Foresight seminar: The economic downturn and the VCS

I came across these suggestions about anticipating the unexpected and working successfully in unplanned ways in the current uncertain economic climate in this month’s Nonprofit Quarterly so thought I’d add them to the discussion:

• Build your collective agility: Work closely with the board to ensure that your budget is understood and that panic, despair or blame is not the order of the day if things get difficult. Making sure that there is a common understanding of your core mission can be very helpful, particularly if things get spare and you need to reorganize.

• Get connected: Make use of state, local, and field-wide networks that help forecast changes in the environment and can organize nonprofits to take on difficult state policy issues that could impact your work.

• Get active with these networks and help them to work well for you. Talk to peers about what they are thinking about in the face of things like flat rate reimbursements, and opportunities to take collective action will emerge.

• Strive for flexibility: Revisit your use of volunteer talent (which should be done for a whole host of important reasons, really) to strengthen your economic resiliency and political positioning.
  Accumulate as much unrestricted money as possible and try to avoid making decisions, which limit your liquidity.

To help with this last consideration, the article recommends you read Clara Miller’s Truth or Consequences: The Implications of Financial Decisions from the NonProfit Quarterly summer issue.

With an increasing number of banks, building societies and big city firms in trouble or going out of business, everyone is wondering how it will impact on them. Although the media and the government has tried to claim that banks crashing in the USA will have little or no effect on people within Britain, when a bank like Lehman goes out of business, it is so inextricably linked to the global markets that it cannot help but effect them in some way. I think we have to be realistic at this time, and accept that, given the current environment, many people within Britain will be affected, as will many organisations. There are many possible implications for VCOs, for example:

An increasing number of people out of work requiring support

An increasing number of people in debt

A reduction in donations

An increasing number of people (employees and beneficiaries) suffering from stress

It is hard to see the positives in such a situation, but there are also opportunities, for example:

Charity shops have already shown an "increase in spending":http://news.bbc.co.uk/1/hi/business/7591970.stm_

Relationships and contracts can be negotiated at longer term as people try to guarantee income

There will be an increase in beneficiaries for some organisations

I recently posted these top five things VCOs can do in a downturn on this epolitix.com forum where MPs and representatives from the VCS and private sector were giving their views on the current economic crisis:

“It is more important than ever during these tough times for organisations to plan ahead. It is vital to look carefully at your objectives and funding streams and ensure that you have the strategies in place to deal with any likely changes.

1. Plan for the downturn now. Look at your funding streams, beneficiaries and costs and plan likely scenarios for your organisation. Be realistic and don’t wait until it’s too late. Can you be more efficient in the way you do things? Can you save money by outsourcing some of your office functions?

2. Revisit your costs. Use this opportunity to renegotiate contracts with your suppliers (who will need your business more), or see if you can save money by switching to NCVO’s recommended suppliers

3. Develop your volunteers. Are you making the best use of their skills? Do you have a strategy to attract the volunteers you need, especially the pool of highly-skilled newly unemployed.

4. Build your network. With the sector facing the squeeze, collaboration can enable you to achieve more and accomplish your aims, despite having fewer resources.

5. Demonstrate your success. Measuring outcomes and demonstrating impact is notoriously hard to do. However, it is a great way to improve your chances of securing funding."

I’ve just added a driver on the credit crunch here

We are gathering together analysis, views and evidence on the impact of a recession on the sector. You can find all the sources we’ve identified here, on our delicious site (delicious is a ‘social bookmarking’ tool which allows you to collect and share web links)

I read an article this morning which stated that the most trusted source of information on the economic situation is not the Prime Minister or even the Chancellor of the Exchequer, but the BBC’s business editor, Robert Peston. This raises interesting questions about trust in institutions and where people get their information about events impacting on their lives. Something to think about for information providers?

The Pre-Budget report published by the Treasury yesterday outlines a number of changes to try and kick-start the economy, and provide a buffer from further misfortune. To find out more about these and how they might impact on the economy and on your organisation, have a look at the following links:

Institute for Fiscal Studies

Deloitte analysis

PricewaterhouseCoopers

How small businesses have benefitted

What the Pre-Budget means for your region

And a bit of a green tint on it: policy think tank Green Alliance’s response has some interesting comments on the implications for fuel poverty and social housing.

If you have read any other reports that analyse the impact, why not add them to the list?

Karl has been working hard to gather evidence about what happens to the sector in a recession. You can now read a summary of his findings in this news post.