To support articles we posted recently on what corporate grantmakers, philanthropists and social investors can do in support of the impact of the COVID-19 pandemic (Read: 10 THINGS CORPORATE GRANTMAKERS, SOCIAL INVESTORS AND PHILANTHROPISTS CAN DO IN RESPONSE TO COVID-19 | Read: REIMAGINING A FUTURE FOR CORPORATE SOCIAL INVESTMENT), this article focuses on the flipside - organizations who work in the social and humanitarian aid sectors.
In recognition for the invaluable and enormous effort the humanitarian and disaster relief sectors are providing to governments and civil society across the world, we want to start off by acknowledging and honouring the work that you are currently doing in response to the COVID-19 pandemic.
Without you, many of the communities we serve will not survive. This is especially true in Africa, where we are already dealing with a lack of access to basic services such as water, housing, electricity, healthcare and social infrastructure.
The complexity and interconnected relationship between several social issues, cannot and should not be underestimated. Operating under these difficult circumstances, we want to acknowledge that you are operating in an already resource and capacity constrained environment and we thank you for your enormous effort.
That being said, how do Social Purpose Organisations (SPO’s) cope in the short term? (Henceforth referred to as a collective name for NGO’s, NPO’s, PBO’s, FBO’s, charities, humanitarian aid organisations and disaster relief organisations). This article is aimed at providing guidance for making immediate decisions and for continuing to play your part in serving humanity.
1. Immediate financial management actions:
The implications of COVID-19 will create a financial crunch and SPO’s should now do what they can to prepare for any eventuality. There are a few things you may want to consider:
- Focus on cash flow management immediately.
- Know what your fixed costs are and when you will need to pay them.
- Delay committing to any expenditure that you can.
- Chase all outstanding debts. First focus on invoicing for all services already delivered and then ensure that these invoices are paid.
- If you are receiving funding, submit any required reports to make sure that you receive future instalments on time.
- Talk to your bank manager and see if they will offer you an overdraft facility (even if you don’t need one right now).
- If you have loan repayments to investors or banks, then financial institutions may be willing to delay the repayments. Check online to see for which relief packages you may possibly qualify for (such as delayed repayments on credit cards, loans, etc.) or even local and global funding opportunities available that will assist you to continue delivering the most crucial services to communities.
- Implement a recruitment freeze on all vacant posts.
2. Develop a business contingency plan:
As soon as possible look at your organizational strategy to ensure it is achievable, considering the impact of COVID-19 on your finances.
- You will need to consider the financial and reputational implications of any existing contractual obligations. These include cancellation of events such as training, fundraising, etc.
- There is a great deal of uncertainty right now about the financial viability of world economic markets and this will have a direct impact on your income, so you might want to look at shorter financial planning cycles.
- Consider the right management structure and/or decision protocols to help you make quick decisions, recognizing that some key decision makers may themselves be unavailable for long periods.
- As the situation is constantly developing, there will be a need for continuous horizon scanning and the sharing of information between the senior management team and Trustees/Board members. Ensure you are prepared for any eventuality.
- Have conversations with critical supply chains to determine their vulnerability to the virus.
3. Plan for an uncertain future:
What other financial and operational activities should you think about right now? Globally, people and organizations live on daily news cycles. Long-term planning is out, and no one knows for certain what the future may bring.
- You and your board may want to consider the potential financial impacts of the virus’ spread continuing for a longer period of time. What steps you might need to take right now to protect and sustain your organization?
- You may want to budget for increased contingency costs over the next financial year.
- You may face increased need for support from people who rely on your organization. How will you raise funds and pay for additional expenses?
- You may also face increased costs if the impact on global trade continues. Speak to your funders about the impact of cancelling or delaying project activities that are part of funding agreements.
- Identify critical decisions that need to be taken right now, and then be explicit about whose responsibility they are. This can dramatically reduce the amount of time spent on inconclusive discussions or delaying the inevitable.
- Establish cross-functional teams, to do scenario planning, evaluate risks, make plans for varying potential scenarios – including bad and worst cases. Coordination can make it easier for people to align and integrate their efforts and share knowledge.
4. Support your staff and volunteers:
Many social purpose organizations are already constrained with limited online functionality, therefore the safety and security of both systems, processes and human resources in a time of crises can be severely tested. Firstly, many organisations have outdated information and communication systems i.e. desktop computers vs. laptops with limited mobile connectivity and data.
Secondly, staff may not have access to online services (that requires high bandwidth) where they are based and thirdly, even if they could take equipment home, and if they could access online systems and connectivity, security remains a challenge quite simply because of where people stay.
This may require you to consider the availability of and access to your resources; or have increased costs implications or may result in diminished and delayed productivity.
- Hardware: Staff will need access to computers and a good internet connection. Are you able to provide them with laptops to take home? Where possible avoid having staff use personal devices, as this can cause issues in relation to security and data protection.
- Software: Choose the right tools to suit your teams’ needs. Do you need a shared messaging system or a video conferencing system? Can all staff access data from your office servers? You may have to consider using cloud-based services, which of course will have a cost implication and take considerable time to set up.
- Meetings: Can you conduct your meeting via video conferencing or over the phone? Do staff have smart devices? Do they have data? What are the implications of ensuring they stay in touch?
