Piper Bulletin March 2010

1. Provide fewer services with fewer resources.
2. Think hard about starting a new earned income venture (up to 90 percent of for-profit new businesses fail in the first year).
3. Focus on thoroughly understanding your financial statements, principally the income statement and balance sheet.
4. Ask your financial advisors for the information you need to gauge continually a key financial indicator: unrestricted liquid net assets.
5. Engage your board and staff in scenario planning and decision making.
6. Stay in front of donors—don't pull back. Tell your financial story and your mission story every day.

These tips were part of the February 2010 Piper Academy, "Managing in Tough Times," presented by Nonprofit Finance Fund. The session covered fundamentals of nonprofit financial statements and highlighted tools to make better decisions to strengthen the finances and programs in difficult economic times.

The bottom line: Nonprofits need to fundamentally change how they do business because the economy "is not going back to exactly the way it was" and recovery will be slow. According to David Greco of Nonprofit Finance Fund, the 2001 recession took five years for a full rebound of the nonprofit sector.

What makes nonprofit finance so difficult? Nonprofits sometimes depend on restricted donations that don't include funding for overhead, continuing program operations and capital maintenance. Nonprofit leaders will benefit from "owning" their numbers and asking for what is needed. The goal is to have the "right" money—resources that are “recurring, reliable and flexible” to cover the full costs of the operation.