Nonprofit Enterprise Management: Strategic Planning for Adverse Scenarios

In recent years, nonprofit organizations have faced an unprecedented number of challenges including a global pandemic, economic volatility, inflation and the Great Resignation. These adverse scenarios have impacted nonprofit operations at every level, while also exacerbating community needs. Fortunately, we have seen many nonprofits quickly adapt and prioritize resiliency and stability as key objectives in their strategic plan. In this paper, PNC Institutional Asset Management’s^® Nonprofit Strategy & Solutions team shares ideas to help your organization find stability, and even grow, in these turbulent times.

Strategic Planning for Stability and Impact

Consider discussing the following topics in your next Board or strategic planning meeting.

Evaluate and Prioritize

While the community need for your services has grown, your ability to meet those needs remains limited to your accessible resources. Be realistic about your capacity and prioritize activities that are within the scope of your mission.

MISSION: Revisit your mission and reaffirm buy-in among your board and staff. When surrounded by so much need, it’s easy for nonprofits to experience mission creep, but you likely cannot do it all… at least not well. Take time to get back to the basics and be sure your guiding mission statement accurately reflects your work. As you evaluate your programs, operations, and finances, refer to your mission to help set priorities and, if necessary, scale back expenses and activities.

PROGRAMS: Evaluate each of your programs by asking:

How is each activity contributing to the success of your mission?
Are there activities that should be accelerated or eliminated?
Do we have the resources we need to do this with impact and excellence?
Is each activity/area fully funded and staffed? If not, how do we get there? Should it be postponed (or even canceled) until it is fully resourced?
Do we have the skill/expertise needed to do this well?

If any of your programs fall short of these criteria, consider partnering with another organization that can help fill any gaps.

OPERATIONS: Assess each of your operational areas by considering where investments should be made.

Staff Recruitment and Retention – While hiring and retention has been a challenge across industries, nonprofits are struggling at higher rates than their for-profit counterparts. Many nonprofits have lost staff to the for-profit sector who can often offer higher salaries and more robust benefits. Nonprofit staff also face issues such as lack of access to childcare, burnout and lack of flexibility among reasons for leaving their nonprofit job.¹ Consider:
- Are you staffed appropriately? Is your staff burnt-out because they have unrealistic workloads?
- Does your team have the skills, education, and experience needed to do their jobs well? If not, how can you address this issue?
- Are employees able to grow in their roles, and are there clear internal pathways to build skills and achieve new positions?
- Are your salaries and benefits packages competitive?
- Is your workplace culture conducive to diversity, equity, and inclusion? Do you have policies supporting these practices?
- Do your employees use their paid time off (PTO)? Do your leaders set an example by using their PTO and making space for their staff to do the same?
Succession Planning – Board and employee turnover is unavoidable in the best of scenarios. A thoughtful succession plan will help ease the fallout caused by the loss of a key employee or Board member. Consider:
- Are you cross-training your employees? For example, if your office manager were to resign, would other staff know how to access key files and continue their work until the position was filled?
- Do you have someone on staff who is being groomed to take a leadership role if your executive director were to resign? If not, who would fill the role in the interim?
- Is there a transition plan in place if there is an unexpected leadership vacancy? How would you communicate this transition to your staff and donors to retain their confidence in your organization?
Board Operations – The fundamental operations of your Board are critical. Consider:
- Is your Board engaged? Do they understand your business model? Do they regularly review and understand your financials? Do you provide them with regular learning and development opportunities?
- Are your bylaws up to date? Do they address how the Board and senior staff can make decision during adverse scenarios, such as having to cancel a gala, apply for a loan, draw from your reserve fund, or hire a temporary staff member if someone resigns?
- Consider that, in an emergency, you may not be able to gather the full Board for a unanimous vote. Discuss which decisions can be made by your Executive Director, Board President or Finance Committee. This policy should be included in your bylaws and voted upon prior to an emergency situation.
- Do your bylaws include term limits, and do you have a pipeline of qualified candidates that allow for new perspectives and fresh skills to participate on your Board of Directors?
- Do you have Board members with relevant expertise such as legal, human resources and communications? Have your Board members lived experiences related to your mission?

FINANCE: Review your investments, think flexibly and defensively

Does your five-year budget projection give you flexibility to handle uncertain markets?
How sensitive is your investment program to a market drawdown?
Does your spending policy provide enough flexibility to navigate in volatile markets?
What steps have you taken to minimize risk in your investment portfolio against your return objectives?
Project and Stress Test Your Budget – Create a budget projection with expected income and expenses, then consider how various adverse scenarios would impact that budget and how you would respond.
- For example, what if your fundraising gala had to be cancelled or postponed? What if your biggest grantor or donor decided not to fund you this year? Would you be able to meet your financial obligations?
Reserve Funds – Ideally, your organization has at least 3 months of liquid, unrestricted reserve funds to be used in case of unexpected adversity. Make sure you have a clear policy as to when and how these funds can be spent and who can decide when to use these funds.