- Processes: Consider your teams’ day-to-day processes and what is essential to continue. What are the normal ways you share information, tasks and feedback? Can these be done when working remotely? Allow for trial-and-error.
- Support: Working remotely will bring challenges and cause disruptions to the daily working routine. It’s important that staff feel supported. Be flexible. Understand that not all staff may be able to work from home on a continuous basis – consider different time zones, working hours and availability.
5. Act quickly and institute risk management plans:
The current turbulent times call for strong leadership and immediate action as risks escalate.
- You will have to manage costs aggressively; doing away with things that are not critical to your mission right now and holding off on any new projects or interventions that are not fully funded yet.
- Consider developing scenario plans that cater for a reduction in income of 30%, 50% and 80%. What will this mean for future hires, future interventions, and future cash reserves?
- Consider reducing your overheads immediately – by either reducing staff, giving notice on leases for premises and equipment, consolidating the number of interventions you are currently running, and reducing the number of locations you currently serve.
6. Protect your mission and the core:
Consider what is most important in staying true to your mission. Now is the time to focus on those interventions with the greatest impact and delivering the greatest value to your beneficiary stakeholders and funders.
- Consider whether you need to cut back or discontinue less critical activities and ask yourself, will this still matter in the future?
- Keeping in mind that by simply identifying which programs deliver the highest impact is not enough. Programs that are not covering their costs (thus requiring cross subsidy) deserve even more critical scrutiny, especially if they are less closely aligned with your organization’s mission and impact.
This will require you to really interrogate the real cost to deliver on the most critical interventions. Deep financial analysis of program vs. operational costs are now critical and needs to be done as soon as possible.
7. Focus on the most critical skills and competencies:
Every organisation has a small group of people who are critical to its success. When fighting for survival - who are these individuals who will fight the fight successfully with you?
- Who matters most right now? Who are those resources with critical and scarce skills, that can be leveraged to fulfill multiple roles and can manage multiple responsibilities. Who is key to the success of your organization? These are the resources that need to be protected and looked after.
- Focusing on critical resources won’t make the process less painful but is directly linked to the survival of your organisation. Those that do not fit the current criteria need to be protected and immediate plans need to be made to ensure that they benefit from existing relief provided by the government, such as claiming from the UIF funds.
8. Now is the time to stay close to your funders:
Funding organizations you have an existing relationship with are the most likely ones to help you navigate through difficult times. This is also a critical time to identify new funders across a wide spectrum. Dedicated resources to identify new opportunities. Start a database and supporting process to cultivate these relationships immediately.
- Now is the time to reach out, conduct research, align with and understand how you can tap into existing resources to deal with the crisis and align with the priorities of funders.
- Focus first on your highest priorities and raise funds for these
- Analyse your sources of revenue and categorize each according to
- Whether it is in the bank – i.e. committed
- Fairly certain – will still come through
- At risk – may not materialize. This will help you to focus and prioritize as well as have a better understanding about various financial scenarios over the short to medium term.
9. Collaborate to reduce costs and expand impact:
Now is the time to reach out and enter into partnerships to explore more innovative solutions that may come from these partnerships.
- By combining operations with another organization may save operational costs, create economies of scale, lead to shared best practices, and increase your chances of funding.
- Now more than ever, your board needs to be both well informed about the organization’s financial health and be a central part of the planning process.
Board members can make important contributions in multiple ways: by providing experience and expertise from other domains and sectors; by helping to pressure test your assumptions and plans; and by playing an especially active role in the organization’s fundraising efforts.They may also be able to provide focused operational support to complement staff efforts or to fill a gap if staff must be laid off.
10. Communicate openly and often:
Difficult times call for open and frequent communication. People need to know that leadership has a handle on the problem and a plan to address it. They want to know where they stand, what the organization’s prospects are, and what they can do to help. Develop consistent talking points for staff and your board to help manage perceptions.
- Currently all attention is focused on ‘combating the Corona threat’. You will have to work very hard to get through the clutter. Be very specific in your communications to all stakeholder groups.
- Everybody is trying to raise funding for their cause, which means there is much competition not only for resources, but also attention. Therefore, consider segmenting your audience and utilize your digital platforms to communicate. Develop separate messages for funders, for calls to action, for sharing updates and progress of your work, etc.
- Also provide context. In these difficult times you should share human stories, highlight the beneficiaries of your programs and the value they receive from your interventions.
Think. Execute. Transform. Now!
The better organized you are now and in the near future, the better positioned you will be afterwards. Learn from the crises.
- Take a deep look at your existing programs, what works, or not, what will be relevant in the future or not.
- Think about your impact, the reach, scale and depth thereof, and which aspects need to be redesigned.
- The big question is, how will you be more resilient in the future? Can you use this crisis as an opportunity to become more sustainable, flexible and digitally efficient and of course, financially resilient?
Steps taken to manage through tough times tend to endure. Making the wrong choices, ranging from across-the-board cuts that weaken everything you do, to fostering mistrust and fear by failing to communicate will have long-term consequences.
But so will making the right choices: reinforcing the organization’s core values and mission focus; identifying leaner ways to execute business as usual; partnering with other organizations to be more effective; getting in the habit of making hard choices; and becoming increasingly strategic about taking new things on.
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