I have been thinking about the last crisis in 2008, how it impacted nonprofit organizations, and what lessons could be learned. I reached out to several people who I thought would provide good perspective, people who have served on many boards and as funders. In this post, they offer their insights from the last crisis as well as thoughts about this one.
I interviewed in alphabetical order: (See bios below.)
- Robbie Bach, former President of the Entertainment and Devices Division at Microsoft and currently a speaker, author, consultant, and nonprofit board member.
- Michael Brown, Chief Architect of Civic Commons at Seattle Foundation and a nonprofit board member.
- Phyllis Campbell, Chairman for the Pacific Northwest for JPMorgan Chase and Co. and former President and CEO of Seattle Foundation.
- Jon Fine, former CEO of United Way King County and currently a board member, professor, and consultant.
We are resilient as a society, as a community, and as a people. Fine
There are so many efforts to help people who are the most vulnerable. That is the good news. That is the silver lining. The generosity of the community is showing like never before. Campbell
The first advice is to act quickly. Money for nonprofits is going to be tight and organizations need to respond immediately by cutting deeply if they are going to survive.
Bach: Speed is important. Decide what changes you are going to make and make them. If you have to make cuts, make the cuts. If you have to change programs, change programs. Don’t just try to tweak around the edges such as changing the ratio of staff to clients. You are wasting valuable time. Organizations have limited resources. How can you make them last the longest? You will have to make cuts eventually; better to do them now.
Campbell: You have to react fast because things are collapsing. Organizations will have to do things very quickly rather than slowly and incrementally as nonprofits usually do. The last crisis caused everybody to look at efficiencies. But we were talking about 10 or 15 percent cuts. That was belt tightening. Today we are talking about cuts of 50 or 60 percent. Today is a true disruptive event with no certainty of the scope, no predictable outcome. Boards need to prioritize cash flow and preserving current resources.
Fine: I was around during the crisis in 2008 as well as the dot com crisis in 2000. Looking at those times, I would tell nonprofits to cut back faster and deeper. It is painful to cut back. Organizations are going to leave some clients behind. But they have to go through the pain, or they won’t survive. You can expand again in the future. But you won’t be around if you don’t cut back quickly and deeply. The organizations that cut fast and deep in the last crisis survived and did better by their clients.
Center Your Mission
So how do you decide what to cut? The second recommendation is to focus on your mission and where you add value. Identify which programs are most essential and prioritize those. We are all in this crisis together so put community first. That means collaborating and coordinating with other organizations. If someone else can do the work better, consider cutting that program.
Campbell: Our goal is the recovery of our community. Organizations need to focus on their mission and what is most important. What role do we each play as we work together?
Bach: Understand your core mission and who you serve. Decide in concentric circles about what you can cut. This is not a time to rethink your mission. If you have to do that, you probably had the wrong mission anyway.
Fine: In the last crises, organizations that focused, strategized, prioritized, and cut back to the essentials are the ones that did the best. Those that tried to do too much or held off making changes struggled and did not deliver for their clients. Cut back to what is essential. Boards should understand where they are truly adding value and prioritize those areas.
The third topic that came up repeatedly was fund development. Organizations are worried about fundraising. State and local government budgets will shrink. Philanthropic dollars will decrease. Traditional fundraising events are cancelled. How do you even plan or make assumptions? What if donations do not come back for a year or more? Organizations that are not on the front line feel especially vulnerable as donors prioritize immediate needs. The advice is to target current donors and have board members help.
Fine: It will not be easy to raise money in this climate. And the money you do raise will be from people who already support you. I recently reached out to a potential donor on behalf of an organization I am helping. I thought he would support our work. But he said, “You know what? We are cutting back to what we see as most essential. We have not given donations to you before. I am happy to have a conversation in the future. But not now.”
Campbell: In the last crisis, everyone worried about fund raising but we were still hopeful. We thought, “If we can make a good case to our donors, we can still raise enough for our basic operations.” But it will be worse now. Organizations will need to look at their strongest sources of funding and focus there.
Brown: Funding for advocacy, policy, and intermediary organizations will be even more at risk. It takes a certain type of donor to understand their importance. In the last crisis, one organization I worked with developed a clear case of why their work was still relevant. Their staff and board reached out to their donor base. Their board really leaned in. They thanked donors for their past support, communicated what they were doing, and made the case for why their work mattered even during the crisis. They told donors that they understood the need for direct service but asked to not be completely zeroed out. They kept a lot of donors that way.
