One of these things is not like the other

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If ever there were a time to be reminded that all nonprofits are not alike, now is it.  Independence Blue Cross is not the same as a health clinic in a poor neighborhood.  A university is not the same as the local literacy or GED program.  Nor is the Museum of Modern Art the same as a community arts organization.

Yes, they are all nonprofits.  But there the similarities stop.  The infrastructures are vastly different.  The resources—from dollars to humans to energy—are vastly different.  The boards may look and act very differently, be equipped with very different knowledge and skill sets.  And the ability to survive during tough economic times is vastly different.

And given that we are in those tough economic times it is important to remember that not all nonprofits are created the same.  In my personal e-mail in-box this evening was a letter from the president of the university my son attends.   It was a letter explaining how the university had positioned and was still positioning itself “to weather the current economic conditions.”  There was no worry or angst expressed in this letter.  Rather, there was a careful reporting of the measures taken to date and being taken now.  He talked about conservative budgetary practices followed in the past, about a prudent approach to managing the endowment and how the Investment Committee of the Board of Trustees, along with the financial management team of the university, was monitoring the market.   Had I been worried before—which I had not—about the future of my son’s education, this letter would have quelled any fears.  If nothing else, I knew the paid and volunteer leadership were awake at the helm, paying attention and in charge.

But then again, these “current economic conditions” don’t worry me for all nonprofits because I know all nonprofits are not alike.  These times worry me for those nonprofits that don’t understand budgetary practices, let alone conservative ones.  Those organizations who operate, year after year, without a budget at all, or with no clue of their overall financial health and wellbeing, or with no understanding of how they are doing this year compared to last .  These times worry me for the nonprofits lucky enough to have surplus dollars, regardless of whether it is a rainy day or emergency fund, an operating reserve, an endowment fund, invested in something—a CD, stocks, bonds, real estate—but operate without written investment policies spelling out where to invest, risk willing to be assumed, when to hold, when to sell, etc.  These times worry me for the nonprofits who don’t have a board exercising its oversight responsibility and being that strong, auxiliary brain trust that is especially needed in these difficult times.  And these times worry me for the nonprofit boards too afraid to fire their executive director knowing s/he would retire in a year but now cannot because the market took what little had been set aside for retirement and made it invisible.  And this is just the beginning of why I worry for the nonprofits—regardless of their size, as size has nothing to do with it—who are unsophisticated in how to run their businesses. 

Before this economic downturn hits bottom, before we begin our recovery, and well before the next downturn happens—which it will, as it always does—every nonprofit which wishes to see its future must take immediate control of its business.  The board and staff must work together to implement best business practices first and foremost, and then, and only then, identify a strategy for weather the immediate weather conditions.