The last few months of 2008 were a period of increasing anxiety for many nonprofit leaders, as the economic news continually worsened. Still, most people I talked with had not yet experienced much direct impact from the financial crisis. Early 2009 shaped up differently. Outstanding proposals to foundations are being denied, and those awards that are still made are often being trimmed. At the same time, as state governments begin their annual budget cycles, the next fiscal year is beginning to look especially grim.

Everyone hates budget cuts, which in our world usually equate to layoffs, since people expenses are the bulk of nonprofit budgets. If you are facing a revenue shortfall I cannot tell you how soon or how deeply to cut but I can say that beginning a pattern of deficit spending, unless you have very substantial reserves, is the path to ruin. Find a way to get your budget in balance, reduce your service levels if you cannot afford to sustain them. Remember, this is a marathon, not a sprint, and your organization needs to survive in order to stay in the fight.

Tags: nonprofit

This entry was posted on Monday, April 27th, 2009 at 2:15 pm and is filed under Nonprofit Sector, Trends. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.