I have watched with complete disbelief the reaction that some of our nonprofit organizations have had in response to the recession. Here are just two examples…
In one case Organization X (name withheld to not shame the board and CEO) is not meeting its internal fundraising goals. Organization X is funded largely by foundations – an obvious mistake even when times are great. Their first and only development director has increased annual revenue every year since she was hired. Even in 2009 revenue is up despite being short of projections. The CEO is the only person to serve in this capacity and the board has largely been chosen by this staff person. And as you would imagine board giving and participation in fundraising is very little.
With revenue short of projections the obvious response is to lay off the only staff member bringing revenue into the organization. Yep, the development director is now out of work.
Let me see if I get the point…a company which needs revenue to deliver its product has elminated the sales department. Sounds like a business model with real potential (yes that is sarcasm).
In the second instance Organization Y (again name withheld for the same reason) has had a decline in interest revenue from its modest sized endowment because of the downturn in the market. It is this revenue that assists with funding program and some administrative costs.
The board of organization Y clearly agree that some agressive cuts in certain program expenses would allow the organization to hold staffing levels constant. In the midst of an agressive major gift effort that requires cultivation and stewardship – a pretty sensible approach.
As luck would have it the final decision was to cut back on staff hours NOT program expenses. Would there be a corresponding change in what was expected from staff? Did they re-write job descriptions to match the decrease in staff hours? The answer is no in both cases and the overwhelming rationale for the cut back was that “donors would expect it”. Funny, no one could identify which donors.
In both instances the organizations made financial decisions that have a negative impact on fundraising and the ability to execute it. Stop and consider their response: “Revenue is down and therefore we will cut back on the human capital necessary to bring revnue in the door”.
There is too much riding on the work of our sector. Real people depend on the work nonprofits do…I hope that at least two boards understand this soon!