Venable attorneys participated in a webinar hosted by BDO, focusing on various COVID-19 issues impacting nonprofit organizations and how to address those disruptions in organizational operations and personnel development. The panel discussion, aimed at nonprofit leaders, covered topics relating to best practices for managing employees, recently issued guidance from the Office of Management and Budget (OMB), and the availability of Small Business Administration (SBA) disaster loans for nonprofits.
Establishing a Crisis Management Team
For nonprofits, fundamental to addressing a crisis on the scale of the COVID-19 pandemic is the development and implementation of a crisis management team. By definition, a crisis is unpredictable. Consisting of a core group of leaders whose roles and competencies encompass the skills necessary to be agile and decisive, a crisis management team offers a clearly identifiable way for nonprofits to manage challenges. The goal of this team is to identify ways to strategically modify an organization's standing in time of crisis and look ahead to the cascading effects of any decisions that are made. This team should have the authority to implement change and make decisions with minimal oversight.
While a standing crisis management team can remain in place to address different types of issues, an ad hoc group can also be created to address specific types of crisis. A key responsibility of this team is to record all decisions in a clear and transparent way. For nonprofits, this team should also include representatives of mission-critical programs to maintain perspective on how and what the organization is delivering to stakeholders in periods of crisis. For nonprofits operating with small staffs, board members might become advisors in certain areas of crisis management.
There is no one-size-fits-all approach to prioritizing in times of crisis – priorities are situationally dependent and may be constantly reframed as new information becomes available. Long-term solutions for continued unpredictability can be advanced through the practice of consistent after-action reports. Fully debriefing after phases of a crisis and then following the crisis itself will ultimately enable continuous growth as an organization.
Communications Plans and Strategies
While crisis management is dealing with the reality of a situation, crisis communication deals with its perception. A crisis will prompt reassessment of an organization's 1) methodologies, 2) timelines, and 3) levels of communication established for various stakeholders. As a rule, communications should be made fully transparent, with the understanding that messaging will vary across a nonprofit's stakeholder groups. Identifying those groups and determining how and when to communicate with them is critical in a crisis; people who might not typically engage with your organization outside of a crisis may be paying attention during one.
Remaining Focused on Mission and People
Nonprofits, like businesses and educational institutions, are balancing how to deliver on their mission with identifying an acceptable level of risk to their employees. Nonprofits can be proactive in addressing potential risks and embracing ways to stay in front of clients while mitigating risks to employees and volunteers. A surge in technology use to conduct virtual meetings – retaining face-to-face interaction – is one way nonprofits can embrace a business mindset to remain consistent in delivering mission-critical programming.
In dealing with challenges at any time, nonprofit organizations are problem-solvers. In times of crisis, focusing on mission-critical program delivery is vital. To adapt to limited resources in times of crisis, pausing or eliminating programs that cannot be delivered because of financial or logistical roadblocks in a particular moment can enable organizations to focus on those programs that will have the most impact. Programs that bring liquidity will be particularly essential in enabling delivery of mission-critical work.
For nonprofit staff, empowering employees with the tools they can use to be successful – flexible work arrangements and technology, among others – will reinforce their physical protection and enable uninterrupted program delivery. Resources providing emotional support to employees are also valuable in crisis management. In the midst of planning for an organization's mission and people in times of crisis, listening to constituents across the field of stakeholders – students, members, donors, patients – will help provide focus on what is needed, both now and into the future.
Crisis-Related Challenges for Nonprofits
Across nonprofit organizations, businesses, and higher education institutions, cybersecurity and data privacy issues are emerging with the increased use of online content. More than ever, educating employees and users about phishing scams and opportunistic cyber attacks is crucial. Information technology teams should remain constantly vigilant to new threat vectors and should be constantly monitoring networks for vulnerabilities.
The illness of employees should be monitored and handled in accordance with the Health Insurance Portability and Accountability Act (HIPAA). Employers may not disclose the identities of individuals who test positive for COVID-19, nor should ill employees be asked to self-disclose. An employee may self-disclose if they choose to do so. While sharing information about a positive case of COVID-19 can offer other employees a chance to monitor their own symptoms, it also offers employers the opportunity to highlight the precautions and progress being made in an organization (i.e., sanitization efforts, employee recovery, etc.).
The Coronavirus Aid, Relief, and Economic Security (CARES) Act contains guidance on expanded leave policies for absences related to the COVID-19 pandemic. The CARES Act provides for emergency family medical leave and emergency paid sick leave, both of which complement an organization's existing leave policies, rather than replacing them. The CARES Act is slated to remain in effect through the end of 2020, but nonprofit organizations should remain vigilant in tracking this and future legislation, which may change as the impact of the coronavirus on U.S. workplaces continues.
Reevaluating Priorities and Prioritizing Goals
This pandemic is upending everyday norms, leading to a reevaluation of goals and priorities in many nonprofit organizations. Because mission delivery is becoming more complicated, organizations should take this opportunity to pause and identify which organizational priorities make sense in the context of this shift. Questions to ask might include:
- Is your mission impacted by COVID-19?
- What can you actually deliver at this moment in time?
- Will you need to change direction in your programming?
If an organization's goals and priorities were clearly outlined before COVID-19 and there has not been a noticeable shift in its ability to deliver programming, the organization's mission and focus might remain the same. Within nonprofits whose goals were not clearly articulated before, focusing on these questions now will have a positive impact. Organizations should not undertake the effort of redirecting attention at this time if they don't have a valuable resource to add to those they serve as a result.
Finance, Operations, and Development Challenges
In times of crisis, evaluating a nonprofit's financial position is also critical. Assessing where funding originates and how the flow of that funding might be impacted over the next three to six months, even up to a year out, will enable repositioning. There are new sources of funding available to nonprofit organizations through the federal government, for example, which may offer financial relief or bridge gaps in other sources of funding. The federal government is working to offer guidance and orders that will ease the financial pain of this economic downturn on various organizations, including nonprofits. OMB has released memoranda aimed at easing restrictions to allow for nonprofits to access funding, waiving certain deadlines and requirements, offering reduced interest rates for nonprofits, and providing debt forgiveness.
Another method of funding relief now available to nonprofits is small business disaster loans. Traditionally, nonprofits were not defined as small businesses under the Small Business Act. The CARES Act includes nonprofits with small businesses in provisions like the Paycheck Protection Program and others. An area of consideration for a nonprofit in determining eligibility for financial relief from the federal government is whether its size is determined by headcount or by receipts. Nonprofit counsel should be consulted with any questions regarding this eligibility.
Operationally, cash flow projections will need to be addressed no less than weekly, sometimes daily. Reserves will need to be managed appropriately, and endowment spending policies should be carefully examined by a nonprofit's financial advisor as a source of liquidity. Credit opportunities may be available as well if liquidity is a concern. To address financial hardship, nonessential spending should be cut, and efforts should be focused on meaningful deliverables. It is worth noting that donors may provide additional funding through individual donations; incentives are in place for those in a position to make gifts to nonprofits at this time. Additionally, some foundations have earmarked COVID-19 impact grants that are available to nonprofits, and federal grants permitting nonprofits to continue working in times of crisis may be utilized.
Guidance relating to tax and financial reporting deadlines is still evolving. Routine extensions to file and make tax payments are still available, and single audit filing deadlines may be extended by six months.
Nonprofit organizations embracing tools like contingency planning and employing crisis management techniques across operations will be better positioned to weather the COVID-19 pandemic. Delivering mission-critical programming, especially in areas providing relief to those directly impacted by the coronavirus, is more important than ever.
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