Tips for Surviving Budget Challenges
While I have a number of clients not only across the country but also around the world, there’s a consistency in a single issue they all are dealing with. Beyond the trials and tribulations of the pandemic, most healthcare organizations are struggling financially – – at least in comparison to the last year or so. As a result, I have a number of clients who are indicating a desperate need to cut their budget.
In nonprofit work, when we hear “cut the budget “it generally means cut people. Most of our expenses are directed toward that singular line item. That makes this conversation even more challenging. But there are some tried-and-true tips you can use to make sure that you’re doing the best you can without causing irreparable harm.
Increase your revenue instead of cutting the budget - When I was in my last practitioner job as a CDO, there were a number of years when we were trying to cut the budget across the academic medical center. Instead of cutting the budget, I went to my boss to see if I could raise more money (above the new goal) at the same level/number as what they were asking for in cuts. His answer was always yes. The bottom line was they wanted to increase the net margin more so than just “cut” expenses. As a result, I never cut a budget in actuality but did increase revenue above goals to make sure I could keep my team intact. And we made it every year.
Prioritize people over stuff - Any time you can reduce expenses that don’t include people, that’s a win. It may be a little painful from a mailing or travel perspective, but people raise money. And while the extra things are always nice, they’re never more important than individuals.
Reduce activities that don’t generate the best ROI - While we all love events and a robust annual giving/fund, if you have to choose, making very hard decisions, choose the activities and the people that generate the most return on investment. That’s major gifts, planned giving, and grants from corporations/foundations. You might be able to reduce your mailings or drop that special event. But if you cut the high ROI activity, in particular with what we’ve seen over the last decade with fewer people making more of a difference, you’ll make your revenue numbers harder to achieve.
Be honest and open with your team - While many leaders think it’s their responsibility to shield their team from tough decisions and news, it actually has the opposite effect. Letting your team know what’s being asked of the department and of you as a leader is critical in being open. They might have a suggestion or two that could be helpful and if personnel decisions are made, they have the right to know they might affect them. It might also give them a chance to find another opportunity more quickly if necessary.
Budget cutting is never easy and rarely comes without pain. However, following the steps above can limit that discomfort and allow the organization to make the best decisions, particularly when it comes to fundraising operations.
