5/24/2021 - By Michael Ward
The COVID-19 pandemic has impacted nonprofits in dramatically different ways, with some organizations scrambling to meet rapidly rising demand and others shrinking to survive the ongoing crisis. Whether an organization’s situation has been one of boom, bust or somewhere in between, scalability is a universal asset in a global pandemic.
In March, a local government order forced a nonprofit community-based child development center to close its campus. As a result, the organization needed to figure out how to scale back operations and sustain itself so it might return to full capacity and capability once able to reopen.
To scale back costs and ensure long-term survival, the organization needed:
While the child development center was able to maintain its government funding, other sources of revenue fell through. Parents who were caring for their children in their own homes did not feel they should continue to pay full—or in some cases even partial—tuition for online resources provided. This left the organization to trim and manage costs wherever possible so that they could maintain their workforce and keep families engaged. However, by shuttering campus, they were able to curtail expenses, including utilities and supplies as well as janitorial and food services.
This issue is not uncommon. With limited unrestricted assets to cover overhead costs, nonprofits often need to consider cost containment measures such as furloughs and reducing variable costs when navigating lengthy COVID-19 closures.
For this nonprofit—and many others like it—scaling back while managing important functions such as government grant management and compliance allowed them to weather the storm and survive up until this point. Even with a promising nationwide vaccine rollout in progress and possible reopening on the horizon, keeping an eye on liquidity and containing costs will be important to sustaining nonprofits through the next phase of the pandemic. With so many unknowns, COVID-19 and the related impacts likely will continue to disrupt organizations for at least the near future. In times like these, only one thing is certain: flexibility in scale is key to survival, and the nonprofits that take this to heart will be best positioned to successfully carry on.
To expand or contract on a dime requires flexibility, agility and foresight. For organizations navigating COVID-19, taking concrete steps now can ease the pain of scaling down the road.
How can nonprofits ensure the flexibility of scale to navigate economic recovery?
While it’s impossible to know precisely what lies ahead as the nonprofit sector navigates the global pandemic, organizations that take these four steps to ensure flexibility of scale will be best poised to contend with whatever comes their way—from another shutdown to an unprecedented growth opportunity.
This article originally appeared in BDO USA, LLP’s “Nonprofit Standard” Blog (May 13, 2021). Copyright © 2021 BDO USA, LLP. All rights reserved. www.bdo.com
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