Welcome to my first post of 2016.
Economists predict a gloomy time financially. In fact, many say that South Africa will go into recession – defined as two consecutive quarters of contraction. The Finance Minister, Pravin Gordhan, says that the country will not in fact go to recession. While those with understanding and experience way above my pay grade debate the details, the important point for all involved in organisations that are reliant on donated money, is that the tough times are going to get tougher before anything improves. The rand is at an all-time low against major currencies. A drought is ravaging large parts of the country. While the weak rand makes our exports more attractive, everything we import is more expensive – so goes the vicious circle. Companies are downsizing. South Africans are belt tightening. NPOs, schools, faith based organisations and tertiary institutions need to do the same. We need to be more innovative than ever in resourcing our organisations. The solution to the financial crisis is not as simplistic as to raise more money. Obviously, all organisations reliant on donated funding as part (note part!) of their funding mix, should always be doing whatever they can to maximise donations.
I say ‘part’ above as no organisation should be in as precarious a place as being entirely reliant on donations. Not-for-profit entities must explore many sources to resource themselves, such as income generating initiatives.
But what about the fund spending? In the same way as companies look to save expenses and households re-look at their spending, so too must non-profits.
What has been done within your organisation to save money? By how much have the expenses being reduced? These should be the burning issues – not just, ‘where/how can we raise more money?’ Success breeds success. Donors want good news. They are rarely given any. Shout from the rooftops about your organisation’s cost saving measures. ‘As part of our tight financial controls and in the light of the economy, we have done A,B,C and thereby saved X rands’, is way more impactful than the victim mode that is, sadly, the default to many in the in NPO sector. ‘The problem is that we don’t have money’, ‘might have to close’, ‘don’t know how we will pay our salaries next month…’
Before anything else, we need to make a mind-set switch. This can be harder than fundraising. We may need to mothball certain projects, retrench staff or reduce their working hours. We may need to take tough decisions in order to ensure that our organisations survive and that we are able to continue in our purpose – to serve our beneficiaries.
What innovative ideas do you have? What cost saving measures have been implemented in your organisation?