THEME: Some Thoughts On Current and Emerging Trends
FOCUS: Preparing for Fiscal Year 2012
Monday morning: August 30, 2010
Dear friends,
In the non-profit world, alarm bells are ringing all over the country. Executive Directors and their teams are seriously worried about the impending dangers of Fiscal Year 2012 which starts on 7/1/11. As they all know, when the recession hit the country starting in September 2008, the tax income dropped off dramatically. When this happened, state budgets were in serious trouble and not able to cover basic service delivery commitments. Therefore, the federal government generated stimulus dollars which in part offered a brief relief to these traumatized state budgets.
Nevertheless, the stimulus dollars are going to be used up soon. Then, the states will have to deal with problems that have continued to persist. According to the June 28, 2010 issue of Time magazine, David Von Drehle reports in his article called “The Other Financial Crisis” that Iowa, for example, will have a 18.6% shortfall next year as a percentage of this year’s state budget. While the best non-profits are actively working quite hard to prepare for the difficult 2-3 years ahead as the states recover from the recession and see tax revenues rise, they also know that the future will not be an easy road to travel.
On the state side of this picture, they are doing just about everything that can to shrink the budget and still operate. One state level solution begins with offering extensive early retirement packages in order to reduce the head count within government. While I recognize that this action will, over time, save the bottom line, I think we need to recognize today that those who are leaving take with them knowledge and experience that has been critical to short and long term success within their respective departments or areas of expertise. Any time there is a loss of knowledge and experience at this level, there is the potential for a decline in the quality of the service delivered and the ability to solve problems within and between different divisions in a timely manner.
Furthermore, when we create a work world where the “long time” employees have barely 5-10 years of experience, we must come to recognize that knowledge acquisition and retention are very critical to success. Remembering that our past choices often lead us to our current challenges, and those who do not remember the past often repeat the mistakes of the past, our work as senior executives will be difficult over the next 18 months.
First, given what could be coming, make sure you have the right people on the right seats on the bus, using a Jim Collin’s metaphor. You will need a strong team to handle these challenges.
Second, examine closely the implications and impact of Fiscal Year 2012 within your circle of influence and/or organization. Generate a plan so people stay focused on the right things.
Third, create a team of people who will work to make sure that as people retire the best of their knowledge and experience is not lost.
Fourth, generate clarity of purpose and focus within your organization about what must be preserved at all costs for short and long term success, and what may be discarded or laid aside until current challenges have passed.
In a time period of great worry, it is important to build a network of healthy relationships. As a bone cancer survivor told me many years ago, “make friends before you need them.” This week, prepare thoughtfully and carefully for the coming fiscal year.
Have a grand week,
Geery
P.S. Here is some interesting information I learned recently about the non-profit world. According to Guide Star, the nonprofit industry accounts for 5% of the nation's entire GDP. The nonprofit sector overall employs 12.9 million people, or nearly 10 percent of the workforce (larger than the finance, insurance, and real-estate sectors combined). There are more than 1.9 million tax-exempt organizations in the U.S., a number that has doubled in the last 30 years.
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