RRP PDF oct1 2008 no.107.pub by benbenzhou


									REPRINTED FROM NONPROFIT ISSUES® VOL. XVIII NO. 13                               October 16-November 15, 2008

                                                                                         NO. 107
           READY REFERENCE PAGE                                                          FOR YOUR FILE

Check List For Dealing
With Tough Economic Times
Here are some things to think about when
planning how to get through the current economic crisis
Participants at the 18th annual      There are two obvious areas on        several other nonprofits, saving
This Year in Nonprofit Law           which to focus: cutting expenses      costs and expanding capacity.
sponsored by Nonprofit Issues®       and increasing revenue. But
and Montgomery, McCracken            don’t underestimate the impact        Since personnel costs are usually
Walker & Rhoads spent a sub-         of public policy on your situa-       a major part of nonprofit ex-
stantial amount of time discuss-     tion, and be sure to participate in   penses, it is a critical area to re-
ing the tough economic times         that debate to protect the work of    view. Review overtime to see if
facing nonprofits and the rest of    nonprofits.                           it can be reduced or eliminated.
the business world. Below are                                              Hold the line on salaries and bo-
some of the ideas that were gen-     Reducing expenditures                 nuses if possible. Avoid filling
erated for nonprofits to consider    Reduce discretionary spending         vacancies.
when planning how to get             where appropriate, including
through the current economic         celebratory events such as anni-      Consider the use of volunteers,
mess.                                versary parties (unless they are      especially those who might be
                                     fundraisers), travel and over-        out of work and looking for re-
Plan for the Worst                   night accommodation costs. See        sume building experience, to
Although the impact of the fi-       if service contracts can be con-      perform front line services
nancial situation will vary sig-     verted to time and materials at a     where possible. Use the unem-
nificantly according to the size     savings.                              ployed as consultants.
and type of organization, non-
profits should plan for the worst.   Reduce printing and publication       Some organizations have consid-
It makes sense to prepare several    costs and substitute Internet         ered reductions in employee rec-
varying budgets, one for a best      communication.      Consider a        ognition gifts, job satisfaction
case scenario, one for the worst     short twice a month email up-         surveys, and even education and
case scenario, and perhaps one       date (including donation oppor-       training programs or tuition re-
or two in between.                   tunity) instead of a quarterly        imbursements.
                                     print publication mailed to your
Then the organization must con-      constituents.                         Layoffs may be required, par-
stantly watch income and ex-                                               ticularly if an entire program has
pense against the budget to re-      Delay capital projects where          to be cut because the govern-
tain flexibility to react and ad-    possible. Outsource services          ment won’t fund it any more.
just. The Audit Committee, cre-      where it might be cost-effective.     But also consider cutting sala-
ated in response to Sarbanes-                                              ries, or cutting working time so
Oxley, is supposed to understand     Consider cost sharing arrange-        that staff can continue in place
the financial risks of the organi-   ments with other nonprofits.          and will be available when the
zation and should monitor what       The Pennsylvania Association of       economy recovers. (If you have
is going on on a regular basis.      Nonprofit Organizations shares        to do layoffs, consult with an
                                     office space and personnel with       experienced attorney before you

 www.nonprofitissues.com                                             Nonprofit Issues/October 16-November 15, 2008
do so to reduce the risk of litiga-   adopted the Uniform Prudent          profit Caucus in your state legis-
tion.)                                Management of Institutional          lature.
                                      Funds Act can take out income
Consider cutting service delivery     even where the value of a fund       Lead the lobbying against cuts in
or the extra frills of service that   falls below its original contribu-   state or local funding where pos-
are not critical. Close facilities    tion value.                          sible, and help create alterna-
and combine services in other                                              tives. Promote grants to states
places.                               Fundraising                          and local governments in the
                                      Don’t stop. Review your case         economic stimulus package.
Obtain state tax exemptions if        statement, and why your ser-         Resist the inevitable efforts that
eligible and if not previously        vices are even more critical in      will come to impose new state
obtained. Get bulk rate mailing       these difficult times. Concen-       and local taxes on charities.
permits if mail is a key compo-       trate on your most loyal donors.
nent of your work.                    Recommend IRA rollovers for          Support the economic stimulus
                                      those who are eligible, and          package, and work to include
Income generating activities
                                      charitable lead trusts for those     charities as a target of stimulus.
Maximize reimbursements
                                      who can take advantage of his-       The gross domestic product of
where there are third party pay-
                                      torically low interest rates.        goods and services of charities
ors. Charge for presently free
                                                                           in the U.S. is larger than the total
services where appropriate.
                                      Increase your efforts to obtain      national economy of Canada or
Shift services to more paying
                                      on line donations, including your    India. Charities employ about
clients and fewer subsidized cli-
                                      new twice a month email.             11 million workers and ought to
ents where possible.
                                                                           be considered a significant op-
                                      If necessary, ask directors and      portunity for job retention and
Start other income-producing
                                      stakeholders for loans.              creation and general economic
activities. Consider an affinity
credit card if you have a substan-
                                      Consider Affiliation, Acquisi-
tial constituency. (Harvard Uni-
                                      tion, Merger                         A number of organizations are
versity recently sent out an affin-
                                      This is also a time to consider      promoting a double charitable
ity card notice.) Investigate the
                                      whether it makes sense to affili-    contribution deduction for tax-
possibility of royalties for en-
                                      ate with others, or to merge and     payers who give more to charity
dorsements. Rent your facilities
                                      go out of business. It also makes    in 2009 and again in 2010 than
to others. Increase your on-line
                                      sense, if you have a strong or-      they did in 2008. The double
sales. Consider putting advertis-
                                      ganization, to consider acquiring    deduction would be applicable to
ing on your website. Some of
                                      other nonprofits so that you can     the increase in total contribu-
these activities may generate un-
                                      continue their programs along        tions to public charities in each
related business taxable income,
                                      with your own when things im-        year. This money is likely to be
but it may be worth it. (See
                                      prove. (See Ready Reference          spent promptly, here in the U.S.,
Ready Reference Page:
                                      Page: “Mergers and Acquisi-          and for goods and services for
“Charities Often Worry About
                                      tions Take Many Forms.”)             the public benefit. Get behind
                                                                           efforts like these. (See Ready
                                      Public Policy                        Reference Page: Lobbying Rules
Consider sales of assets, espe-
                                      Support the umbrella associa-        Create Opportunity for Chari-
cially unnecessary real estate
                                      tions, like the state associations   ties.”)
that has large carrying cost.
                                      of nonprofits or industry associa-
                                      tions, that are working to protect   This is obviously not a time for
Watch endowments and reserve
                                      the nonprofit sector and promote     passivity. It is a time for aggres-
funds carefully with professional
                                      the kinds of work that you do.       sive effort to promote your pro-
advice. Charities in Pennsyl-
                                      Work with them to create a Non-      gram.
vania and in states that have
 www.nonprofitissues.com                                              Nonprofit Issues/October 16-November 15, 2008

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