Tough Decisions in Tough Times

Being a nonprofit leader by definition means you will have to make difficult decisions – and even more so in a down economy. We make decisions about who gets served and who doesn’t. Decisions about how much (or how little!) your staff will be paid next year. Decisions about which programs grow and which need to shrink. Even decisions regarding difficult staffing changes.

Despite having a surprisingly strong year so far from a financial and impact perspective here at Greenlights, we have nonetheless had to make our fair share of difficult decisions this year, some related to the economy but most just in an effort to continue to excel and to be good stewards of the community’s resources. As we’ve navigated these waters, we’ve found that having adequate, accurate data to inform those decisions has been one of the keys to our success.

This year more than ever, knowing your numbers (be they financial, program performance, or others) in an intimate way is required for solid decision-making. We recently completed an incredibly enlightening exercise here in which we meticulously allocated all of our costs (salaries, benefits, rent, supplies, etc.) across each of our activity and program areas (consulting services, workshops, conferences, fundraising, marketing, admin, etc.). The exercise gave us a very good idea of what share of organizational resources all of our activities are using. We then allocated all  of our income (grants, fees, donations, etc.) across these same categories, which gave us new insight into what things we do are truly “covered”, and which things we do are “subsidized” by other programs or unrestricted revenue. This exercise is enabling us to make much smarter decisions about how to budget for 2010, where to invest, where to pull back, etc. To learn more about this and similar financial analysis techniques, please sign up to attend a workshop I am leading on October 29^th called Financial Management in Difficult Times.