COVID-19’s Lasting Effects on Nonprofits – Management and Governance

This article is the third in a series examining the COVID-19 pandemic’s lasting impact on nonprofit organizations. View the full series here. Read on to learn about some of the management and governance issues nonprofits continue to face because of the pandemic.

Probably the single most important management issue put in the spotlight by the pandemic has been cash management. Nonprofit managers should focus on building their operating reserves by reviewing billing and collection processes, as well as implementing cost reduction strategies. Best practice for cash management includes preparing cash forecasts and reviewing them regularly.

Continuing in the forecast vein, budgeting and financial planning is critically important. These functions have always been components of a strong governance plan, but they become even more important during times with increased uncertainty. The pandemic has required many nonprofits to ask hard questions they may not have previously asked themselves. For example, what changes would your organization need to implement to sustain a prolonged decrease in contributions or grant funding? What course of action should be taken if the nonprofit’s investments suffer a significant decline in value?

Many nonprofits that use inventory or supplies have struggled with shortages and other supply chain issues. Since many nonprofits operate with limited funding, it’s common practice to have only limited inventory or supplies on hand. Nonprofit managers must weigh the benefits of a just-in-time inventory model against the potential costs of not having supplies on hand, such as the inability to provide services to the community.

Remember that a hallmark of a strong nonprofit governance plan is an independent board. Keep the finance committee and the full board informed with frequent communications and reports. Take advantage of the knowledge and connections of your board members to help you tackle the challenges brought on your nonprofit by the pandemic.

Schreiber Accounting and Advisory has experience working with nonprofit organizations of all sizes on financial statement services, Form 990 preparation and management advisory services. If your organization needs the assistance of a qualified CPA firm, contact the firm for more information.

Material discussed is for informational purposes only. It is not to be interpreted as investment, tax, or legal advice. Individual situations vary, and this information should only be relied upon when coordinated with individual professional advice.