nonprofit use

The Future is Coming

COVID-19 is changing priorities and deadlines for many grant applications. While there is money for the coronavirus, most of it will not help most nonprofits. Like small businesses sinking into bankruptcy, nonprofits are headed that way, too. Unless they manage their future.

One of the reasons grant deadlines have been delayed and priorities altered is that foundations are looking at their investments. Money will be tight due to the downward trend of the economy. Yet, like the recession of 2008, things will improve.

I am encouraging the nonprofits I work with to contact the foundations helping them in the past. Seek out and continue the relationships. During downturns and with reduced funding, foundations want to reduce risk. They are more likely to provide for nonprofits they funded in the past rather than recent ones.

Nonprofits can do more by looking for in-kind donations and volunteers. Plan for a lack of funding and seek non-funded options.

There will likely be despair. Yet, this is a right-now situation.

If you are a nonprofit who has been around for a few years, your mission has become important to many people. The positive impact to the community has been felt. Seek out businesses, government, and organizations who want to make sure the nonprofit does not fail. I hope the government and organizations help small businesses, too.

When a Crisis Creates Special Funding

These past few weeks, many foundations are quickly offering grant money to help with the impact of the coronavirus. This is good news since the Federal money will not be coming for weeks or months.

I’ve written a few grants already and read over a few others. The foundations do not require much information. Some grant requests are by invite only and a few foundations are sending money to nonprofits they know are directly impacted without needing a grant request. I expect more foundations will offer money to cover coronavirus related expenses.

There are good and bad things about quick money during any crisis.

The good news is that foundations want to help and they make money available easily long before the federal government can respond. The bad news is that a nonprofit could find it hard to justify receiving money in a crisis, such as the coronavirus, when their programs are not impacted.

For many nonprofits, the impact is a loss of income such as in donations.

Nonprofits should resist the urge to justify receiving coronavirus money unless their programs were impacted. Chasing after crisis money, like coronavirus funding, can force a nonprofit to become what they were not meant to be. When the crisis is over, the nonprofit can be labeled something else, future money cannot be justified, relationships get broken, and the path forward could be lost.

More importantly, the reputation of the nonprofit could be hurt if they received money outside of their mission without a logical reason.

Yes, some nonprofits can readjust their resources to accommodate a specific crisis and they should receive crisis money for doing so. In the end, I think the responsibility is more on the nonprofit than the foundation to rationalize accepting crisis money or not.

A Nonprofit’s Need for Stability

Nonprofit operations need to continue in a consistent manner each time and every day. Without this stability, mistakes occur and, when a problem happens, the people struggle for a solution.

Most of the time, nonprofits (and other organizations) rely on people staying in their same position over time to maintain stability. Unfortunately, when these people leave, the operations must be relearned. This costs time and other resources and could be a significant point of failure in the mission or a program.

A simple list of what to do is sufficient to keep operations stable when people leave. As an example, when receiving grant money, the instruction should state what spreadsheet to use, what information to enter, who to inform about the grant, and who will be accountable for spending the money (receive, record, inform, and establish accountability). The instructions do not have to be long.

While it can seem daunting to write instructions for each activity and process, they can be written without many details. Do not write about every possible contingency that may come up. Keep the instructions simple so they can be used as a baseline for what to do. Keep the instruction to one page or two at the most. Make sure there is plenty of white space on each page, maybe use an outline form. The reader does not want to feel like they are reading War and Peace.

I am trying to follow my own advice with the nonprofit I’m involved with. While I already keep records of everything, I am writing out the steps I take to accomplish each process. Now is a good time for everyone to do this since most of us are home. I’m also doing it because I do not plan to stay with the nonprofit the rest of my life.

What it means to be a nonprofit

I have become involved in a small nonprofit that existed for many years. While the previous board members were familiar with the mission, they were unfamiliar with operating a nonprofit. They assumed that being small meant they were okay with not following all the nonprofit rules.

If the IRS approves a letter of determination and the nonprofit receives money, they must follow basic nonprofit rules. Size matters only in what rules to follow.

For example, this nonprofit had not filed an income tax form for several years. Previous members decided that the nonprofit’s small income exempted them from filing. This caused the nonprofit status to be revoked and it was reinstated at a cost.

Every board member should learn how to run a nonprofit. Of all the things to learn, the two most important ones are:

  • Protect the money by creating financial guidelines. Include at least two unrelated people on the bank account and require dual signatures on all expenses. Also, establish a process to balance the bank account and report to the members.
  • Keep the bylaws updated. These are the operating rules of the nonprofit and should be reviewed at least every two years. The most important part of the bylaws is what makes a quorum. Too low a number and changes could be made without members having a say. Too high a number and nothing can get change, even when needed.

Other matters to pay attention to are having a budget, maintaining archives, and keeping a set of operating procedures updated.

Everyone in a nonprofit has responsibility to make sure that, not only is the mission met, but that the nonprofit operates according to the rules. No matter the size of the nonprofit.