Financial Management in a Crisis/recession

'What will Your Non Profit look like when the economic dust settles?' April 20th seminar.

Russell Pomerantz of Fiscal Management Associates provided insight and technical expertise in his recent seminar at Cranwell under the aegis of Berkshire Taconic Community Foundation, Ulster County Community Foundation, and the Dyson Foundation. Following an overview of historical precedents, Pomerantz led the participants through a systematic review of how to assess and implement financial priorities and develop processes-especially scenario budgeting. Pomerantz's presentation was reminiscent of recent discussions I've had with independent school board chairs regarding short and intermediate term options for dealing with the economic down turn.

The session underscored the chasm separating organizations with endowment/financial reserves and groups who rely on uninterrupted income to make payroll. Organizations with some form of financial reserve are able to plan for systematic cost reductions. Pomerantz provided a 'tool box' of tactics to help manage expenses ranging from furloughs, reducing or eliminating 'entitlements' such as annual COLA, and reducing or eliminating un/underutilized benefits.

From my perspective the single most important take-away from today's presentation was the opportunity provided by economic hard times to dispatch certain sacred cows in non-profit financial planning such as-
'Everyone should be treated the same.' In fact merit or performance based pay will likely increase in the future.
'The financial folks handle budget and program directors provide content.' Pomerantz distributed an article [CPA Journal Feb 2008] on how the CFO balances the dual role of 'visionary protector' and/or myopic bean counter.'

Undergirding Pomerantz's approach was a critical assumption-NPO's that survive will have been supported by effective engagement between staff and board. Establishing priorities, articulating the state of the organization, ameliorating the impact of income swings cannot be the sole province of even the most visionary Executive Director or the heaviest of heavy-hitting boards.