5 Ways To Recession-Proof Your Nonprofit

5 Ways To Recession-Proof Your Nonprofit

Lately, it’s hard to go more than a few hours—forget about a whole day—without being haunted by the joint specters of recession and inflation. We see the numbers at the gas pump and when we turn on the news. They insert themselves into small talk with co-workers at the water cooler. Or conversations with our partners and roommates about rising interest rates and rent hikes. In short, the economy is on everyone’s mind. There is much to contemplate when considering how to utilize recession-proof nonprofit tactics.

However, if you’re a professional in the nonprofit sector, the presence of inflation and the concomitant threat of a recession has an even more sinister implication. People with less money and purchasing power are less likely to donate to charities or nonprofits.

Because nonprofits rely heavily on donations, the possibility of an economic downturn can also portend a crippling loss of income. Particularly for organizations still recovering from the financial setbacks caused by the COVID-19 pandemic.

A comprehensive report on philanthropy was released by Giving USA, stating:

“During the high inflationary period of 1972-1975, giving fell by almost 9 percent in inflation-adjusted terms. This data point alone should prompt nonprofit leaders and gift officers to pause to consider modifications to their fundraising practices in the near term as inflation persists.”

While no one can control the broader economy, you can ensure you know how to recession-proof your nonprofit. We’ve compiled a few key strategies that you can implement to help shore up your organization financially. These tips will also help maximize fundraising efforts during an economic downturn. 

5 Ways To Recession-Proof Your Nonprofit

1. Don’t Wait

There’s an old saying: failing to prepare is preparing to fail. If you detect rumblings of economic instability in the future, don’t wait until things take a nosedive to start ramping up fundraising efforts. The time to start building a cushion for the organization is now. 

Business best practices recommend maintaining an emergency fund equivalent to at least three months (or more) of operating expenses. However, the right number for your business will depend on the type of work you do and your circumstances. When in doubt, talk to a financial advisor about how to ensure your savings are appropriate. 

2. Practice Risk Management

Things that might be a headache in times of financial stability can become a disaster in times of scarcity. Therefore, experts at the Nonprofit Risk Management Center recommend taking stock of everything that could go wrong and trying to prepare for it as best as possible. Risk management professional George Head states, “Risk management focuses on making positive surprises more probable and negative surprises less likely.”

Those surprises include not just financial contingencies but material ones too. For example, is your team prepared to deal with fire damage to your building or some other type of emergency? What about a natural disaster? A cyber-attack? Theft? It’s well worth investing a bit more time and money in insurance and safeguards now rather than facing a scenario like that without them. 

Other risk management strategies that you can implement ahead of time include:

  • backing up or making hard copies of any important documents 
  • drafting emergency protocols and distributing them to staff
  • purchasing and installing a security system
  • making any necessary repairs or safety modifications to your building/office space

3. Cut Strategically

In the event of financial hardship, odds are that you’ll be faced with not whether to cut but what (or whom) to cut. 

While many peoples’ initial impulse might be to try to maintain as many services as possible, according to the Stanford Social Innovation Review (SSIR), that’s not always the best approach. Instead, they recommend zeroing in on the core activities that define your organization and protecting those at the expense of auxiliary programs. 

Similarly, if your organization is forced to lay off employees to make ends meet, don’t think about whose salary will save the most money. Rather, think about which personnel are essential to the organization’s survival, both in the short and long-term. This is important in recession-proof nonprofit tactical thinking.

It’s also important to plan how you’ll pick up the slack if you have to downsize your staff. Ask employees to create standard operating protocols (SOPs) for their roles, and make sure that everyone is adhering to a set of standardized practices in terms of document storage. Bonus: implementing these strategies will also streamline normal employee turnover and make onboarding new hires easier. 

Thinking about these difficult questions ahead of time, rather than waiting until you’re forced to, can save you a lot of headaches later on down the line. Spend some time making a list of your most lucrative and/or most integral business activities, as well as the people who are indispensable, and think about how you’ll shift your resources and attention to focus on those in the event of a downturn. 

4. Be Ready To Pivot

If the nonprofit world learned anything from the pandemic, it’s important to adapt to new modalities, technologies, and audiences quickly. Organizations applying the same principles of adaptability and flexibility in a recession are also more likely to weather the storm. 

For example, rather than focusing on cash donations, a nonprofit might pivot to soliciting gifts in the form of stocks, real estate, donor advised funds. Alternatively, organizations might consider allocating more time and resources to acquiring grant funding, which can be more stable than donations. Similarly, a nonprofit whose target audience was traditionally younger generations might switch to include Baby Boomers (who tend to have more wealth) in their campaigns. 

Consider using other organizations’ responses to the pandemic as case studies. Think about the ones that survived (and thrived), and compare them to the ones that folded or struggled. What was the difference between them? How could your organization implement the same principles that brought others success, if not the same practices?

5. Prioritize Good Donor Stewardship

In times of economic uncertainty, many businesses and nonprofits alike make the mistake of allocating most of their efforts to acquiring new customers or donors—often at the expense of their existing base. 

Of course, expanding your target client or donor pool is never bad; however, experts agree that retention of existing donors is more likely to yield results and thus should be your priority. Make a point to craft compelling impact stories, keep in contact with donors, and listen to what they want. Don’t be afraid to be honest if the organization is struggling or to acknowledge any hard decisions you’re forced to make. People are much more likely to stick around and continue supporting you if they feel you’re being transparent and genuine. 

A good online web presence and marketing campaign are essential for any nonprofit, regardless of the economic climate. But marketing can also be costly, particularly if your organization doesn’t have the resources to do it in-house. Resources like the Google Ads Grant, which provides $10,000 each month in free ads to qualifying nonprofits, are an excellent way to ensure that your nonprofit stays visible even when times get lean. 

If you’re ready to take the next step in protecting through recession-proof nonprofit techniques, Nonprofit Megaphone can help! Our trained team handles Google Grant acquisition and reactivation, ad creation and maintenance, weekly account optimization, and regular compliance updates for our clients, leaving you free to focus on the work that matters to your organization. As a Google Premier partner, we’ve helped hundreds of nonprofits expand their reach and achieve their goals- fundraising, visibility, client acquisition, or something else—all at a reasonable price. Check out our case studies or contact us today to learn more about our services, including Google Grant Management, Facebook fundraisers, and content creation.