What to Do if You Find Out Your Nonprofit is in Distress

First of all, don’t panic! Working with a CPA can be an important step in turning around a nonprofit organization in distress. If you find out that your nonprofit is in distress, there are several steps you can take to address the situation:

The first step is to understand the nature and extent of the distress. This could involve analyzing financial statements, reviewing program effectiveness, and assessing staff morale and needs. A SWOT Analysis may also be helpful.

Next, develop a plan based on that assessment to address the root causes of the distress. This could involve cutting expenses, seeking additional funding, revising program strategies, or restructuring organizational operations.

Remember to:

• Be transparent with your stakeholders, including donors, board members, and staff about the situation and the plan to address it. Seek their input and support.

• Regularly monitor progress against the plan and adjust as needed.

• Keep stakeholders informed of progress, including successes and challenges.

The most important thing is to be proactive and take action as soon as possible. The longer you wait, the harder it will be to turn things around.

Consider enlisting the assistance of outside experts, such as a CPA who has experience working with distressed organizations.

A CPA can

• Analyze the organization's financial statements to identify financial weaknesses and inefficiencies

• Help the organization develop realistic budgets and financial forecasts to help it plan for the future

• help the organization manage its cash flow more effectively—a critical move in times of financial distress

• Ensure that the organization is complying with all relevant accounting and tax regulations

The right CPA can also help the organization develop fundraising strategies and assist with grant applications. CPAs see a bunch of organizations and development workflows, and will likely be able to offer valuable insight.

Finally, a CPA can work closely with the organization's board and management to provide financial guidance and support, lending both credibility and reassurance to stakeholders. Working with a CPA during times of distress can show donors and lenders that the organization is taking steps to address its financial challenges.