Crisis Management

In this section we would like to personally reach out to Board members or Executive Directors who are looking for assistance for an organization that is in crisis.

Over the years we have worked with many organizations that have found themselves in crisis and near closure.  Crisis in nonprofit organizations is often due to specific easily identifiable causes such as theft, mismanagement, and loss of funding.  However, crisis can also evolve from an organization’s inability to change over time.  In these cases, organizations lack strategic initiatives to maintain viability and year over year they use up monetary reserves as the work they do diminishes.

We are often asked what signs indicate that an organization is “in peril.”  Repeatedly, we see similarities in troubled organizations.  While the presence of one of these conditions does not mean an organization is ready to shut its doors, collectively more than one may mean changes are needed:

•    Absence of an engaged and qualified Board of Directors with set term limits
•    A Board of Directors that attempts to manage the organization and crosses the boundary of its oversight responsibility
•    Lack of timely audits by qualified audit firms that regularly audit nonprofit organizations
•    Audit findings
•    Absence of a strategic plan
•    Inadequate controls and procedures throughout the organization
•    A finance function consisting solely of a bookkeeper
•    Year over year operating losses
•    Depletion of cash reserves
•    Reductions year over year in units of service
•    Absence of any new programs or initiatives
•    Staff without adequate education or experience
•    Absence of job descriptions, organizational charts and procedural manuals
•    Inability to meet financing obligations
•    Related party transactions
•    Single sources of funding and the absence of fundraising efforts

If an organization finds itself plagued by any of the above, a way to avoid potential crisis is to seek assistance before the problems grow and multiply.  For example, a year over year deficit of $50K with a large cash reserve is much easier to overcome than a $200K deficit with no reserves.  Likewise, it is much easier to implement controls and procedures then deal with the repercussions of theft or a poor auditors’ report.

Unfortunately, many organizations don’t recognize the signs or existing management or Boards are unwilling to be proactive.  These organizations maintain the status quo until they are forced to implement change to remain in existence. Once an organization is in crisis, Board members typically resign and key personnel jump ship or are terminated.  However, we see over and over again that a solid group of staff and Board members committed to the mission remain and are ready to do what is necessary to heal the organization and move it forward.  It is at this juncture that we welcome the opportunity to become part of the team to restore an organization.  Via our experiences in working with nonprofits that span numerous industries and the varied backgrounds of our staff we enable our clients to manage the challenges of re-establishing their organizations.

Our crisis management techniques generally include many of the following:

•    Developing an overall plan for transition
•    Reestablishing government funding and reestablishing relationships with other funding sources to restore cash flow
•    Rebuilding accounting systems and financial records to produce auditable financial statements
•    Engaging an audit firm
•    Compiling budgets and cash flow analysis to assess financial viability
•    Compiling and implementing control and procedural manuals
•    Assessing contracts and agreements such as salaries, insurance, retirement plans and leasing arrangements
•    Assisting the Board and management with restructuring and staffing
•    Assisting with plans for program development and reorganization
•    Compiling delinquent reports for funders and government organizations
•    Writing applications for new grants
•    Providing overall support to new Executive Directors

As an entity,  Aurora thrives when working with the Board and management team of a new client to rebuild and revitalize a nonprofit organization.