By Katy Snyder
JVA Communications/Resource Development Associate
Last week, we talked about Nonprofit 911—the things that nonprofits need to do ASAP to get on track in a down economy. This week, we’re talking about the real 9/11 —September 11, 2001—the effects that it had on the funding landscape for nonprofits and what we can learn that will help in the current recession.
On September 11, the nonprofit landscape radically changed. As the stock market tanked, donors pulled their necks in and stopped giving. Donors that didn’t stop giving changed their giving patterns and dedicated their dollars to emergency efforts. Foundation did the same. At many New York nonprofits, demand for services went up at the same time that resources became scarcer. Nonprofits that could no longer get funding merged with similar nonprofits or shut their doors.
Much like the effects of the current downturn, 9/11’s “immediate organizational impact was swift, hard and widespread,” according to an article entitled, “Lessons from the Crisis: New York City Nonprofits Post-September 11.” Also similar was the indiscriminate nature with which organizations were initially affected. The 9/11 impact was “impervious to organization age, budget size, staff size, type of organization, sources of funding or revenue—whether government contracts or fee-for-service…” While the initial impact seemed to be relatively random, the aftereffects eventually seemed to hurt small and medium nonprofits the most, as they could not count on the public and private support that the larger organizations had.
What can we learn from 9/11? Well, first of all, that things will get better. Although some organizations went under, the vast majority of nonprofits survived (except those created solely to help with the aftermath of 9/11; many are now out of business). The best of these nonprofits came out even stronger.
Here’s a list of the top things that they did, as reported in the articles Managing Financial Uncertainty by Thomas Raffa and Robert J. Cocchiaro, and Lessons from the Crisis: New York City Nonprofits Post-September 11 by Dennis Derryck and Rikki Abzug.
Look to your board for guidance in tough times. According to the Derryck and Abzug article, which looked at the results of a survey conducted with New York nonprofits after 9/11, only 38 percent of nonprofit boards met immediately after 9/11 with the express purpose of talking about the crisis. As the main function of a board is to provide governance, your nonprofit needs the board’s input on how to weather the downturn. If your board hasn’t met already to talk about the current recession, it needs to, and the sooner the better.
Stick to your mission. After September 11, there was an abundance of new funding available to nonprofits as the government dispersed emergency funds and foundations redirected their budgets to funding emergency services to help with the aftermath. We are seeing similar redirection of funding budgets to assist with emergency services such as food banks and homeless shelters in our current recession. Does this mean that if you are an arts-based nonprofit that you should create a new program to provide emergency services? Absolutely not. In economic downturns, it can be tempting to chase funding, but instead, an organization should really be looking at their programs to see if they are, as Raffa and Cocchiaro say, “mission-critical—activities that support what the organization was established to do.” Deciding which activities are mission-critical is another good time to bring the board into the fold to make decisions with staff about where your organization wants to go and how you’ll get there. As we talked about last week, having these kinds of conversations will help you decide if it’s time for you to do away with a program that a similar organization has the means and the mission to do better, or if it might be time to merge your services with another organization.
Communicate. With all stakeholders in your organization. This includes the board, foundations that have funded you in the past and your individual donors. Communicating with your board will help you craft a consistent message about the economy and how it’s affecting your organization, which can then be used when staff and board communicate with funders. By keeping lines of communication open with foundations, you will know which funders are cutting back funding and in what areas, and also continue to build relationships, even if you they do not have funding to give you this year. Communicating with individual donors will similarly allow you to retain support (such as through volunteering), even if your regular donors are not able to make a monetary donation this year.
Keep coming back to Nonprofit Street for more Nonprofit 911.