When Cutting Expenses Isn’t the Solution
Deficits: at a certain point, cutting expenses isn’t the solution. Cutting expenses to meet income while maintaining the same organizational structure and model for staffing, programs and buildings will cause the organizational mission to be compromised after a certain amount of cuts. Moreover, the organizational stress of “death by a thousand cuts” will strain all aspects of organizational life, as people begin to ask, “Who is next?” It just ends up smelling of death.
So what to do? Wise, fiscally prudent leaders know that deficits can’t last forever. In organizations with net worth rather than net debt, the strategic use of assets will create the space to make the changes necessary to get finances back on track.
That strategic asset use could include:
- A Donor Capacity and/or Constituency Assessment to see what additional funds may be available to the organization. If you don’t know to ask, it’s less likely you will receive. It just may require you to ask people you never thought to ask in ways you never thought to ask for things you never thought to ask for.
- Development of a new organizational model with different governance, staffing, and program structures and different facility needs.
- Developing and nurturing partnerships with like-minded organizations for shared work in common causes.
- Developing a for-profit wing of the organization that takes the organization’s expertise and passion and uses it to fund the organization through the sale of products and services.
All of these approaches are adaptive in nature and require innovative thinking – but base results in how an organization can begin to thrive and grow rather than preserve what it has.