If you do not have a reserve fund, create a plan to fundraise for one. Consider asking a long-time donor to provide seed funding, explaining the stability and longevity it would create for your organization.

If you have more than a year of unrestricted cash, consider speaking to a financial advisor who specializes in institutional assets about strategies for capital preservation and investment. You may be well-positioned to establish or grow your endowment to support your operations well into the future.

FUNDRAISING: Review your income and fundraising activities from the last few years. On which activities do you spend the most time and money? Which efforts bring in the most revenue? Are these aligned?

Ditch the Gala? After having to forgo or significantly scale back their fundraising events to prevent the spread of COVID-19, many organizations realized that they can raise the same amount in donations without an expensive and labor-intensive gala or golf tournament. As you evaluate your return on investment for events, do not just calculate the financial costs, make sure you are considering the amount of time it takes the staff to put these events together.

Consider less expensive and time intensive fundraising activities like a “Stay at Home” gala, new grant opportunities or engaging socially responsible businesses in your community. But before you cancel all your events, consider other ways you can showcase your services and engage donors in your mission such as volunteer opportunities or an open house.

Consider Planned Giving – While not all nonprofits have the capacity to manage a robust planned giving program, it’s worth seriously considering. Last year, $46 billion was given to charities via bequests, a trend that is increasing steadily every year.² According to the American Council on Gift Annuities, 52% of donors who create a charitable gift annuity also include the nonprofit in their estate plans, and most planned gifts often lead to larger gifts.³
Pursue Multi-year, Unrestricted Gifts – While these may seem rare, many donors and grantors are recognizing that multiyear, unrestricted gifts allow nonprofits to create stability and plan for the long-term. Speak candidly with your most loyal supporters about your needs, with a clear plan for how unrestricted funds will support your mission. While operations grants are competitive, do not give up in the face of rejection. It’s not unheard of for a grantor to decline your application the first one or two times you apply, but award you with a grant in the third year. Spend time getting to know the funder’s priorities and staff to strengthen your application for the next grant cycle.
Diversify your Revenue Streams – By having a diverse stream of revenue, you can create stability when one stream lags. Many nonprofits have found success in a combination of fundraising strategies such as monthly giving campaigns, planned giving, endowments, earned revenue, events, etc. But make sure you are not stretching your fundraising staff too thin. Most fundraising activities require significant time and investment to see results. Consider who, where and how you are soliciting donors, and where there is capacity and potential for expansion. For example, most fundraising efforts focus on by Baby Boomers since most donations are made by this group. But GenX and Millennials are very philanthropic and positioned to inherit 84.4 trillion dollars over the next 25 years.⁴ Reports, such as Giving USA, can help you understand the philanthropic behavior of various population segments and regions, how they communicate, and which issues are top of mind.

Let’s Invest in the Success of Your Mission

At PNC Institutional Asset Management, we are ready to help our nonprofit clients address the tough questions raised as part of the strategic planning process. Adverse scenarios are inevitable. Strategic planning can help to reduce the impact that such scenarios have on your organization’s mission. Toward this end, we have invested in specialized resources, human capital, and technology to help nonprofit organizations solve their unique challenges. We help our clients to better manage assets, fundraising, and their operations by providing:

Asset Management and Financial Advisement

Outsourced chief investment officer (OCIO) solutions to manage a volatile investment landscape and allow nonprofit staff to focus on their mission
Customized fixed income, liquidity and cash management solutions to manage a rapidly evolving interest rate environment
Custody and safekeeping of assets, which can be “bundled” with investment management services for further ease of administration
Subaccounting services to manage multiple pools of assets, saving your in-house staff time and avoiding the risks of recordkeeping via spreadsheet
Access to I-Hub, a secure, online tool that provides 24-7 access to account information and market values
Enterprise Financial Modeling
Traditional banking solutions

Philanthropic Services

Dedicated planned giving team to manage the investment and administrative needs of your program
Ongoing education designed to help board members and fundraisers increase their effectiveness at donor engagement and overall fundraising
Responsible investing solutions that help to align the portfolio with your mission and attract donors with similar objectives
Specialized payment services, including ACH (direct deposit), to help support the administrative side of your planned giving program
Discretionary grant-making ^[1]
Donor-advised fund services
PNC Gifting Portal®

Nonprofit Management Services

Retirement Benefit Solutions

3(21) Investment Advisory and 3(38) Investment Management Services for defined contribution plans
Employee education for participant-directed plans, including financial wellness and customized education campaigns
Defined benefit plan investment management, custody, and trustee services

To learn more about our nonprofit solutions, visit pnc.com/iam.

Nonprofit Management: Strategic Planning for Adverse Scenarios