Discover the Opportunity in Crisis Times are tough, but help is a click away. Get the information you need to lead your organization beyond survival to success by downloading Surviving the Financial Crisis: A BoardSource Toolkit. More Information

Educational Resources for Boards on Leading Through the Financial Crisis

As the nonprofit sector continues to feel the impact of our turbulent economy, it is critical that organizations be able to rely on their boards for leadership and stability. This section of the BoardSource Web site offers board and staff leaders resources for navigating these challenging times.

A recent BoardSource article presented the 10 smart things your board can do NOW to address the financial crisis; they are listed below. Click here to read the full article. Click on each topic below to access additional resources for leading through the crisis.

1. Don't panic.
2. Think strategically.
3. Get a realistic picture of your organization's financial situation.
4. Create a contingency plan.
5. Work more closely with your chief executive.
6. Step up your fundraising.
7. Tighten your belt.
8. Pump up your engagement.
9. Evaluate your compensation structure.
10. Be a mission guardian.

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1. Don't panic.

Don't let fear freeze you into inaction. Read, research, and remain calm. Be deliberate in any action your board undertakes.

Articles and Resources

• Facing the Financial Crisis: 10 Smart Things Your Board Can Do Now
  
  
• Finding Your Way Through the Financial Turmoil
  In this transcript of a Plenary Speech at the 2008 BoardSource Leadership Forum Plenary Speech, Linda Crompton, BoardSource President and CEO, asserts that boards need courage during these tough times.
  
  
• Raising Funds in Turbulent Times
  
  
• Boards MUST be Proactive in Responding to the Economic Meltdown by Terrie Temkin, Charity Channel (November 12, 2008) – Registration is required to view this article.

Services, Books, and Tools

• New Training – Leading in Turbulent Times: What Your Board Can Do Now

2. Think strategically.

Examine your organizational goals and strategies in light of the current economic conditions. Now is the time to think about how your organization can become more competitive. Thinking strategically also implies being conscious of how the board frames the questions it will discuss, which in turn directs where discussions will go.

Articles and Resources

• Thinking Outside the Boardroom
  
  
• Risk Management

Services, Books, and Tools

• Culture of Inquiry
  
  
• Training – Deliberating Differently in the Boardroom
  
  
• Training – Governance as Leadership: Reframing the Work of the Nonprofit Board
  
  
• Step-by-Step: Strategic Planning
  
  
• Strategic Planning Workbook for Nonprofit Organizations

3. Get a realistic picture of your organization's financial situation.

Talk to the chief executive and chief financial officer and determine how the financial downturn is affecting your financial picture. Assess cash availability if your revenue is tied to market fluctuations; make sure that your cash, investments, and/or reserves are parked some place safe and are getting the highest possible return. Check to see if you have a diversified funding stream, and, if not, develop a plan to diversify.

Articles and Resources

• Five Quick Questions for Your CFO
  
  
• What are the key financial questions our board should ask?
  
  
• Reviewing Financial Statements
  
  
• What should our nonprofit investment policy include?
  
  
• Madoff Scandal Provides Painful Lesson in Board Investment Policymaking by Linda Crompton, BoardSource President and CEO
  
  
• Finance Questions to Consider by the Nonprofit Finance Fund
  
  
• How Board Members Can Respond to Investment Turmoil by Michael W. Peregrine, Chronicle of Philanthropy (January 15, 2009) – Registration is required to view this article.
  
  
• Nonprofit Operating Reserves Initiative
  
  

Services, Books, and Tools

• Understanding Nonprofit Financial Statements
  
  
• Fundraising Responsibilities of Nonprofit Boards, Second Edition
  
  
• Step-by-Step: Nonprofit Financials
  
  
• Financial Committees
  
  

4. Create a contingency plan.

Ask the chief executive and chief financial officer to work with the board treasurer and/or finance committee to develop an alternate financial model for the organization based on the assumptions derived from that exercise, and create a contingency budget to account for potential shortfalls. Think outside your current structure: For example, consider a collaboration or even a merger with another nonprofit with a similar mission.

Articles and Resources

• Managing in Tough Times: 7 Steps by The Bridgespan Group – Bridgespan presents 7 steps for managing in tough times. Step 1 discusses contingency planning.
  
