Not-for-profits are used to keeping a tight budget and working efficiently and effectively with limited resources, but the COVID-19 emergency has shaken many to their foundations.
We asked the Community Business Bureau (CBB) –a not-for-profit that helps others in the community sector with their business needs – about essential considerations for organisations battling to get through.
The bureau specialises in the disability field, but its suggestions apply to any group grappling with reduced income, restricted movement and constant change.
The CBB’s consulting and business services general manager, Jane Arnott, who has a keen interest in sustainable financial models for NFPs, outlined five measures small to medium organisations can take to ensure their financial survival.
1. First principles: Understand your market
The first consideration, the CBB suggests, is to know the market you are working in.
“Understanding the market is the basic foundation of our business consulting approach,” Ms Arnott said.
This meant “understanding your customers, your competitors, key agencies that regulate or influence the market, and the changing market context”.
She said good market knowledge was central to the CBB’s NDIS Success Program, which comprises free specialist training for disability providers to help them develop new services or to expand existing ones.
“If you understand your market in ‘normal’ circumstances, then you’re far better placed to identify and prepare for the potential impacts, and longer-term consequences, of challenges such as COVID-19,” Ms Arnott said.
2. A broader perspective: Be across the whole situation
Having a bird’s-eye view is critical to ensuring your organisation is responding appropriately, especially at a time when email in-boxes are flooded with information.
“There is an overload of COVID-19 information out there at the moment, and it’s hard to keep across it, but you need to keep yourself up to date with the latest developments, so you can act in a timely way, rather than playing catch-up,” Ms Arnott said.
That broader view “is another aspect of understanding the market, but it also involves a bigger picture perspective about what’s happening on a global, national and state level, and in adjacent sectors.”
Anything you can do to “think ahead” will help. Many community directors will be familiar with the Institute of Community Directors Australia’s 2020 Not-for-profit Roadmap, which laid out many of the challenges for not-for-profits before the COVID-19 storm rolled in, and which holds useful insights in this regard.
Our Community’s new study of the impact of the pandemic on not-for-profits also contains useful sector benchmarks.
3. Review your business (or service) model
If ever there was a time not-for-profits needed to rethink the basics, now is it.
As Ms Arnott says, “The pandemic has had a major impact on how your customers can access your services, and even the type of services you can offer.”
Whether you can adapt may depend on the groundwork you have already done to understand your market situation and develop your capabilities.
“We’ve seen our client organisations make radical shifts in service in response to COVID-19,” Ms Arnott said.
Many had transitioned from NDIS group work to “individualised supports”.
That kind of change required a good understanding of the operating environment, she said.
In the case of NDIS operators, “For that kind of service model change, you really need to have a good understanding of the NDIS, so you can make an informed decision around the regulatory and financial impacts of changing your service model.”
In CBB’s own case, it was able to increase its use of technology, wind back site visits and build on existing online training.
“At CBB, we work with not-for-profit organisations all over Australia. Whilst we love visiting clients on site, we were already using technology to engage with clients in remote areas, and with organisations that have staff across multiple sites.”
The organisation’s training program (NDIS Success) had already been planned to be delivered online, partly because it targets regional, rural and remote providers.
4. Understand your numbers: Get those finances right
While many not-for-profits lack resources and run a tight ship, having a good handle on the financial situation would always enable organisations to “plan and respond to the changing market”, Ms Arnott said.
“For example, if you have a clear understanding of your different income streams and your largest expenses, you can better understand which parts of your budget are risky, and what’s more resilient.
“This information is critical to your decision making and enables you to take a longer-term view, rather than making poor-quality ‘crisis’ decisions.”
Ms Arnott cited the case of a client that diverted group activity resources into new product development.
“They are confident that they can get through the next few months based on their other sources of income. This enables them to retain experienced staff and plan for the future beyond the pandemic.”
5. Research the support that’s available
Finally, if your organisation has a good understanding of its market, its business model in the current circumstances and its finances, you will be better placed to review the financial support packages that are available.
As Ms Arnott puts it, doing that research means “You can make the right decision for your organisation that looks at the long game, not just immediate pain relief.”
The Community Business Bureau offers business consulting in a not-for-profit context, providing assistance with understanding markets, business design, service models, and good financial and people management. It has specialist knowledge in the disability sphere, and has delivered government programs such as the NDIS Success package, which is free for organisations to access.
Trusted sources More information to help not-for-profits cope with COVID-19
Diploma of Governance Presented by ICDA, this course covers all the areas touched on by Jane Arnott in this article
This article is just one of the ways the Our Community Group is working to support not-for-profits through the COVID-19 crisis, as part of our major campaign to help the not-for-profit sector to survive, re-invent and sustain.