Learning from a Near-Death Experience: How to Survive a Budget Crisis

In December 2023, the organization where I work, the Post Growth Institute (PGI), lost half of its funding for 2024. Our major funder was withdrawing support for three-quarters of their grantees, and we were one of them.

Our cash-flow projections showed a four-month runway until we wouldn’t be able to make payroll. At the time, 10 out of our 23 paid staff relied fully—or almost fully—on income from our organization to sustain themselves and their families. This was the gravest threat we’d faced in our 14-year history.

Over the next six months, something incredible happened. While our bank balance evaporated—right down to $50—we didn’t lose a single employee.

This is the story of how we did it, and what we learned.

Nonprofits, Money, and Trust

Formed in 2010, the PGI’s annual budget has yet to surpass $500,000. Our organizational mission includes “modeling approaches that equitably and innately circulate money and power.” To implement our mission, we operate using sociocratic governance—equitable self-governance—and have collectively decided to share the wealth when our balances support doing so, rather than focusing on building reserves. One could argue that deprioritizing reserves made us uniquely vulnerable to funding cuts, but I’d say it was central to what eventually saved us.

Our cash-flow projections showed a four-month runway until we wouldn’t be able to make payroll.

Our approach to circulating money is one of the ways we model appreciation for each other and show trust in our collective efforts. The majority of the PGI’s 33 team members are paid something, and every PGI employee sets their own pay rate—whether it’s a small or large amount—in consultation with our director of personnel.

Despite our entire team working with flexible schedules, remotely across 18 countries, we don’t scrutinize time tracking. Moreover, employees (and volunteers) are encouraged to share their feelings and aspirations on current and future pay through scheduled check-ins and confidential surveying. With organization-wide salary transparency being part of our annual participatory budgeting process, people even request pay decreases as part of a commitment to sharing wealth with others.

Six Key Practices

When the news arrived of our funding being halved, a steering group immediately assembled to decide how to sensitively break the news and plan contingency options. Below are six practices that were essential for us making it through our lean period:

1. Strengths-Based Approaches.

“We will get through this, together.” Following these words, we shared the funding news with the entire team. We used an “asset-based approach” to open wider discussions, which was critical to activating creative approaches to our predicament, as well as maintaining morale. This was especially the case given that, just a few months earlier, we had welcomed 10 new people into our organization, with many of them on payroll. To be clear, we weren’t trying to sugarcoat anything; we wanted to reassure the team of our belief in and commitment to the collective.

We continued this asset-based approach throughout. For example, in our internal, confidential financial surveying (described below), we included a range of creative ways people could voluntarily contribute to help reduce overall pressure on organizational finances, including: temporarily reducing their monthly hours; increasing volunteer hours; offering unpaid participation in some of the virtual activities we run (such as a monthly social café); temporarily reducing their pay rate; delaying payment for contractors; capping monthly paid hours and donating any excess hours; and even loaning money to the organization.

Numerous team members expressed willingness to help with fundraising, so we designed a program to introduce them to practical ways they could assist.

Team members also provided ideas about nonmonetary ways the organization could better acknowledge their contributions, including more verbal acknowledgment in team meetings/communications; work anniversary announcements; long-service certificates; profiles in our newsletter; and public acknowledgment on social media.

2. Internal, Confidential Financial Surveying.

To better understand each employee and volunteer’s financial situation and needs, we developed a “financial strengths and needs” survey. To honor privacy, all questions in the survey were optional, responses were stored in a confidential drive and retained for only 12 months, and people had the chance to share any of their answers verbally with our director of personnel.

The survey’s main goal was determining to what extent people felt they were able to adapt to different levels of reductions in pay (specifically: 25, 50, and 75 percent).

With all employees completing the survey, we were able to develop a highly sensitive picture of anticipated resilience to different levels of contingency adaptation.

3. Relational, One-on-One Check-Ins.

While survey data were critical, the success of our contingency planning stemmed more from the relational approach we maintained. Run by our director of personnel (who, as a member of our finance circle, was fully apprised of our budgetary situation), we held one-on-one calls with every team member. In the calls, the director of personnel would walk through the team member’s survey answers and test various contingency ideas.

These conversations helped us realize the importance of considering:

• • Many of our team members’ lived experience of economic precarity;
  • The extent to which team members were supporting others with their income; and
  • Issues of equity relating to present and historical experiences of oppression, and team members’ perceptions of privilege relative to their colleagues.

