Constraint or Opportunity?

By Nell Edgington

One of my favorite organizations and a critical player in the creation of a well-capitalized nonprofit sector, the Nonprofit Finance Fund, is seeking feedback.  NFF is a community-development fund that makes millions of dollars in loans to nonprofits and pushes for fundamental improvement in how money is given and used in the sector. Last March they published the results of a survey about how the recession is affecting the nonprofit sector.  They plan to conduct a similar survey this spring, and, in a bow to crowd-sourcing and transparency, are soliciting feedback on questions to ask in this year’s survey.  They are soliciting this feedback through comments left at the Tactical Philanthropy blog.

Last year’s survey was a good one, but a key element was missing.  The survey focused solely on the challenges that the  recession brought. Question after question had a similar pessimistic, constraint-filled theme. For example the only options available to a survey respondent in the question “To successfully weather the current economy, please check all actions below that you have taken in the last 12 months or are planning to take in the next 12 months” were negative.  The options assumed that the recession provided only challenges, not opportunities, to nonprofits. The possible responses were:

• Develop a ‘worst case scenario’ contingency budget
• Reduce staff or salaries
• Freeze all hires and current staff salaries
• Reduce staff hours (short weeks, furloughs, etc.)
• Reduce staff benefits
• Reduce or eliminate programs
• Collaborate with another organization to provide programs
• Collaborate with another organization to reduce administrative expenses
• Merge with another organization
• Reduce or refinance occupancy costs
• Sell assets such as a building or securities
• Use reserve funds
• Delay payments to vendors
• Speed up the collection of receivables
• Engage more closely with your board through more frequent reports and meetings when necessary
• Hold conversations with funders to explain your situation and projections and/or to discuss the use of currently restricted grants

19% of respondents said “none of these” or “other.”  I’m curious about those respondents.  Is anything innovative going on there?  Maybe, maybe not, but is anybody asking?

In the business world, examples abound of companies that capitalized on a recession to gain market share, snap up talented employees from their competitors, create a new product or service, and so on.  Are there really no examples of innovation in the face of adversity in the nonprofit sector?  Or are we so mired in the charity mindset to think that innovation in the nonprofit world is not possible, particularly when economic times are tough.

I understand that this survey was primarily intended to uncover the financial situation of the nonprofit sector, but was there really no room to understand any potential opportunities the recession afforded and how nonprofits might be  capitalizing on those opportunities?  I don’t mean to be a Pollyanna in the midst of a dire situation, but if we continually throw pessimism and constraint at the nonprofit sector doesn’t it make sense that they will continue to feel constrained and pessimistic?  Is there a possibility that some innovation exists out there?  Perhaps there are examples of nonprofits who bucked the trend and took the recession head on, revamping their approach to the social problem they are working on, or the funding of their operations, or the delivery of their services, or their response to competitors.

Let’s uncover the Southwest Airlines (creator of the “Grab Your Bag, It’s On” anti-recession ad campaign) of the nonprofit world who are taking the recession by the throat, making some bold moves, and innovating amid constraint.

We’ve seen it here at Social Velocity.  One of our clients, Heart House, an after-school program for at-risk children, decided last year to kick their vision for growth into gear, despite the recession.  The program, currently serving 500 kids in Austin and Dallas, knows they have a great, scalable model, so they put together a growth plan to go statewide.  Social Velocity helped them refine the plan and create an investor pitch around it, and they went out to raise $1.5 million in growth funding, recession be damned.  A few months into their campaign they’ve already raised a third of the money.  They don’t sit around talking about constraint and the horrible economy, yet they are feeling the pinch just like the rest of us.  They seized the opportunity:  when funders have nonprofit after nonprofit coming to them begging for money to get by, Heart House talks about something completely different.  They are talking about big plans, a grand vision, results and a way to scale those results, a way to solve Texas’ afterschool problem.  And funders are intrigued.

Let’s uncover those stories. Let’s hold them up as an example of how constraint can breed innovation.  That’s inspiring.  That’s encouraging.  That’s bold.

Related posts:

1. The Opportunity in the Chaos
2. Making Change the New Norm

Tags: Heart House, Nonprofit Finance Fund, recession, Social Velocity, Southwest Airlines, Tactical Philanthropy

---

No comments yet.

Leave a comment