Don’t Forget the Emotional Impact
Boards and senior leadership are going to have to make heart wrenching decisions about discontinuing programs and laying off staff. Cutting programs impacts clients. But not cutting could mean your organization will not survive and many more clients will be hurt. Cutting also has an enormous impact on your staff – even if they retain their jobs. Leadership needs to be transparent, to communicate constantly, and to listen.
Campbell: In the last crisis, many of us missed the human factor and cost. People go through emotional cycles. At first, folks were scared and resistant to change. The same will happen here. We are leaving the world we knew and entering a different world. Nonprofit leaders need to understand what staff are going through. We need to understand their fear and how that can lead to resistance. It is essential to be open and transparent. Be clear about what is going to happen to them, how their jobs will be affected, how they might refocus or do things differently.
Brown: Nonprofit staff are panicked. Government budgets are going to shrink. Philanthropic budgets are going to shrink. It will become more competitive. They are angry when they don’t get funding. They know they are going to be impacted. They are concerned because they are facing something that they did not anticipate, and they do not have the infrastructure to weather it. They are not sure that they will have the funding to respond to the needs they are seeing on the ground.
Fine: None of this is fun for staff. Boards and leaders should be transparent. They should over communicate. Even if you think you told them, tell them again. Also listen. Staff have good ideas. Be decisive — it is not a democracy where staff gets to decide — but you need to hear their input and adopt their best ideas. Communicate that you want to help the clients you are best able to serve. You are not looking to abandon people, but you have to prioritize.
Bach: There is a lot of collective angst on boards at these times. It is emotionally challenging. It is hard on staff to deal with the situation programmatically and operationally. But if the board’s own angst gets reflected back, it is even harder on staff. Boards need to take a moment to be angry or scared and then let it go and move on. I think the most important thing for boards and leaders to do – and this is an emotional thing – is provide a sense of security. Be present. Show up for all the board meetings. Give. Help with fundraising. Be transparent and honest about what is going on. Uncertainty at the organizational level is deadly. Even if the news is bad, people will operate better if they know what is going on.
The Future Will Be a Marathon
A key role for boards is to think long term and they should start this process now in parallel to efforts by staff to address the crisis.
The Future: How to Do Your Work Better and Have More Impact
Boards, working with Leadership, need to imagine what the world might be like and what role their organization will play in that world. How will your organization be relevant and how will it interact with other organizations, government, clients, and donors? What does it mean that government is stepping up in unprecedented ways? Working better not only means finding efficiencies, but also learning how to partner and collaborate more.
Brown: After the last recession funders in the Seattle area created a resiliency fund. Funders wanted to balance short-term need with long-term investments. We wanted to strengthen systems and encourage collaboration so when the next recession came, the region would more resilient. Those investments leave our region in a better place in many areas. But this crisis is so much bigger, there will be much more need. As we come out of this, organizations need to be focused even more on collaboration and system changes.
Campbell: The sector will look very different on the other end. The public sector will play a crucial role in recovery because it is so massive. There are two ways to think about it: First, how we can combine forces with other like nonprofits? Because we can’t afford to do the same things. Organizations cannot worry only about their own brand and their own mission. They need to think about the broader community. Second, how will public sector money and partnerships fit into delivering on our mission? I am encouraged because we do see that we are all in this together. It is not the corporate sector in one corner, philanthropists in another, the government in a third, and nonprofits in yet another. We all have to work together. Partnerships will be the name of the game going forward. Organizations that are collaborative and relevant will be the ones that come out of this relatively well. Donors will gravitate to them.
Bach: Figure out when you can stop triaging the pain and start thinking long term. In all crises, there is a rush to triage. Unfortunately, some organizations never get past triage. The hardest thing for leadership to do during a crisis is think about the future and realign to get there. It’s hard work. Take advantage of the opportunity: Focus on mission. Stop doing things that you have known for a while are having marginal impact, but you kept going because of a donor or some legacy. Scale up those promising pilots and push them out.
