (business leaders, funders, gov. agency representatives, customers, staff)
• What is our communication strategy to announce closure that informs the most people all at once to avoid rumors, gossip, accusations?
• Are our services used by other nonprofits? Could some of what we do be done by them? Can they take some of our staff?  What assets might we give to them?
• Do we have any government contracts and grants that designate assets be given to them if dissolution occurs?
• What local legal assistance should we find?
• What organizations may benefit from what you have been doing? Are any of them effectively lead, managed effectively and shown evidence of positive outcomes?  Are they willing to entertain a merger?  Under what conditions?  Have we clearly identified the outcomes of our work?
  • Which ones have we worked with in the past?
  • What plan can be developed to submit as a proposal to them?
  • Who can help put together your corporation’s financial profile showing expenses, income, size of current donor pool, potential future donors, asset profile?
• What legal ramification are involved in a merger?
• What federal and state legal procedures must be followed for dissolution?
• Who should we notify when we have decided to terminate services? What funders? What business leaders? What customers? What other nonprofits?  What donors?

Additional Resources

For readers who are not members of the National Association of Nonprofit Organizations and Executives (NANOE), they have provided their members with a series of Guidelines which give hundreds of resources, examples, and further insights into each of the questions mentioned above.  The name of the Guideline booklets are as follows.  They can be found at Https://nanoe.org/

• Build Financial Capacity: Secure Technology, Equipment, Legacy, Facilities, and working capital for Significant Impact
• Boost Financial Capacity: Secure Opportunity Risk and Change Capital for Significant Impact
• Evaluate Impact: Before, During and After Strategic Growth Actions
• Harness the Power of Differentiated Relationships
• System Shock: Leadership and Governance Structures and Cultures that Soar
• Strong CEOs: Character, Competence, Courage, Vision, Actions, and Achievements

 References

New Jersey Center for Nonprofits (2020).  The COVID-19 Crisis and New Jersey’s Non-Profit Community. Retrieved at https://njnonprofits.org/COVID19_RRSurvey2_April2020.pdf

Mission Capital. (April, 2020).  Pulse Survey Results: COVID-19 Central Texas.  Https://missioncapital.org/wp-content/uploads/2020/04/2020-4-8-CTX-COVID19-Pulse-Survey.pdf

Massachusetts Nonprofit Network. Survey of On-going Impacts of COV-19 on Massachusetts Nonprofits.  https://myemail.constantcontact.com/COVID-19-Nonprofit-Update–The-CARES-Act-and-Survey-Results.html?soid=1111540182115&aid=YesraSK6K98

Detrick, L., Tinkler, T., Young, E., Strawser, C.C., Meschen, C., Manriques, N., & Beatty, B. (March, 2020).  Nonprofit Sector Response to COV-19: The Immediate Impact of the COV-19 Pandemic on San Diego County Nonprofits.  https://digital.sandiego.edu/cgi/viewcontent.cgi?article=1003&context=npi-npissues

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Charity is Facing an Extinction Level Event was written by Kathleen Robinson, Co-Founder, National Association of Nonprofit Organizations & Executives (NANOE)

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