September 4, 2017
Other Voices

State budget crisis hitting nonprofits hard

Lori M. Budnick

With Connecticut's budget stalemate now lingering through the end of summer, the uncertainty and turmoil at the state Capitol has reached levels that people have not seen in decades.

Nowhere is this uncertainty quite as palpable as it is in the social services sector.

The state is now in its second month without a budget and, according to published reports, the first round of potentially painful cuts to human services happened at the start of August.

The bottom line is the longer the state goes without a budget, the more difficult it will get for both the state's social services agencies as well as the nonprofits that count on their support. It is unlikely that any organization involved in human and social services will be immune from this year's difficulties, from community health centers to senior care communities to local charities and foundations.

Additionally, once a budget is finally approved and the $5 billion state deficit is balanced, possibly with even more significant cuts, the news could remain equally concerning for nonprofits throughout Connecticut.

There will simply be fewer dollars to go around for those human services-based agencies that need them, and many Connecticut residents who rely on these agencies could be forced to turn to nonprofits for help. With more demand for their services, critical charitable donations and philanthropic support will be that much more in demand, and nonprofits could be stretched even thinner than they are right now.

With such a daunting outlook in front of them, those in the state's nonprofit community must now find ways to navigate through these difficulties, in order to continue to operate at maximum capability and continue to provide the invaluable support on which so many residents have come to depend.

There are steps that nonprofits can take to help them better endure during times like this. What follows are some helpful tips they may consider.

Maximize operational efficiency

Though it is difficult to consider, tight budgetary times often require a hard look at how the organization currently operates to determine the best ways to operate with the same effectiveness on limited resources.

It could be wise to consider consolidating certain roles, relying more on part-time workers or even expanding the volunteer base. Additionally, a thorough examination should be given to all core operational functions, from financial management to client databases to technology systems. You never know where you can find places to save, and you'll never find out until you take a close look.

More innovative approach to fundraising

This is a step that can always help; nonprofits these days should look beyond traditional means, no matter how tried and true, to ensure they are utilizing all available channels and potential resources. A personal approach remains essential, but organizations should also consider presenting a wider array of donor options and means of contributing.

Additionally, they should take advantage of available technology through online giving and social media engagement, which not only makes it easier for people to contribute, but creates greater efficiencies among limited resources.

Consider partnerships

A team-based approach with like-minded organizations is another route to explore during austerity. If there is commonality in message and target audiences, it is always possible that certain strategic partnerships could benefit nonprofits in their quests to find those elusive dollars.

Unfortunately for the nonprofit world, uncertainty can breed anxiety and worry over long-term viability, something being realized in Connecticut right now, with the budget crisis' impact on social services trickling down to the organizational level.

The key to not just surviving but succeeding in challenging financial times is careful planning, innovating wherever possible and taking a close, thoughtful examination of the entire operation. The 2017 budget outlook for Connecticut presents a number of obstacles for nonprofits to overcome, but they should be manageable with the right strategic approach.

Lori M. Budnick, CPA, is a partner with BlumShapiro, the largest regional business advisory firm based in New England, with offices in Connecticut, Massachusetts and Rhode Island.

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