Unless we finalize this process by creating an actual — on paper — plan, we're still in a reactive mode. For instance, how long will it take to properly institute a plan to offset a 25% drop in funding? Will it take two weeks or three months — or more? Who must be in place? Are we going to overload our executive director or others to put this plan in place?

All of these questions can be answered with a plan. That plan may include an emergency appeal letter or it may include prepared and careful cuts in spending that take place over a matter of months. For instance, we may not suddenly lay off an employee, but we may — with proper notice through the plan — limit her hours from 20 to 15 each week over a three-month period. This way, she is not laid off but is prepared — well in advance of the situation—for this eventuality. We plan, so she can plan as well.

It is much better to tell an employee this: "Patty, funding may be tight this year. The board has decided that if funding drops as much as 20% we may have to cut your hours from 20 to 15 each week. But this would only happen after we sent out an emergency appeal letter, which is already drafted — just in case. Believe me, you would know several weeks in advance so you will be prepared." Isn't that better than saying, "Patty, our funding dropped the last two months. The board decided last night that you are being cut back to 15 hours per week."

Creating the plan — making it work for you
In creating the plan then, we've got to keep several thoughts in mind:

Know the facts
The only way to know whether we are running ahead or behind on donations is to have a grasp of the income we are expecting for a particular time frame.

This doesn't mean splitting a $240,000 budget into an expectation of $20,000 per month. Instead, our income budget will factor in fundraising events and normally "slow" months. Only then will we project a clear picture.

What is our trigger point?
If donations are running ahead or behind, we need to have a trigger point for putting a plan into place.

For instance, if funding is running 25% ahead of schedule for the first three months of the year, do we have a prayed-through trigger point to begin a new program? Conversely, if our funding is down 10% do we first look at our savings and make appropriate withdrawals? What is the point where we put in our action plan for increasing our funding? And should expenditures be altered, when do we take our first step?

Obviously, we can't plan for everything — nor should we. But coming up with some reasonable trigger points for action is important. We can change them later if conditions warrant, but having an idea of where we might go — and when — is a duty of the board, with input and proposals by the executive director.

Remember the "reality factor"
When we bring up the idea of having contingency plans a board member might say, "Look, we could spend hours and hours making plans for hypothetical situations; we need to focus on what is happening now." There is truth to this. The last thing we want to do is spend all of our board time working on what might happen — instead of making key decisions that are important today.

In short then, let's stay balanced. We don't want to be a bunch of planners who fail to accomplish our mission. This is why this process needs to be streamlined. First, the executive director creates a proposal for each contingency; let's take four: What will we do if?

• Funding drops 10%
• Funding drops 25%
• Funding goes up 25%
• Funding goes up 50%

You'll note a difference on the "plus" side of our contingencies; that's because a 10% bump will likely be set aside for a rainy day. Only if we see a big surplus do we need to look at new ideas.

The Executive Director's proposals don't need to be elaborate; they can simply lay out a few ideas for how to deal with each situation. From there, a task force of board members (two or three) can meet with the executive director and come to agreement on what to do.

From there, the task force brings a proposal to the board for a vote. Any approval would not be binding, but it would be the board's way of saying, "Now we've got an idea of what we will do — let's keep this plan in our pocket, just in case."

A wise executive director thinks ahead, preparing the board for the good and not so good. Creating these proposals and placing them in front of the board shows leadership and builds confidence toward a bright future.

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Reprinted by permission from Boards of Excellence, a LifeTrends publication. If you'd like to know more about the resources provided by LifeTrends that can be used to encourage your volunteers, educate your Board and reach your supporters, or if you're looking for a great speaker for your next banquet, contact Kirk Walden at kirk.walden@comcast.net.