I’m fascinated by the economic dynamics at play in the past year. The nonprofit sector tends to lag the market by 9-12 months in both good and bad times. This is partly because of the way the government attempts to funnel money to the sector, partly because of fiscal-year budget differences, and partly because of the way charitable giving is treated by individuals. While I could go on, I won’t, less you tell me you want my two cents.
Speaking of stimulus, there are a lot of cash flow issues cropping up within nonprofits waiting on funds from the states. While delays between the award letter and cash-in-hand are common with government grants, the stimulus funding contains deadlines for programs, hiring, and reporting prior to the cash being distributed. This is putting a lot of great nonprofits in a bind, especially those dealing with increases in demand.
If you’re a nonprofit and you have not started diversifying your funding sources, please start now. It’s not easy, and with no easy answers in a down economy. But I’ve talked with too many ARRA recipients who are hurting because of a lack of “plug money.” I’m also talking with those who are winning because they established a funding strategy and rainy day fund for just such an instance.
There are lots of resources out there, and lots of articles. But the key is to understand your market demographics, start small, and implement what is sustainable. Overtime, you’ll gain momentum. No successful program emerges overnight – even in this world of instant gratification or instant access.
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