Well, it is true; it’s actually happening. The non-profit sector is struggling in a large way. The timing couldn’t be worse: we rely upon so many non-profits to supply their services – from soup kitchens to health care – and the prospect of scaling back (or shutting their doors) is occurring when they are more urgently needed than ever in communities, both large and small, all over the nation. As a point of view, we have to remember that an organization receives its IRS non-profit status only after proving its charitable benefit to the constituency it serves.
If we examine the series of important events over the past months, several specific issues have combined to form that so-called ‘perfect storm’ – we have just finished the most expensive presidential campaign in the history of the country (and, before Obama can deliver his acceptance speech on election night in Chicago, many people were already quite seriously concerned about the economy), state budgets have been squeezed, many of those failing private-sector associations (even Freddie and Fannie) were large contributors to the non-profit industry, and individual donors have seen their economies fall over any other time in their lifetime.
Let’s face it ; the size of the current financial situation – and its effects on the non-profit industry – is enormous.
However, the objective of this article is to supply some positive actions to assist proactive non-profits achieve success (success?) Even during tough times. True, as in the for-profit sector, not all non-profits will endure. We cannot change that reality in a capitalistic society. However, we can encourage non-profits to exude excellence and compete one of their peers for precious funding dollars.
I got an email on March 26, 2009, from a bunch, whose advice I try to follow, known as “IT Solution Journal.”
Wow! That is the topic near and dear to my heart: non-profit compliance in the areas of integrity, governance, and accountability. As I have mentioned in previous articles, I believe that pro-active compliance is a certain way for a nonprofit careers, charitable organization to signal its commitment to excellence.
So, in part, here is exactly what that email had to say:
“Organizations of all types and sizes, industries and professions have long been mindful of the need for legal and regulatory compliance.
The good news: My experience has been that non-profit organizations have been exceptionally resilient over the years. And, my belief is that non-profit organizations are better-suited to address a number of their most pressing problems than the government-sector or even the private-sector organizations.
As well as the good thing: I am concerned that most non-profits have not been as diligent as they should with their regulatory compliance. So far, the crucial document for a non-profit, charitable organization was the IRS Form 990, filed yearly. It’s my opinion that this will start to change more and more (as I have mentioned in prior articles regarding the focus that Congress has placed on non-profit compliance along with the higher scrutiny it has mandated into the IRS.
Foundations are observing their endowments drop, thereby making the situation for less grant funds as well as their boards struggle with eroding investment portfolios. The same goes with individual donors. So, how can a fighting non-profit gain an advantage?
I have five suggestions:
1. Do not panic. Now’s the time for calm, cool, collected thinking.
2. Make necessary changes. If there are board members or staff members that aren’t serving the business adequately, replace them. Now’s the time to rally your best and brightest minds and your ardent supporters.
3. Review your IRS compliance requirements. Ensure that you have your policies in place – and, make sure that you are following them. Ethics, governance, and accountability measures will speak volumes.
4. If you are fortunate to have an endowment, utilize it. Avoid seeing the stock exchange amounts daily. Keep in mind focused on the future.