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Wagner school at NYU releases new study on how nonprofits can manage the economic storm

The Berman Jewish Policy Archive at NYU’s Robert F. Wagner Graduate School of Public Service has released a report by Jack Ukeles on how nonprofits  can turn the economic downturn into opportunity.

Ukeles, now a philanthropy consultant, played a key role in the turnaround of New York City’s government in the mid ‘70s when he was the executive director of the mayor’s Management Advisory Board. He is the author of "Doing More with Less: Turning Public Management Around."

Some insights from the report:

Nonprofits are hurting, and are not well prepared for the fiscal crisis. I do not think we have to belabor the point. The Bridgespan Group in Boston did a survey of more than 100 nonprofits groups.

  • 75% of nonprofits surveyed are feeling the effects of the downturn
  • 52% percent of nonprofits surveyed have already experienced cuts
  • Only 28% of nonprofits surveyed appear to have a "well-defined" contingency plan (e.g., key tripwires to determine when to enact the plan)
  • 74% of respondents have less than six months of operating reserves

First and foremost, Ukeles suggests that good management is key to navigating through the economic crisis.

But he also suggests that there are six responses to getting through the crisis. Three are useless and should be avoided, while the other three are helpful:

1) The first response is denial. Comments like: “It will be OK.” or “It will soon blow over.” In the fall of 1975, either September or October, I had been approached about becoming the Executive Director of the Mayor’s Management Board. As part of my due diligence, I met with the first deputy mayor, a man named Jim Cavanaugh, who was a great public servant and worked for the city his whole life. I came to his office and asked him about the City’s financial situation. Jim leaned back and he said to me “Ahhh, it’ll all blow over. We’ll move the BANS and the RANS and the TANS (different forms of public debt) and we’ll be fine.” Three months later, the City was inches away from default, and six months later, Jim was out of a job. That was denial then, and there is plenty of denial out there today.
Fred Lane, a friend and colleague from Baruch College, reports that in 2001, in a mild recession, 40% of nonprofits in San Francisco had taken no action, even though 78% said things were going to get worse in 2002.

2) The second response is panic. Panic leads to making irrevocable decisions, such as closing entire programs or facilities that have taken decades to develop.

3) The third response is to circle the wagons. Comments like: “Don’t change anything, we’ve been through tough times before, we can weather it again, if we just do what we did before.”
None of these responses are worth a damn, pretty obviously, but they are really out there in a significant way. There are three strategies that do make sense.

4) Managing the crisis

5) Managing in the crisis

6) Using the crisis to improve management (which is what I will be focusing on)

To find out what he means, read the report.

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