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Funding Solutions for Crisis Situations
Funding Solutions

No matter your business or nonprofit, chances are you’ll encounter a funding crisis somewhere in your journey. Be it a pandemic that changes gathering rules or a major donor becoming dissatisfied with your organization, you’ll hit a funding road bump at some point.

When that happens, panic is close at hand. Fear not. I’ve been there. We’ve all been there. 

Remember these words: “For God did not give us a spirit of fear, but (a spirit) of power, love, and self-control.” (1 Timothy 1.7) In times such as these, you’ll need all three of those attributes. You’ll need to take charge, be disciplined in your decisions, and make them with both your employees and stakeholders in mind.

I’ve organized this post around a decision framework of Immediate and Upcoming. I wrap up the discussion with what we call a 1/1/1 action plan. More on that at the end.

The framework speaks to the reality that in a crisis, time is money. The sooner you can make wise, decisive decisions, the more money you will save to spend another day.

You can only spend a dollar once. You don’t want to spend a dollar today that you’ll need even more tomorrow.

Immediate: Cash Flow

Cashflow

First things first. How’s your cash flow? 

While money’s not the mission, when there’s no money, there’s no mission. So immediately assess your cash position.

My key question when assessing cash flow is, “How much runway do I have?” In other words, how many days, weeks, or months before your cash balance goes below $0? As much as possible, I want to maintain at least six months of runway. 

If your project is going negative before it’s feasible to right the ship, what borrowing options do you have, if borrowing is in line with your organization’s policies? If you are a non-profit, what key donors can you approach, perhaps immediately?

Knowing your runway reality will allow you to determine the size of your need. The larger the need, the larger income or expense elephants you’re looking for. Who can you ask for a large gift? What can you cut for large savings? In both cases, without jeopardizing the mission of the organization.

The larger the org, the more miniature elephants you might be able to locate to equal a large one. The smaller the org, the more likely you are to have full-sized.

Immediate: Care & Communication

Communication

Crisis situations take on a life of their own. People’s fears and worries become giants who specialize in gossip. Your goal as leader is to stay in front with caring communication of your own.

Caring means you communicate your care for people. Your company is an organization of people. Your vendors are people. Remember that in crises, people’s anxiety increases. They are concerned for their well-being and family. They worry their job will be eliminated.

Consider three groups in your communication plan: employees, stakeholders, and vendors.

Depending on the type of crisis you’re facing, your employees and vendors may be experiencing it themselves on a more personal level. The COVID-19 pandemic impacted not only the economy, but also health and lifestyle.

Address those worries not by promising something you can’t deliver — “I promise we’ll never eliminate any positions.” Address them by identifying their fears in sincere, heart-felt language. Make their covert thoughts and concerns overt. Name them. Label them. Let them ask questions and express their concerns. Answer them as truthfully and forthright as possible.

When communicating with stakeholders in a for-profit, go with a weekly check-in if the crisis threatens the life of the org. The same frequency applies for non-profits. But segment your donors. 

The more financially invested a donor, the more granular the communication. Depending on the individual, I would call or meet face-to-face if possible. That level of donor views themselves more as a partner than a contributor. Treat them as such. Quite possibly they will be a source for bridge funding.

Meet in person with your employees as well. The more critical the communication, the more critical in-person communication is. If you have a deployed staff, utilize video communication for these situations. Ask everyone to keep their video on. Pay attention to the emotions on their faces. Rather than asking questions, say, “It looks like this is pretty unsettling to you, _____.” Pause and let them share their thoughts.

Immediate: Expenses

Startnew Canvas

Since the crisis most likely had income implications, immediately address the expense side of your organization.

This doesn’t mean you’ll ignore income, but rather that you steward the income well — which translates into spending dollars judiciously.

When deciding what expense or staff position to eliminate, allow core and cause-critical functions to drive this. Cause critical means it’s integral for your mission to continue. What function(s) must be carried out so that your mission is carried out?

During COVID-19, churches kept worshiping because worship is a cause-critical function. The challenge was to figure out a way to worship not-in-person. They also had to move their revenue collection on-line or through the mail. Receiving offerings was a core function. Some churches stopped children’s ministry because it wasn’t a core function. Other churches moved it online because ministry to children was a core function.

Still, others held caring for their community as such a core value that they determined ways to continue that outreach. They didn’t necessarily have to continue for the financial well-being of their org. They continued this because it was cause-critical. If they stopped doing it, they would have ceased to be true to themselves.

Let your core or cause-critical functions determine your staffing necessities. Perhaps some of these roles — or new, necessary ones — could be outsourced to a vendor. 

When considering who to keep and who to let go, look for those individuals with a flexible, “can-do” spirit AND key skills. Utilitarian players increase in value in this season. Especially those with a “whatever it takes” mindset. Honor them by giving them a front-seat in the car. Invite them to help you see into the future. Crises are a great time for building staff morale as you tackle a huge challenge.

