| NSN, like other non-profits and households everywhere, has had to take a hard look at finances and see where we can do the most good with a limited amount of resources. The Board has worked hard to align NSN’s strategic goals with available funds, implemented a renewed fund raising campaign, and moved the organization decisively toward a brighter future. We have taken the path to recovery . . . Our finances were close to the brink. The Board has looked over the edge, thought hard about NSN’s strategic goals, and moved the organization decisively the other way. We have taken the path to recovery. Now NSN will be able to maintain its core services while rebuilding its financial reserves. This will take a few years. Once reserves are in place, NSN will have the foundation that a broad national organization of storytellers requires. We will be able to restore old programs and sponsor new ones and (from a new headquarters) we will be able to reach out and engage storytelling stakeholders all over the country. All of us are excited about the possibilities in front of NSN after this transition. Like most young non-profits, we grew for years without the guidance of a Strategic Plan. But now NSN has a unified vision for what role a national organization of storytellers will play in the overall establishment of our art form. What follows are some details of the financial realities that guided our decision process in April. The April meeting’s first revelation emerged from the re-organized accounting and reporting structure that NSN has put in place in recent months. We discovered that our operational reserves were lower than we thought and were low enough to be troubling. That left us realizing that the clock was ticking and that we didn’t have time to experiment with creating new, long-term revenue channels that might or might not succeed. The shrunken reserves meant that NSN had very little room for error and would continually live hand-to-mouth. That environment is hardly conducive to developing new ideas and programs. The Board also had to face a second unpleasant reality. We realized that, even by the optimistic budget we had adopted in January, we should assume a series of losses in the months ahead. There is nothing wrong with that, in principle. It simply reflects the basic fact that NSN’s revenues are highly seasonal – like a department store’s. A disproportionate amount of our revenues – from the National Storytelling Festival, our membership fees, and the Conference – come in the later months of the year. Our expenses, however, are more evenly spaced. Even sticking to our budget meant a reasonable likelihood of a further $70-80,000 in withdrawals before significant income turned up in late fall. And this led to the third unpleasant reality. We were not sticking to our budget. Our budget (perfectly balanced at about $550,000 in revenue and $550,000 in expenses) had made ambitious assumptions about membership growth, board fundraising, marketplace sales, and conference registration on the revenue side. After the first three months of 2008 passed, the Board prudently re-examined some of those assumptions. The new, more prudent projections made our low levels of reserves even less sustainable. Finally, we were concerned that the economy’s struggles could cause our revenues to fall for reasons beyond our control. We saw this first when we talked to other people in our efforts to jumpstart NSN’s fundraising. We decided that we had to structure NSN as an organization that could stand against a storm; we decided against living forever, day-to-day, watching out for clouds. Moreover, we have had to face the fact that NSN’s current financial situation makes it hard to attract funding from other organizations and foundations. Although our finances are not at all uncommon for a nonprofit in adolescence (NSN is nine years old), foundations and funding partners generally want to see their partners and grant recipients make it through the awkward years before making long-term commitments. We will have very limited ability to engage funders, as a national organization should, unless we change our hand-to-mouth business pattern. To change that pattern, we had to make fundamental changes in NSN’s operations. As with many nonprofits, NSN’s early development was ad hoc – we added new programs here and there that members were excited about. (We even spoke of it as “building the airplane as we flew it.”) By 2008 NSN had committed itself to a very ambitious range of programs and had hired staff and rented office space to support them. According to the original 2008 Budget, personnel and general and administrative costs make up about 67% of our anticipated expenses. Another 22% of expenses comprise the costs of running the Conference and publishing the magazine. That leaves very little “discretionary spending” for leveraging against a structural loss. To make the significant and immediate economies that NSN needed, we were forced to look at staffing levels. We could count on some attrition, but it would be insufficient. We made the painful decision to suspend the office of Executive Director and elected to launch no unfunded new programs until reserves are replenished. We have also suspended operations of the NSN Marketplace (a major drain on staff effort) and simplified some systems to relieve pressure on the office. In addition, we have committed to working more actively as a Board and with member volunteers on core issues that have consumed much staff time and mindspace (for example, membership recruitment and renewals). By taking these steps immediately, we removed any threat to our long-term pledged assets and were able to keep a skilled, trained staff who, with volunteer assistance, could organize the conference and maintain core services. These decisions will cut our budgeted expenses by roughly 25% and put NSN in a position to replenish its reserves and “fill up the tanks” for the journey ahead. For those who would like precise figures to flesh out this picture, the 2007 audit is now in process, and will be posted on the NSN web site as soon as it is completed. We are also preparing a revised 2008 budget and will post that when it is completed and approved by the Board. Discuss this post and related issues here. |
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FAQ #2: What’s the financial story? How are we doing?posted May 2, 2008 5:03 PM by M.L. Barron [ updated May 4, 2008 10:03 AM ] |