Coping With Cutbacks: The Nonprofit Guide to Success When Times Are Tight

Fieldstone Alliance

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Copyright © 2011 by Fieldstone Alliance. All rights reserved.

No part of this work may be reproduced without the prior written permission of Fieldstone Alliance, except for the inclusion of brief quotations in a review.

Fieldstone Alliance is committed to strengthening the performance of the nonprofit sector. Through the synergy of its consulting, training, publishing, and research and demonstration projects, Fieldstone Alliance provides solutions to issues facing nonprofits, funders, and the communities they serve. Fieldstone Alliance was formerly Wilder Publishing and Wilder Consulting departments of the Amherst H.

Wilder Foundation. If you would like more information about Fieldstone Alliance and our services, please contact Fieldstone Alliance at www.FieldstoneAlliance.org.

Illustrated by David Kacmarynski

Designed by Rebecca Andrews

Edited by Vincent Hyman and Judith Peacock

Second printing, March 2011

Manufactured in the USA

Library of Congress Cataloging-in-Publication Data

Angelica, Emil, date.

Coping with cutbacks : the nonprofit guide to success when times are tight / by Emil Angelica and Vincent Hyman.

p. cm.

Includes bibliographical references.

9781618588838

1. Nonprofit organizations--Finance. I. Hyman, Vincent L. II. Title.

HG4027.65.A54 1997

658.15’224--dc21

97-40748

CIP

Limited permission to copy

We have developed this publication to benefit nonprofit and community organizations. To enable this, we grant the purchaser of this work limited permission to reproduce forms, charts, graphics, or brief excerpts from the book so long as the reproductions are for direct use by the individual or organization that purchased the book and not for use by others outside the organization. For example, an organization that purchased the book to help its staff or board make plans relevant to the topic of this book may make copies of material from the book to distribute to others in the organization as they plan.

For permission to make multiple copies outside of the permission granted here—for example, for training, for use in a compilation of materials, for public presentation, or to otherwise distribute portions of the book to organizations and individuals who did not purchase the book—please visit the publisher’s web site, www.FieldstoneAlliance.org/permissions. Aside from the limited permission granted here, all other rights not expressly granted here are reserved.

Acknowledgments

We would like to thank the Edyth Bush Charitable Foundation for underwriting the research and writing of this book.

Many people contributed, directly or indirectly, to the ideas in this book. Thank you to the nonprofit leaders and consultants who gave their time and ideas through surveys, lengthy interviews, and conference participation—all told, several hundred contributors.

Thanks, too, to the following people:

David Odahowski of the Edyth Bush Charitable Foundation

Sherry Abbott of the Florida Nonprofit Resource Center for help in research

Becky Andrews for designing the book

Sue Dormanen, Kendall Guthrie, and the staff of HandsNet, an online service for nonprofit organizations, for posting an electronic version of our survey and a review draft of our strategies list

Greg Branstetter, president of NonProfit Partners, University Heights, Ohio, for his generous help in providing a survey mailing list

Anne Hays Egan, author of The Devolution Toolkit, for her work on the impact of welfare reform on nonprofit organizations

A special thanks to the many people who reviewed this book in draft form, including Sue Abderholden, Marcia Keller Avner, Bryan Barry, Art Cross, Anne Hays Egan, Bob Golberg, Bob Held, Sy Holzman, Nancy Latimer, Carol Lukas, David Martin, Patrick McCormack, S. J. Meaders, David Odahowski, Patti Oertel, Clifford Pearlman, Jackie Reis, David Renz, Michael Seltzer, Karen Simmons, Jennifer Vanica, and Kathleen Vellenga.

About the Authors

I never can understand how two men can write a book together; to me that’s like three people getting together to have a baby.

Evelyn Waugh

Emil W. Angelica, M.B.A., is a senior consultant with Amherst H. Wilder Foundation Services to Organizations. He has more than two decades experience in the nonprofit sector. His consultation experience includes planning, evaluation, organizational development, fiscal management, board development, strategic planning, and fund-raising planning. He has also served as the executive director to a nonprofit organization and as director of his own consulting agency. He has published several articles on nonprofit funding issues and has conducted workshops and keynotes on cutback-related topics. Emil earned his M.B.A. in Finance and Management from New York University.