Our StartNew Canvas offers a hands-on tool for determining where to reduce expenses. Keeping in mind your Value Proposition for the Customer you are serving, what Key Activities MUST be maintained in order to provide that value? Those key activities drive staffing which contributes to Cost Structure.

Upcoming: Income – Donative

Donors

After reviewing your immediate future and determining the immediate steps necessary for the well-being of your organization, move now to a more long-term view. Think about initiatives that will take weeks and months to execute.

Break this area into two parts: donative income and earned income.

On the donative side, remember that asking is the most powerful tool you have. Of 78 percent of Americans who were asked to donate, 85 percent of them gave a gift. When merely informed of a need but not specifically asked to give, only 38 percent of them gave. 

In this season, always ask. Not in a legalistic way. Not leading to guilt. But in a story-filled way that shares the impact of your work and invites donors to help continue to make your work a reality.

Here is where your cash flow projections will pay off. Consider what your donative income needs are for the next six months. Take 1/3 of that and set it for a one-month campaign.

So, if you need $60,000 over the next 6 months, set a goal to raise $20,000 in a 30 day campaign.

Whenever having communication about this campaign, keep these three things in mind: 

  • Caring Communication
  • Cause
  • Contribution.

Make sure your correspondence communicates care for the donor. Remember, if they are experiencing a crisis as well, recognize that. That shouldn’t stop you from asking for support. But it should shape your ask with compassion.

Utilize caring communication especially in 1-on-1 situations. Approach your supporters with sincere love for them and their situation, not simply as resources for yours. Yes, they are divine resources for your work. But, that is not their fundamental identity.

After caring communication, share your cause, using a 1-on-1 scenario again. This time, telling the story about one person your venture has helped. “Jack, you’ve heard about our mission before. I’d like to tell you about Alice, a young lady we’ve helped first-hand.” Tell the story about Alice. Use real examples. Real people. But limit the story to just one person. Help them see Alice. Help them feel her reality.

Last, contribution. Make the ask. But do it in a way that states the need in tangible ways. For example, “Jack, we need $X by Y so that people like Alice can continue to get cared for. We are seeking gifts of $3Z and $2Z and $Z. Would you be able to give one of those?”

Note that you give Jack an option, and you lead with the largest ask first. By giving Jack options, you respect him, allowing him to choose the one that best fits his situation. 

Be sure and give all three options. Don’t avoid one because you think the individual doesn’t have the resources or desire. Let them make that decision.

Make sure you’ve made it easy for people to give. Use technology. Text to give. Bill pay through their bank. Online on your website. Auto-draft monthly, preferably from their bank, since people often change credit cards, but rarely change banks.

One last time: Asking is the most powerful tool you have. Ask!

Upcoming: Income – Earned

Earned Income

Some crises will allow you to turn your current earned income streams into rivers. Other crises will choke them to rivulets. Either will likely require you to pivot in some fashion.

Gather your staff. Remind them who your core customer is. Engage them in brainstorming what pains your customer is experiencing that your company could address. Our StartNew training process uses a Customer Pains & Gains canvas for this strategic exercise.

After brainstorming, begin to decide which pain(s) you will tackle by exploring these four questions.

  1. Are these pains evident in our community in a significant way? The larger the number of people experiencing this pain, the more quickly you might be able to address your income need. Rank the pain based on the size of local population.
  1. Which of these pains hurt our customer the most AND would cost the least for us to tackle? Cost is both money and time. This is where your runway estimate from the cash flow exercise will help you decide.
  1. Taking into account the ranking from #1 and #2 above, What resources can we leverage to address the pains with the greatest return? Capital — facility, property, transportation. Staff — realign key staff into this new effort. Knowledge — identify who has past experience in this area.
  1. Who can we partner with to tackle this initiative? Consider current vendors and others in parallel lanes. Especially those with complimentary missions. “Who could we partner with so that it’s a win-win for everyone, including our customer?”

1/1/1 Action Plan

Action Plan

Taking into account all of your work above, use our 1/1/1 action plan to move you forward. Involve your staff in the process. Make this a topic of your regular meetings, especially those focusing on the crisis.

The 1/1/1 Action Plan is quite simple.

Map out each of the Immediate and Upcoming areas above. For each one, set a 1 day, 1 week, and 1 month goal. This timeframe keeps you and your staff responsive and acting quickly. 

Use this framework with each of your staff. Ask them to set goals for their areas in light of your group decisions. 

By 1 day from now, I will…

By 1 week from now, I will…

By 1 month from now, I will…

Remind them you want the highest impact with the quickest time frame. 

Have you had to fundraise in a crisis? What would you add to this list? 

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