INSIGHT ARTICLE  |  April 29, 2021

Two years before the COVID-19 pandemic, Jeff Britton and a team from RSM helped a midsized not-for-profit become more agile by optimizing and consolidating their technology and streamlining operations, which ultimately helped them lessen the blow of the health crisis.

Britton, a director of management consulting at RSM US LLP, said the not-for-profit’s technology had been driving several operational challenges, which ultimately led to a degrading member experience. As an example, the organization was using multiple customer relationship management systems, with data also spread out across Excel spreadsheets. Each week, erroneous emails were sent, asking members and board members alike to renew their membership.

The not-for-profit wanted to fix the mess, so it consolidated its data into a single system. This allowed the organization to manage its membership better. The erroneous emails stopped, and the organization immediately saw positive returns from their efforts.

Then came the novel coronavirus outbreak. The organization, scheduled to host its annual event, was in a much better position to pivot their approach based on newly imposed restrictions and alert its 75,000 attendees that it was moving to a virtual environment. “They were able to do a virtual event, facilitate similar sessions, and ended up receiving outstanding feedback from their members,” Britton said.

This not-for-profit was fortunate in its timing, but other organizations suffered greatly during the pandemic. COVID-19 has been a major, disruptive event, one that should serve as a wake-up call to not-for-profits: It’s time to become agile.

Here are five ways that not-for-profits can become more agile.

1. Strategic planning, budgeting and forecasting

The first step toward agility is budgeting for risks, the worst-case scenarios—like a pandemic— that chew through budgets.

“Too many strategic plans don't consider risks,” said Charlie Tate, a partner at RSM US LLP. “You need to be prepared for the unknown and have a model in place.”

Once organizations forecast their risks—brainstorming sessions can be helpful, with multiple people considering risks and opportunities—Tate said that they should quantify the potential budgetary impact of each risk. This risk assessment should also evaluate the likelihood and response plans for various outcomes.

For example, what would be the cost of another pandemic cost? Or an economic downturn? A natural disaster? These are painful questions, but not-for-profits must address them.

2. Reserves planning

Once organizations know their risks, they should build their reserves accordingly. The organizations that planned for a pandemic-sized disruption, for example, had deep reserves. The challenge that most organizations face is the balance of what is the right reserve to satisfy risk, CRA compliance and stakeholder expectations.

In addition to risks, an organization can plan the reserves it needs by examining its environment, asking questions about what external factors could affect the organization and whether the organization would be able to tighten its belt in lean times. During the planning process, executives should be as objective as possible, researching what similar organizations have planned for their reserves. There are likely hints for how to best handle reserve management in the stories of other organizations.

3. Technology

Christopher McCarthy, a principal of technology consulting at RSM US LLP, said that there’s only one answer for how not-for-profit organizations can become more agile: better data. Often a positive outcome or driver for new technology efforts, better data is also the starting point for more effective execution.

“As things open up, organizations will need better data to make good decisions,” McCarthy said. “And that will be a constantly moving target. What is going to happen this summer is very different from what is going to happen in the fall, which is going to be completely different from next summer. The No. 1 way to be accurate—to stay on top of things that are changing faster than they've ever changed before—is to use data to make your decisions.”

Because this pandemic recovery is an unprecedented event, a good data stream will help organizations make informed decisions. Not-for-profits will need access to organizational data, such as donations and memberships, but also public information on the economy and the financial markets.

“Surveys will become vital, statistics will become vital, financial metrics will become vital,” McCarthy said. “And the more granularly we collect that data, the more value we add in our analysis so we can do better predictive analytics. Instead of looking backwards, we want to be looking forward.”

Britton and Tate agreed: Having the technology in place to have a good data stream is essential to agility, whether amid a pandemic recovery or during normal times.

It’s especially important, Britton said, to have a “source of truth” for data to ensure that organizational data is accurate and people are working from the same information. Having a single source of truth means having a consolidated repository of key information rather than trying to maintain multiple systems or, worse yet, Excel files.

4. Focus on talent

According to Dorothy Chan, a director at RSM Canada Consulting LP, the pandemic has really put a magnifying glass on a not-for-profit’s ability to maintain efficiency, effectiveness and relevancy in its operations.

“Working at home and off-site has been particularly challenging in maintaining efficient workflows as data and information sharing can be much more siloed but this has also presented an opportunity for not-for-profits to look at existing processes, accountabilities and redundancies,” Chan said. “This may involve organizational structure changes or outsourcing. Key employees who are performing meaningful work are more engaged and easier to retain.”

Not-for-profits should step back, evaluate their talent resources, and develop strategies for the attraction and retention of a team that will focus on mission attainment. A consideration in the talent strategy is the assessment of what work could be outsourced.

Outsourcing work—especially in information technology management, finance and accounting—can be a great way to save time and money, Tate said, while providing security and consistency. Outsourcing can help not-for-profits build sustainable technology and business processes while avoiding unexpected challenges related to turnover and recruiting as well as provide flexibility to scale staff as organizational needs change.

For not-for-profits, outsourcing can be a key differentiator, setting them apart from competitors.

While setting up an outsourcing solution may appear arduous, it has never been easier. Not-for-profits can hire a consultant to help integrate outsourcing solutions, which could allow not-for-profits to save money, work more efficiently and have timely data.

5. Virtual and other delivery models for programs and fundraising

McCarthy attended many virtual events during the pandemic, often paying the same money as if he attended physically. The events didn’t feel quite the same, he said, but they helped many not-for-profits survive.

Not-for-profits, typically technological laggards, have caught up on technology during the pandemic. A big reason, McCarthy said, is that cutting-edge technology has become inexpensive and easily accessible. Now, unlike five or 10 years ago, there are push-button solutions that allow not-for-profits to communicate with far-flung employees and members, including environments for virtual conferences, meetings and fundraisers.

McCarthy believes that virtual events will change the not-for-profit world. My personal, thumb-in-the-air opinion is that we'll see a 30 per cent reduction in physical meetings, including annual meetings, he said. They’ll return to in person, but you might see less in attendance, because there will have to be virtual offerings as part of a physical meeting to increase the exposure of the content.

Organizations with good data streams will navigate this new hybrid virtual and in-person world best, McCarthy said. Comparing numbers between in-person, virtual and mixed events will become essential for success.

If we use data and we determine that a virtual event doesn’t add value, then we just go back to in person, McCarthy said. And maybe it's not one-size-fits-all. There are many organizations, particularly networking organizations, where physical presence is highly preferred. Then there are others, which are just strictly charitable, and I'll bet that many don't need to actually have that annual picnic—I’ll bet they're going to get everybody’s $100 if they just send an email.

If the pandemic has shown us anything, it’s that not-for-profit leaders need to be prepared for almost anything, and that agility is key to long-term survival. Organizations that can quickly switch directions, adopt new standards and accommodate changes in demand will be in the best position to respond to the next disruption. Those who fail to make the right investments in their processes and technologies to be more agile—will only fall further behind.