Vincent L. Hyman is editorial director of Amherst H. Wilder Foundation Publishing Center. He has been writing and developing publications on mental health, social services, and nonprofit issues for fifteen years, is author of numerous articles on chemical dependency, and a contributing author to books on nicotine addiction, employee assistance, and rural violence.

Table of Contents

Title Page

Copyright Page

Acknowledgments

About the Authors

Preface

How to Use This Book

CHAPTER 1 - What’s Going on Out There?

CHAPTER 2 - How to Engage the Community

CHAPTER 3 - How to Generate Strategies

CHAPTER 4 - Cutback and Engagement Strategies

Postscript

APPENDIX A - Strategies Checklist

APPENDIX B - Reproducible Worksheets

APPENDIX C - Survey Responses

Bibliography

Preface

American nonprofits, deeply intertwined with the programs and policies of the federal government, are beginning to contend with a fundamental shift in how Americans want to solve long-standing social problems.

This is not the book we set out to write.

We wanted to write a simple book that would help people face the kinds of budget cutbacks that we thought were in the wind—cutbacks that we thought would be similar to those faced by nonprofits in the 1980s. Our book would consist of two basic chapters. One chapter would explain what was going on, and a second chapter would list strategies nonprofits could use to cope with the situation. We figured it wouldn’t take too long to research some new strategies to add to those we already knew, so we set to work—Emil by conducting in-depth interviews with a variety of nonprofit executives and consultants; and Vince by collecting strategies and background material from the published literature (books, journals, Internet) and from a survey of nonprofits.

We found out that our simple plan wasn’t going to work. The change descending upon nonprofits—what some people call devolution—is BIG. Much bigger than can be handled (in anything but the short term) by typical cutback approaches. In fact, the changes we saw in the early 1980s were really the first waves in what we believe has become a very large sea change. American nonprofits, deeply intertwined with the programs and policies of the federal government, are beginning to contend with a fundamental shift in how Americans want to solve long-standing social problems. This shift deemphasizes the role of the federal government in changing social conditions. We think it is part of a growing movement toward using more community-centered, locally based approaches to solving problems. At the same time, nonprofits face an increasingly diverse population. Increased diversity means that the one-size-fits-all approach to meeting community needs simply won’t work. Compounding the situation is the fact that many nonprofits involved in social services report heavier caseloads consisting of clients with problems more complex than ever before.

So we changed the course of our book. We still provide a lengthy list of strategies that nonprofits can use to cope with cutbacks, and we hope you will view these as one option to the challenges that face your nonprofit. But the heart of our work proposes a different way of thinking about solutions to the problems confronting nonprofit organizations. We describe a process nonprofits can use to rethink their roles and to retool their services to fit with the changing scene—and perhaps to meet mission goals in new and previously unimagined ways. This process is not just for nonprofits with social service missions. Any nonprofit providing some sort of social good—whether via direct service, cultural preservation, policy advocacy, environmental protection, or some other mission—will feel the effects of devolution and will need to adjust course.

We have tested this book and approach with many organizations and individuals. Through peer review, conference presentations, feedback groups, and practice sessions, we’ve only become more convinced that nonprofits are ready to change—and that they are hungry for tools to facilitate that change.

If your nonprofit organization is dealing with decreased funding, increased demand for services, or both, you will find some immediate, short-term solutions in this book, as was our initial goal. If you are feeling just a few of these changes and want to better prepare yourself for more of them, you will also find here a process to facilitate such preparation. If you are in a community with many opportunities for action, you can use the process to link with a variety of people in the community. If you are feeling relatively secure, you can use this book to inform your plans for the future and, we hope, to push your organization to greater community involvement and greater success.

Ready or not, all of us in the nonprofit sector are entering a new era. We hope this book can help your organization adapt and thrive.

Emil Angelica

Vincent Hyman

September 1997

How to Use This Book

This book is not about how to retrench or get lean and mean in the face of tightening financial resources. Nonprofits that faced major cutbacks in the 1980s will wince at the recollection of those terms and processes. Today’s