  
• Financial constraints
  
  
• Making Nonprofit Partnerships Effective
  
  
• Merge Right
  
  
• Merging Organizations
  
  
• Dissolving a Nonprofit
  
  

Services, Books, and Tools

• The Nonprofit Mergers Workbook Part 1: The Leader's Guide to Considering, Negotiating, and Executing a Merger
  
  
• Training – Strategies for Sustainability: From Strategic Partnerships to Mergers

5. Work more closely with your chief executive.

Any contingency plan must, of course, be developed in close collaboration with management. Now is the time to increase communication with, and support of, the chief executive and staff and help keep their spirits high. At the same time, adhere to a culture of transparency. If the financial situation is grave, work with management to keep staff apprised of developments.

Articles and Resources

• Constructing A Partnership

Services, Books, and Tools

• Training – Sharing Leadership: The Board/Staff Partnership
  
  
• Getting the Best from Your Board: An Executive's Guide to a Successful Partnership

6. Step up your fundraising.

Call on key funders to discuss your situation and reaffirm their commitment to your organization's mission. Go beyond your usual suspects by considering nontraditional funding sources, and don't forget to approach and engage former donors.

Articles and Resources

• Raising Funds in Turbulent Times
  
  
• Should all board members be required to make an annual contribution?
  
  
• Fundraising Roles
  
  
• What are the most effective ways to ask for donations?
  
  
• Break Through Fundraising Anxiety
  
  
• How much should be spent on overhead and fundraising costs?
  
  
• "Foundations, Corporations Have Committed More Than $100 Million to Address Economic Crisis, Researcher Says" by the Foundation Center
  
  
• Watch the video Ensure Adequate Financial Resources

Services, Books, and Tools

• Fearless Fundraising for Nonprofit Boards, Second Edition
  
  
• Fundraising Responsibilities of Nonprofit Boards, Second Edition
  
  
• Development Committee
  
  
• Training – The Board's Role in Fundraising

7. Tighten your belt.

Now is a good time to examine the feasibility of reducing expenses. Consider a reduction in board-related expenses. Build cash reserves as you reevaluate the necessity of budgeted capital outlays.

Articles and Resources

• Financial constraints
  
  
• 20 Cost Cutting Ideas for Nonprofits by Fieldstone Alliance.
  
  
• Raffa – Managing the Economic Downturn
  
  
• Nonprofit Operating Reserves Initiative

Services, Books, and Tools

• Understanding Nonprofit Financial Statements
  
  
• Financial Responsibilities of Nonprofit Boards, Second Edition
  
  
• Step-by-Step: Nonprofit Financials

8. Pump up your engagement.

Board members must step up and ensure that they are full, constructive partners with senior staff. All board members should be active ambassadors and friend-raisers and should help others connect the dots to see that your services are in great demand and offer great value.

Articles and Resources

• Constructing A Partnership
  
  
• Ambassadors to the Public

Services, Books, and Tools

• Training – Sharing Leadership: The Board/Staff Partnership
  
  
• Getting the Best from Your Board: An Executive's Guide to a Successful Partnership

9. Evaluate your compensation structure.

What could be worse now than newspaper headlines announcing the names of overpaid nonprofit executives? Benchmark your chief executive's compensation against survey data for comparable organizations. Such information has been compiled by The Nonprofit Times, Abbott & Langer, GuideStar, and The Chronicle of Philanthropy. Be prepared to discuss your findings with the chief executive.

Articles and Resources

• Chief Executive Compensation: How Should Your Board Determine Compensation?
  
  
• Developing a Compensation Philosophy
  
  
• What constitutes excessive compensation for chief executives?
  
  
• Intermediate Sanctions

Services, Books, and Tools

• Dollars and Sense: The Nonprofit Board's Guide to Determining Chief Executive Compensation
  
  
• Executive Compensation Policy – Download 3 Samples

10. Be a mission guardian.

Ensure that you, your fellow board members, and the chief executive recommit to forwarding your organization's unique mission and ensuring that all important decisions flow from the mission statement.

Articles and Resources

• Living Your Mission
  
  
• Why do we need a mission statement?

Services, Books, and Tools

• The Nonprofit Board's Role in Mission, Planning and Evaluation, Second Edition

Other Resources on the Financial Crisis

• Council on Foundations – Economic Xchange
  
  
• Foundation Center – Focus on the Financial Crisis
  
  

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