Certification Program in Nonprofit Resilience Management

Nonprofit leaders generally understand that they need resource “cushions” to cope with unexpected demands on, or shortfalls of, their resources. For example, they commonly try to put aside some reserve funds or hold back on committing expenses (such as maintenance or new hiring). However, the constellation of resilience strategies is much richer than what is normally practiced; moreover, nonprofits fall significantly short in following recommended practices such as maintaining sufficient financial reserves or developing networks. Thus, nonprofit leaders can benefit from a fuller understanding of the ways in which organizations can increase their resilience. Distinguished scholars have studied tools such as organizational slack and innovation, identifying their importance in addressing uncertainty and environmental pressures. This module lays the foundation for a robust portfolio of potential strategies for organizational resilience.

This module will delve deeply into the nature of costs and how they may be structured to accommodate risk and resilience in a crisis or to prevent a crisis from occurring. A basic distinction will be made between fixed costs, which do not vary with the level of output, and variable costs, which do. One set of resilience strategies consists of converting the former to the latter. For example, organizations can rent rather than buy their physical space and capital equipment and they can reduce their permanent staff in favor of contract workers. Also relevant is the concept of joint costs, i.e. costs shared by two or more program activities. The ability to shift the burden of joint costs among programs with different revenue possibilities, is another potential element of resilience strategy. In addition, understanding the relationship between variable costs and revenues is a key determinant of when an organization is better off shutting down versus maintaining operations in a crisis. Finally, the potential for an organization to exploit economies of scale and scope by developing contingency plans for organizational expansion and collaborating, merging or consolidating with other organizations.

Crises that cause organizations to reduce, increase, or otherwise change their services, often require adjustments to their workforces. Thus, a more flexible workforce can be an important element in a successful resilience strategy. For example, organizations forced to shut down operations may face painful choices associated with reductions in force and payroll contraction. Alternatives include furloughs, reduction of hours, termination of positions, combining of positions, and shared salary reductions. As well, the development of workers’ capacity to flexibly engage in multiple kinds of work, and the engagement of volunteers to supplement and substitute for paid workers, may be additional sources of resilience. This module will explore the differential consequences of such strategies, in terms of resiliency, economic benefits and costs, and fairness, in both the long and short term. Finally, mirror-image strategies will be considered for organizations required to expand quickly in a crisis, such as occurred for food banks and hospitals in the COVID-19 crisis. In particular, the module will also explore how workforce capacity can be expanded while retaining long term resilience.

After the 2008-2009 financial crisis, the federal government subjected the largest banks to “stress tests” to ensure that they would not fail in the next crisis. Similarly, nonprofits could benefit from risk-related audits that would periodically assess their vulnerabilities in crisis situations. Such tests would scrutinize various dimensions of vulnerability including financial, technological, human resource, and network relationships. In addition, nonprofit managers need day to day information that would signal potential trouble and raise “red flags” before the onset of crises. Current performance assessment and monitoring systems in nonprofit management are not well tuned to crisis situations but they can be enhanced to include resilience measures. In this module, participants will learn about performance measurement principles and potential crisis vulnerabilities and asked to design dashboards and stress tests for their own organizations.