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A Four-Step Action Plan for Churches and Non-Profits to Restore Finances Following the Pandemic

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The coronavirus has created many challenges for families and businesses across our nation. The financial devastation caused by COVID-19 has been rapid and unprecedented. The sudden job losses for millions of American families have left many struggling with buying even the bare necessities.

Churches and non-profits are not immune to the downturn. Charitable donations are often the first spending to be cut and the last to return during a financial crisis. However, the monetary needs of churches not only continue during economic downturns but often increase as they help meet the needs of their community. As with families across America, non-profits need an action plan to pro-actively address their financial challenges and continue their vital work.  As C.S. Lewis once said, “You can’t go back and change the beginning, but you can start where you are and change the ending.”

Serving as Treasurer and Board member for two non-profits, I know how difficult these times are for many charities.  So, here are some important steps for churches and other non-profits to consider as they deal with the pandemic.

Assess the situation.

Proverbs 27:23 instructs believers to, “Be diligent to know the state of your flocks and attend to your herds.”  This sage advice applies to the church as well.  No effective action plan can be created without an honest assessment of the current financial situation, so don’t forgo this important initial step.

First, pray for guidance and wisdom, and continue to do so. It’s important to act quickly, but also thoughtfully. Understand your situation by undertaking a genuine self-assessment. Where have spending needs increased? Are contributions down and if so, by how much? What unmet needs exist in your community?

Pull together the management team and Board of Directors to help prioritize the various church programs to cover critical ministries first, then proactively seek out options to help meet those key programs.

Improve cash flow.

Once the initial assessment is complete, steps can be undertaken to improve the cash flow for the church. Here are several strategies to consider:

  • Speed up the collection of donor pledges. Some families may be able to accelerate their promised donations if they are made aware of the need.
  • Speak to the donors of restricted funds about converting the restricted dollars to unrestricted. Perhaps a donor gave funds for a building project, scholarship fund, or upcoming mission trip. Ask if they would consider releasing the restriction so the funds could be used for any pressing need of the church.
  • For ticketed events that have been canceled, ask ticket purchasers if they would donate the ticket price instead of receiving a refund.
  • Contact key funders about increasing or accelerating their giving in this time of need.
  • Teach giving strategies that many not impact the donor’s immediate cash flow. Such strategies include donating appreciated securities, giving via a donor-advised fund, and Qualified Charitable Contributions.
  • Create and publicize multiple ways for donors to give. These would include mailing checks or dropping them off at the church, encouraging the use of bank bill-pay services, and offering on-line giving options that donors can use from their smartphone or computer. Put instructions and links for giving on your church web site.
  • Reduce or eliminate non-mission-critical expenses. For instance, many Sunday school classes are not meeting. Can subscriptions for class materials be temporarily halted to save money or to redeploy to more pressing needs?
  • Collaborate with nearby churches to share non-financial resources. For example, combining purchasing may reduce the overall cost, while technology resources (such as those used for the recording or broadcasting of services) may be shared to eliminate duplicate expenditures.
  • Many lenders are allowing skip payments on mortgages and other loans, often with no fees. Check with your lenders to discuss options.

Utilize recent stimulus programs.

Congress and many states have passed legislation recently to help deal with the financial crisis. For example, churches and other non-profits are eligible for Paycheck Protection Program (PPP) loans to help with expenses. Some or all of the loan may be forgiven for expenditures on eligible expenses (payroll, rent, mortgage interest, and utility costs). If staff layoffs are necessary, enhanced unemployment benefits are available to support affected employees. Research the options available in your state and locality.

Commit to better preparation.

The United States had not been affected by a widely-spread pandemic in over 100 years, so, understandably, many families, businesses, and non-profits were less than fully prepared for COVID-19.  Eventually, our nation’s health and the economy will recover.  It’s important, however, that we don’t lose sight of the lessons learned.  Winston Churchill once stated, “Those that fail to learn from history are doomed to repeat it.”  Let it not be said of us that we failed to learn from the impact of the coronavirus.  Every family, business, and non-profit should commit to stronger budgeting, building larger financial reserves, and eliminating debt once this crisis passes.