The organizations that are successfully navigating through these challenging financial times have several shared characteristics, and here are just a few:

• A strong working relationship between the Board of Directors and the staff leadership team. Shared governance is one of the unique features of the sector and creates an opportunity to effectively leverage the collective wisdom of a team of passionate leaders to achieve your mission. More about shared governance.
• A balanced fundraising portfolio. Organizations that have built revenue streams from diverse sources, including grants, major donors, annual campaigns, program fees, and earned income, are much more nimble when one or all of those sources decline. Organizations that rely primarily on events are often the first to suffer.
• A keen focus on mission and the programs that are producing the strongest outcomes. Many organizations are using this as an opportunity to re-evaluate the effectiveness of their programs and halt the programs that are contributing the least value or are duplicating services that others provide. More on performance management. Others are considering alliances, partnerships and mergers. More on partnerships and collaboration.

Is your organization weak in any of these areas? If so, now's the time to strengthen to not just survive, but thrive.

In Peter Block's book, The Answer to How is Yes, he tells us the story of an AT&T executive who would ask his team, "What do you do when you find yourself in a hole?" The answer is, "Stop digging."

Block goes on to say, "Most of the time, when something I am trying does not work, I simply try harder. If I am trying to control a business, a project, or a relationship and it is failing, then I doggedly do more of what is not working."

What if we instead took a different approach and actually "stopped digging?" What if we put down the shovel and said to ourselves, "This isn't working. I'm going to stop doing it, analyze why it isn't working, ask for my team's support on finding a new path, and then set a new course."

Wouldn't it be great to be out of the hole-digging business altogether? What hole are you currently digging that's getting too deep? Take the smart way out. Stop digging.

In the current edition of the Stanford Social Innovation Review, Burton A. Weisbrod and Evelyn D. Asch make a compelling argument in their article, "Endowment for a Rainy Day."

Here's an excerpt from the summary:

"In recent decades, nonprofits have significantly increased the size of their endowments. Yet during the current economic crisis, they made scant use of their sizable holdings. Instead of drawing down their endowments to offset losses of income, nonprofits resorted to cutting programs and personnel, sometimes dramatically. To prepare for future financial downturns, nonprofits should treat endowments as rainy day funds, not cut programs to preserve the endowment."

View the full article here.

(Make sure and read the comments, too.  This stirred up quite a controversy!)

In a recent article on the Philanthropy Journal website, Pier C. Rogers gave some great advice about ensuring that you're not just managing through difficult times but also leading and inspiring others to action. Here are some of her pointers:

• Know your budget inside and out.
• Anticipate and see trends in programs and funding.
• Create budget scenarios - and plan for potential reductions.
• Communicate regularly with key stakeholders (board, volunteers, funders, etc.), determining the appropriate message for each.
• Where cuts are necessary, involve staff in analyzing budgets and recommending reductions. Line staff often know the most pain-free ways to reduce expenses.
• Know and preserve the organization's core. Reduce or eliminate programs that are not critical to your mission before other cuts are made. 
• Use financial dashboards to provide guidance in planning.
• Always maintain a positive perspective and message.

Read the full article here.

Additional Resources:

20 Questions About Your Organization's Financial Health.

More on Managing Expenses.

In the First Person section of the Winter 2010 issue of the Stanford Social Innovations Review, Alan Tuck, Don Howard, and William Foster from the Bridgespan Group start by saying that "Recessions are not sprints; they are endurance events."

Since 2008, they've been regularly surveying a group of ~100 nonprofit leaders, and this article offers a summary of the 7 healthy habits of those that are most likely to endure. These nonprofits:

1. Act quickly, yet thoughtfully.
2. Protect the core.
3. Fortify the best people.
4. Draw funders in.
5. Shape up.
6. Bring in the Board.
7. Communicate openly and often.

 Read the full text of the article here.

In the Jan-Feb 2010 issue of Harvard Business Review there's a great article by Joshua D. Margolis and Paul G. Stoltz about "How to Bounce Back From Adversity." The article is several pages long and loaded with great info, but my quick takeaway for nonprofits and NGOs is a list of several useful questions that will enable leaders to "counter adversity with resilience." Instead of becoming paralyzed by crisis, instead engage by using the questions below as starting points to catalyze action:

1. What can we do now to change or influence the course of this crisis?
2. Who can help us and what's the best way to engage those who can?
3. How can we effectively mobilize others to help us navigate through this?
4. Are there specific, immediate actions that we can take to reduce the potential downside of this crisis and maximize the opportunity that comes from it?
5. What do we want our organization to look like on the other side of this crisis and what can we do now to shape that outcome?
6. What concrete steps and action plans can we develop and adopt that will keep us moving forward as a team with a shared agenda?
7. How can we effectively communicate our plans to our key constituents and to the community-at-large?

Regardless of how we answer each of these questions, Margolis and Stoltz make it clear to us that resilient leaders use these and similar questions for rapid analysis, and then move quickly to a plan of action.

Read a summary of the article here (full article available by subscription only).

In a recent presentation, Michael Guillot from Gadd/Guillot shared his list of six questions designed to "energize our community through stronger philanthropy." We think these are awesome questions for anyone in any position in any organization to be able to answer at any time.  They are:

1. Why does what we do matter?
2. Who cares about us and our future?
3. What opportunities are emerging that require our attention?
4. How can we move toward our dreams?
5. When can we expect results?
6. Where do we go from here?

The full 36-page presentation is embedded below.  We recommend it highly.