Topics that don’t focus on COVID-19 for nonprofit leaders

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For obvious reasons, COVID-19-19 and the many elements of disruption it has caused continue to dominate conversation at organizations of all types. This month we commemorate two years since the widespread effects of COVID-19 first hit the United States, along with the start of significant fiscal stimulative response from the federal government.

I don’t want to belittle that momentous anniversary. However, for a few minutes, please accept my invitation to think about a few things other than the pandemic. Not-for-profit organizations are shifting to attend to other strategic priorities more actively. Is your organization making that shift?  While some of these topics relate tangentially to the COVID-19 disruption, we will focus here on the non-COVID elements of these topics.

To start the conversation, here are 10 non-COVID items that not-for-profit leadership groups are re-engaging on. The list is not scientific, but if your organization hasn’t actively discussed and addressed these recently, they are likely worthy of consideration in the short term.

1. Remote work arrangements. Many organizations have come to accept that remote work arrangements are going to be a part of their operation moving forward regardless of what happens with COVID-19. This could entail a local employee occasionally working from home, or your organization hiring someone who lives four states away to work exclusively from afar. If some of your employees are given the opportunity to work remotely while others are not, employees may view the process as random or based mostly on management judgement. This exposes your organization to risk. If you haven’t formulated and articulated a policy to guide and support decisions about who can work remotely and who can’t, as well as what the terms and conditions are for remote work arrangements, now is the time.
2. Program sustainability. There were many challenges to the operational and financial sustainability of not-for-profit programmatic activities over the last two years. The conversation is now shifting to focus on the go-forward sustainability of each and every program. This evaluation often focuses on financial sustainability, but other factors should be part of the conversation. The analysis and conversation must challenge your organization’s conventional thought about “who you are.” If the program(s) that have historically been your core programs are not sustainable going forward, a true sustainability evaluation must consider the potential that terminating or reducing those programs is necessary to ensure the larger organization’s overall sustainability.
3. Employee training. Training delivered via virtual video sessions became a necessity two years ago. Many organizations realize that this training format is less effective than live, in-person training and the consequences of two years of virtual training are being felt in the form of inadequately trained personnel, lower employee satisfaction, and ultimately as a contributing factor to higher turnover. Organizations are now coming to terms with deficiencies in the level of training that employees received over the last two years. This could include everything from general cybersecurity training to specialized technical training specific to a particular role in the organization. Identifying these deficiencies and establishing a plan to address them should be a priority.
4. Cybersecurity risk assessment. All the distractions of the past two years have created an opportunity for the bad guys. Cybersecurity risks have continued to evolve and flourish. If your organization wasn’t as focused on cybersecurity because of other pressing needs, it’s time to catch up. One of the best ways to do this is to have an outside cybersecurity risk assessment conducted. Anecdotally, we’re hearing of insurance companies having some rather pointed conversations with organizations that are trying to renew their cybersecurity insurance policies but are lacking up-to-date documented cybersecurity updates. Don’t be caught by surprise when your policy is up for renewal.
5. Donor relationships and fundraising events. Many organizations are exerting significant effort to reestablish live in-person fundraising events and efforts in 2022. Are you making this push based on an objective evaluation of what your donors and prospective donors want? Have you adequately considered “holding on” to some of the newer practices that your organization learned during the last two years? There are plenty of organizations that experienced notably better financial results from fundraising events in the virtual format, often due to the significantly lower costs of such events. Assuming your organization must go back to “2019-style” events may not be considering all your options. Some organizations are doing surveys of recurring donors and past event attendees to gauge interest in going back to the “old way” vs. expanding involvement and gifting opportunities via virtual or hybrid models. Keep an open mind and be responsive to donor input.
6. Your organization’s online presence. Take time to go to your organization’s website. Find the button for the “about us” or “our organization” page. Is there anything there from after 2019? I’ve seen organization websites that make annual reports available, but the last year posted there is 2018 because the 2019 annual report, which would have normally been completed in March of 2020, was never finished. Take an objective look at what your organization’s website says about your organization to a prospective employee, prospective donor, government regulator or funding agency, and to your own employees. While you’re at it, take a look at your organization’s Facebook, Instagram, LinkedIn, Twitter, etc. social media accounts. Even better, consider if your organization is even present at all on the more recently popular social media sites. (If you’re not sure what those are right now ask your kids or maybe an intern at your organization.) If your organization’s online messaging hasn’t been updated in a couple of years, you should add it to your 2022 plans.
7. LIBOR sunset. While this topic is slightly more mundane, it is no less important. If your organization has debt (or for that matter investments) that bear interest based on LIBOR (which stands for London Interbank Offering Rate), you should already be engaged in establishing what the rate will convert to when LIBOR ceases to exist in the near future. Most financial institutions are initiating conversations with customers about this rate conversion. Are you prepared to understand the impact that the end of LIBOR may have on your financing arrangements? Is your Finance Committee and/or Board aware of the changes and their potential impact? If you haven’t heard from your bank on this topic yet, it’s time to reach out.
8. Rising interest rate environment. As a general rule, I stay away from making predictions about future financial market conditions, including the interest rate environment. But we are in a time when virtually every indicator is flashing in bold bright font that interest rates will be rising in the near term. Organizations should consider what impact this will have on their finances. Many not-for-profits are in an unusually strong financial position right now as a result of federal COVID-19 relief funds. Is it possible that you could restructure financing arrangements, such as lines of credit, to more favorable terms right now to soften the effect of rising interest rates going forward?
9. Lease accounting. I promise, no debits and credits talk.  If your organization leases notable assets, such as office or program operating space, equipment, vehicles, and even in some cases software arrangements, the new lease accounting rule was effective January 1, 2022, for all entities that hadn’t previously adopted it. The rule, formally referred to as Accounting Standards Update (ASU) 2016-02 – Leases or Accounting Standards Codification (ASC) Section 842, requires virtually all leases with an original term longer than 12 months to be recorded as liabilities. Gone are the days when you would pay your rent each month and simply record rent expense. Some organizations were required to adopt this standard in previous years, but if your organization wasn’t one of those, this is a 2022 accounting change for you. Make time to understand the effect that this new liability will have on your financial reporting, including on debt covenants related to total liabilities, as well as the effect the new requirements will have on your accounting team resources.
10. Cash management and investing policies and practices. Over the last two years, many organizations adopted practices that monitor cash flow very closely. Other organizations are in a better-than-normal cash position due to the receipt of various COVID-19 relief funds. To the extent your cash management and investing activities have changed since 2019, have your policies been updated? Also, as we move into the future, do your practices around cash management and investing appropriately consider the challenges looming on a go-forward basis or are you still managing cash as you did in response to the crisis from two years ago?

Taking a moment to think about non-COVID-19 matters doesn’t mean we’re done addressing the effects of COVID-19. But the transition to a time when COVID-19 is not the over-arching topic of conversation will happen at some point. It’s not too early to prepare your organization for this shift.

Jeff Paille is a CPA and partner at the Bonadio Group and has consulted with tax-exempt organizations for almost 30 years.