SETTING BUDGETS IN THE SHADOW OF COVID-19

Nonprofit Maverick CEO, Abigail Erickson-Torres Shares Her Bold Ideas

I've been working with nonprofits for 24 years in Australia, England and America and led many agencies, Board's and teams through natural disasters, agency emergencies, capital campaigns, unexpected leadership changes, the 2008 recession, the shift in giving online or peer-to-peer campaigns vs. direct mail, recession planning and so much more. Each situation had it's own unique budgeting challenges.

I recall in early 2009, a VP of Development for a nationally-recognized nonprofit whose annual budget was $20 million, dropping her head into her hands in sheer exhaustion. She declared her retirement, and did actually retire that year. She couldn't wrap her head around moving her entire direct-mail budget to an online web-based fundraising platform. Her agencies overall revenues weren't being met, donors were aging and jobs were on the line. People's values had shifted. It needed to be a delicate balance of traditional and new avenues of fundraising that would get them through. Donations were dwindling because of the failure to see the opportunity. The leader was still worried about not seeing small envelopes filled with $5, $10 and $25 checks come in the door at the holidays. They traditionally spent $2 million a year, to raise $6 million that way, which propped-up their entire fundraising efforts. The climate was changing. As a consultant, my words didn't offer much comfort, but I had to be realistic. "It's time to adapt, now." There is always going to be a next new hurdle to jump.

Our 2020 - 2023 hurdle is COVID-19'.

This time, it's not just giving models that are going to change. Everything has changed. How we do business, see ourselves, communicate and relate to each other as a society. We are not the same, but I do believe as a society we are still generous and good. As a result, the way we budget for the next fiscal year, and our new 'way forward' at Bryan's House must change.

'We are planning with a new 5 year goal, backwards'.

Now nonprofit leaders must work with their Boards to pivot. Collaboration, innovation and planning are key in this unknown future.

It's exciting and intimidating at the same time! So how do you plan for the unknown?

To find out, we formed a COVID-19 Task Force in April at Bryan's House, made up of existing Board members who had strategy expertise flowing through their veins, and the time and passion to conduct research. We asked them to look for potential partners, models and trends and opportunities on a nationwide, State or local level that may gel with our own community needs.

We made sure we had those with financial expertise on the Task Force, and the Board Chair as a working member; all key factors to make sure we were realistic and worked cohesively with our vision and mission in mind at all times.

'I urge other nonprofit leaders to look to their Boards, but also be brave and follow your gut to come up with a framework that works for you, to present to them.'

So far, it's proved to be the key to our future success and after some initial discussion we are well on our way. We are being proactive.

We discussed adapting a three-tiered budget that's based on a 6, 12 and 18 month model to shift with the "unknown." We want to carefully frame our potential, being conservative, and pivot as needed over the next few years.

In the first six months, starting July 1 of our new fiscal year we will be pulling back some program elements, to meet the very basic needs of our client population. As discussions progress over the next few months, and as mandated restrictions to shelter-in-place ease, people go back to work or find work, we hope our innovations will start to bloom buds of potential.

With a tiered budget, we will have the flexibility to modify client care at the 6 month mark, and based on new opportunity and new quantified data, it will give us a better sense of markets, community healing and more. We can adapt as needed to either expand or remain conservative to protect the clients we serve, and preserve our legacy. Innovative service-models may be born from this strategy. Partners we work with may adjust their models to form mutually-beneficial problem solving programs, to meet new gaps in community services that we may identify as a result of COVID-19.

So far, Task Force members have been working hard to explore new potential partnerships to preserve programs with staggered timelines (known and unknown), consider new social enterprise models (cost/overall impact), and our ability to meet the gap in the community at a grass roots level. All to deliver basic services in a sustained way.

In the weeds...and because we have a direct-service component, we considered our population served and their health and safety. In addition, our up and coming requirements to submit a new budget to the Board for approval in June, before the new fiscal year, and in between when new Board members would be voted on and retiring ones would come off the Board - we've had to move quickly. I'm sure we are not alone as other nonprofits face similar timelines. We still have a fiduciary responsibility to our stakeholders, clients and existing partners.

Bryan's House is a 31 year old nonprofit. When founded in November 1988, it started as a small grassroots effort with a $5,000 grant. The annual budget soared to $7 million a year at the height of the HIV/AIDS crisis in the 1990's, when federal dollars began flowing after the need for services and death tolls rose exponentially.

In 2016, and over the past 4 years, the agency budget was adjusted from $2.3 million, to $1.9 million to $1.85 million a year, and we managed to serve more families annually, meeting audited goals. We needed to flip the funding model from 72% government funded, to just 38% funded by Federal or State dollars. It took us 3 years, but we did it.

Now serving 1,000 people each day in 2020, with multiple holistic services, and after a major pivot, focusing on very poor children with complex health and educational and domestic challenges and disabilities, not just blood disorders; in 2016 we were able to sustain funding and operations, reach more children and meet gaps in services, re-brand, re-fresh and improve programs for those living in poverty that have one or child with special needs.

Now it's time to do it again and we hope to use the tiered step-by-step budget plan. We can stay flexible, adjust as needed and remain within our by-laws, audit specifications and Board governance guidelines for the long-term. The last step for us will be communicating internally and externally as we go with our stakeholders, existing and new funders, service delivery partners, leadership and clients. We are hopeful for the future.