4. Modeling Leadership

Before sharing the survey with the wider team and initiating the check-in calls, we tested it with our 11 organizational “directors” (who make up the bulk of our paid employee hours). From the resulting data, we piloted a two-month contingency adaptation solely among directors. The pilot included reductions in pay, increased volunteering, and other measures based on each person’s unique situation. Some did not have the ability to contribute (indeed, three people ultimately required salary increases even during this period).

Given our open approach to documenting and acknowledging the sacrifices many were making, we needed to reassure everyone, upfront, that there was never any requirement for people to make adjustments. Anything being suggested was merely for voluntary consideration, and we reiterated how much we trusted that each person knew their own situation best.

5. Lean Testing the Budget.

Our annual budget is only considered passed once everyone in the team has consented. When it came to the contingency budget, we adopted the same approach.

As with all our activities, we use a lean methodology, which means developing “minimum viable models” and sequentially testing the “riskiest assumptions” associated with those models. In this case, this meant building a basic budgetary proposal (with planned average salary reductions of 25 to 50 percent, among other measures, for what ultimately lasted three months). We then tested this proposal, one-on-one, with those people for whom the proposed sacrifices were greatest or where resistance was most anticipated. This way, we were able to make the most radical adjustments upfront, with the confidentiality of the testing enabling safety for people to provide honest, often very “raw” feedback.

The beauty of this relational testing and refinement phase was revealed at the full-team contingency budget meeting. Presentation of the budget, discussion, and voting took only 10 minutes. No one had any questions.

6. Centering the Emotional Experience.

Throughout the six months of contingency planning and adaptation, we regularly acknowledged the stresses, fears, and broader emotions people were understandably experiencing. One specific meeting was convened specifically for those who wanted to express to the collective how they were feeling. The team would have undoubtedly gained by convening even more in this way.

Indeed, we could have done better in terms of providing emotional support throughout the contingency period. On occasion, team members were presented with cash-flow graphs in ways that lacked sensitivity to what such data represented, in terms of employee livelihoods. Similarly, there were moments when we forgot the asset-based approach. Some team members struggled emotionally, for example, when budgetary discussions began with ominous news.

Team members could also have benefited from greater clarity in terms of the PGI’s approach to participatory budgeting, which at the time was still evolving. The impact on programmatic budgeting was particularly confusing, as we did not take the time to collectively discuss it. With both participatory and programmatic budgeting, our lack of documentation was problematic, leading to contradicting guidance from senior leaders in the organization.

No one at the PGI lost their job through this challenging period. Ultimately, an existing donor came to the rescue, and within two months of the bailout, every employee’s rate was restored to preexisting levels. In fact, shortly after our funding situation recovered, many saw their wages increase. This occurred in part because one of the options we’d offered in the contingency planning was a rate rise, should we survive, for those taking a rate reduction.

However, the lack of clarity around some of our methods, along with months of uncertainty, led one team member to take a three-month pause from PGI work, even after funding was confirmed, because they had found emotional stability in steady, external employment. The heightened stress also surfaced other tensions, requiring even more energy for supporting team members’ wellbeing when resources were already stretched thin.

Wider Applicability

Data suggest that more than 50 percent of US nonprofits have less than six months of cash in reserve; the scenario experienced at our nonprofit isn’t outside the realm of possibility for many organizations. But are our learnings appropriate for nonprofits that are structured differently?

Asset-based framing certainly seems to have widespread relevance in nonprofit organizations, for any future moment of financial challenge.

Internal financial surveying requires high levels of trust to ensure enough buy-in to make the data relevant. Likewise, the relational, one-on-one check-ins require a track record of supporting people through highly sensitive situations. If your organization has experience with trauma-informed facilitation, consider creating space for emotional processing throughout contingency scenarios.

By centering relational care, appropriate design, and careful sequencing, it’s possible to practice solidarity economics in ways that bring colleagues closer together.

If participatory budgeting isn’t already established in some form, then it’s not something I’d suggest introducing through a contingency process—it requires high levels of trust and skillful group facilitation.

Finally, when it comes to making payroll-related sacrifices, it always bodes well when senior leadership actually leads. Although such leadership may be more effective in organizations where collective decision-making and nonhierarchical organizational structures are already instituted.

Building Forward

The cellular memory of this time is real. I recently sensed a familiar stress resurfacing in a team meeting at a mention of possible cash-flow challenges (even though, this time, our circumstances are not as dire). However, the experience was such a growth opportunity for us all.

What we learned is that by centering relational care, appropriate design, and careful sequencing, it’s possible to practice solidarity economics in ways that bring colleagues closer together. Even in the toughest financial times, we can continue to nurture our better natures and, in turn, each other.