The Future: Resiliency
Leadership should examine governance and financial practices. What are your expectations of board members and how many of them fulfill those expectations? Now is a good time to up the ante. You should also plan on creating a reserve fund which will protect you in future crises, institute executive sessions, do succession planning, and more. I recommend looking through my previous posts: https://leadingwell.org/blog-archive/
Campbell: The last crisis caused organizations to look at their boards more and ask questions: Who is on our board? What do they bring? What are our expectations of board members? Boards shrank. I think organizations that made the pivot to better governance in the last crisis will be stronger in today’s crisis.
Brown: My observation is that those who spent time thinking about their resiliency and built up their reserves after the last crisis are going to weather this one better. They have some breathing room. So, coming out of this crisis organizations will need to rebuild reserves – or build them up if they did not before. There are also many new ways of doing things now. Like working from home. We don’t know which will become permanent and which will be temporary. But the Board and CEO should be thinking about that – with an eye on equity.
The Future: Equity and Structural Changes
This crisis has exposed the stark reality of life in the US. Health, job prospects, education, and more are too often determined by how a person looks or speaks or where that person lives. This is wrong. Boards and nonprofit leadership should integrate policy and advocacy into their strategic plans. We must prioritize structural changes that address inequities in our society. Organizations should start by identifying the equitable world they imagine and outlining the steps needed to get there.
Brown: On January 1 of this year, we knew there were structural inequities and biases. Now they are all in front of us. We must figure out how to tackle them. We have to see this moment as an opportunity to play that long game. We had some organizations post 2008 shift their work. They were still doing direct service but also tied in more to efforts that address structural challenges, to slow the flow. We cannot just leave this to philanthropy. It requires the public sector. So, we need to advocate. We also must figure this out as a region. We are all in this together. Yes, there are more needs in some geographic areas of our region but let’s not pretend there is not need in all areas. We must focus attention on the neediest people wherever they are. If we target the systemic piece, we can cover the entire landscape.
Fine: Before any of this happened, a substantial minority of the population was living hand to mouth with no reserves. Shutting down the economy and their means for making a living creates a huge problem. We have to address this.
Biographies of Interviewees
Robbie Bach joined Microsoft in 1988 and over the next 22 years worked in various marketing, general management, and business leadership roles. Beginning in 1999, as Chief Xbox Officer, he led the creation and development of the highly successful Xbox video game business. Now in his new role as a “Civic Engineer,” Robbie believes we all have a responsibility to engage on civic issues and dedicates his time and energy to providing strategies, creative ideas, and consulting to organizations who are driving positive change in our communities. He speaks to corporate, academic and civic groups across the country and in 2015 completed his first book, Xbox Revisited: A Game Plan for Corporate and Civic Renewal.
Michael Brown is the Chief Architect of Civic Commons, a regional civic infrastructure of Seattle Foundation aimed at uniting more community voices in decision-making to advance racial and economic equity. Most recently, Michael served as the Foundation’s Vice President of Community Programs, where he oversaw the Foundation’s community impact efforts, strategic grantmaking initiatives, convening activities, and impact investing program. Since beginning his tenure at the foundation in 2001, Michael has led efforts to elevate community voice and foster public-private partnerships, tackling complex challenges in the areas of affordable housing, economic and racial equity, policy, and advocacy. He led the development of the Seattle Foundation’s Center for Community Partnerships, which focuses directly on targeted efforts to achieve greater racial and economic equity.
Phyllis Campbell has been chairperson of the Pacific Northwest Region for JPMorgan Chase & Co., a publicly traded company since 2009. She is the firm’s senior executive in Washington, Oregon, and Idaho, representing JPMorgan Chase at the most senior level. From 2003 to 2009, Phyllis served as president and CEO of The Seattle Foundation, one of the nation’s largest community philanthropic foundations. She was president of U.S. Bank of Washington from 1993 until 2001 and served as chair of the bank’s Community Board. Phyllis has received several awards for her corporate and community involvement, including Women Who Make A Difference and Director of the Year from the Northwest Chapter of the National Association of Corporate Directors.
Jon Fine was President and Chief Executive Officer of United Way King Count from 2000- 20019. Under Jon’s leadership, United Way of King County became one of the largest United Ways in the county and one of the leading human services organizations in the Puget Sound region. Prior to United Way, Jon as the CEO of the Seattle/King County Chapter of the American Red Cross. Before joining the Red Cross, he worked for Weyerhaeuser and in the banking industry with Puget Sound Bank from 1981 to 1993.