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The pandemic isn’t over and your revenue is declining. Now what?



May 19, 2020

Many leaders in churches, ministries and Christian led organizations clearly recall the unexpected and difficult season now known as the Great Recession. One financial reality for many during those days was declining revenue. That phenomenon taught us several lessons. Among them were the importance of carefully evaluating your options and avoiding the temptation to react quickly without sufficient information. Another takeaway was that tough seasons can bring unexpected opportunities...if we’re looking for them. These are the things that came up in a recent conversation that we had with ECCU relationship managers Michael Garcia and Chris Hernandez..

If your revenue declines, what are your options?

One outcome of this pandemic is that people and organizations are figuring out different ways to do essential things. If your income drops, your planning must include an essentials-focused list of ways to reduce costs in the short term and alternatives to cover essential expenses. A few considerations:

  • Cash reserves or credit? This pandemic is the sort of situation for which you set aside reserves, but before dipping into them, make sure you know how long they could cover essential expenses. If you use a line of credit instead of dipping into reserves, be sure to keep enough liquid capital to repay those funds according to the clean-out provision.
  • Mortgage payments: If you anticipate having trouble making mortgage payments, the first phone call you should make, and be comfortable making, is to your lender. In return, you should expect to receive support and expert guidance.
  • Key donors: Challenges like these often create opportunities to showcase how effectively your organization is fulfilling the mission that prompts people to support it. Clearly communicate this story to key donors, with a specific need and specific dollar amount. This gives these donors an opportunity to invest where their passions lie.
  • Outside the box: When the pandemic triggered social distancing restrictions, the implications for businesses like restaurants were profound. Some closed their doors, hoping for a quick end to the shutdown. Others looked outside the box and saw that people still needed food. So they kept cooking and promoted pick-up and delivery options. And I’ve noticed that the coffee shop around the corner has a perpetual line of cars in their drive-thru lane. Why not brainstorm with your team to identify outside-the-box income options for your organization?

A couple financial adjustments NOT to make right now:

  • If you’re a church, don’t invest too much in live-streaming technology. Most people don’t expect you to present a studio-quality online experience. And keep in mind that it takes eight weeks for a habit like watching online services to catch on. New, better, less expensive streaming technology is on the near horizon. Be patient.
  • Don’t assume giving will dry up. Instead, communicate the story of what you’re doing to meet the needs created by the pandemic. One ECCU member ministry that’s been working for decades to feed thousands of school kids has been proactively telling the story of how they’re meeting the even greater need for food today. Over the past 60 days, their giving has actually increased!
  • Don’t make long-term decisions based on short-term information. For example, laying off key people today who you might need in just a couple months could be short-sighted. Chances are you can cut costs in other areas and keep those employees on the payroll. Maybe you call all your vendors and ask what kind of short-term relief they can offer. Or postpone planned capital expenses for a few months until business begins to rebound.

As you respond to current reductions in revenue, here are two reminders. One, which I mentioned earlier, is to keep an eye out for unexpected opportunities. Like one of the pastors at a church here in Brea. He saw the inability to gather as an opportunity to connect with neighbors who might never attend his church. So he invited them to a prayer-focused, socially distanced service in his front yard. Now about 15 neighbors join him each Sunday morning. Another reminder: God is at work even before you know it. Last year an ECCU member church asked me to help them do a cash flow analysis. This was before the Covid-19 pandemic hit. As a result, they decided to shelve an improvement project until expenses were more in line. This allowed them to invest more available funds on essentials. And guess what some of those funds were used for? To improve their live-streaming capability.

At ECCU, one of our “essentials” is to help our members stay focused on theirs. As you clarify your essentials, it helps to know how much liquid capital an organization like yours should have on hand. If you haven’t done so lately, contact one of our Relationship Managers at ministry@eccu.org or 800.921.1130.

Category: Ministry Matters