Potential Solutions to Prevent Budget Deficit in Non-Profit Organizations: A Case Study of Goodwill San Francisco

This article discusses potential solutions to prevent budget deficit in non-profit organizations through a case study of Goodwill San Francisco. It explores strategies such as tracking budget, reviewing business spending, and raising revenue. The article emphasizes the importance of managing finances effectively and coming up with a solution that can raise funds to cover the deficit.

NON-PROFIT

Table of Contents
Introduction 2
Situation facing by Goodwill 2
Outline the potential solutions, giving the pros and cons for each alternative solution 4
Tracking budget 4
Reviewing business spending 5
Raising revenue 5
Implementing solution to get rid of budget deficit 6
Conclusion 7
References 8
1

Introduction
There are two types of organisations i.e.for-profit organisation and not for profit organisation.
not for profit organisations are usually known as non-profit organisations or NPO. Non-profit
organisations are established in order to provide social services by introducing several programs
for the citizen of a country. Economic definition of non-profit organisation is different. Non-
profit organisations use their surplus of revenue in developing their programs and services while
for-profit organisations distribute their surplus of revenue among the leaders and the
shareholders (Denzin and Giardina, 2018). Budget is financial documents or may be termed as
report which provides an overview of the way the organisation is planning to execute their plans
by spending the revenue it brings. Expenses and revenue are the two key components of the
budget. Budget surplus for a non-profit organisation means the company has managed to bring
more money than It has spent for the services it provides and budget deficit for a non-profit
organisation means the organisation could not meet the budget goals which is outlined by the
finance committee of the organisation, spending and fundraising etc (Carlson, 2016). In February
2009 the organisation named Goodwill San Francisco has faced a serious economic problem and
there was 3-million-dollar budget deficit which has threatened the ability of the organisation to
provide services to the citizen. In this article potential solutions to raise funds and to prevent
budget deficit will be provided with the strategies to implement the most secured solution.
Situation facing by Goodwill
Goodwill International was established in the year 1902 by Dr Edgar Helms. The organisation
used to distribute household goods and clothing to the poor people. Dr Edgar Helms employed
some unemployed people in order to repair the goods that would be distributed to the poor
people and this is how the organisation started its business with this philosophy of “hands up, not
hand out” (Hazy, 2015). Goodwill of San Francisco accompanied by Reverend Samuel
Quickmire started helping those citizens who were in need. In 2004 the organisation has
appointed Deborah Alvarez Rodriguez. She came to the organisation with clean vision and
mission in order to make the organisation a bigger one. The board of goodwill San Francisco has
appointed some staffs and interdisciplinary team in order to review its mission and vision
(sfgoodwill.org). The organisation has developed a set of programs for the citizen who are in
need. The mission of the organisation is to find solutions to reduce poverty through the business
they operate. And the vision was to build a poverty free world where the people would be live in
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safe and growing communities and will have the opportunity to support their families and would
be able to take active care for the environment (Epstein, 2018). In order to implement the New
vision and mission in the business operation, Deborah Alvarez Rodriguez the management team
the board of the organisation and the interdisciplinary team had started to change the way they
used to operate the businesses by introducing job training and services through which the
organisation would be able to earn revenue in future. The organisation has started its revenue
generating programs with training and development services. In February 2009 the company has
faced a serious economic problem and there was 3-million-dollar budget deficit which has
threatened the ability of the organisation to provide services to the citizen. David Alvarez
Rodriguez, San Mateo and Martin Counties, the CEO and the president of the organisation
Goodwill San Francisco, has decided to introduce a fundraising campaign in order to determine
how the organisation will be able to do its business for the next few years. The situation has
caused due to a failed sale of its headquarters in July 2008 which has resulted in a severe damage
to the cash flow of the organisation. The company has lost 6 million dollars in terms of
investment capital and 1 million dollar in terms of operating capitals. The company used to earn
its revenue from selling salvage products like metals woods etc and drop in the prices of the
commodity has plummeted the revenue of the organisation due to National economic downturn.
During the economic crisis of 2008 several countries have experienced a significant drop in in
portfolio values of their organisation and like other non-profit organisation Goodwill San
Francisco has also experienced this situation which has threatened its yearly income (Bartlett and
Beamish, 2018). Demand for the services that the organisation offers to the needy citizens has
also increased during this time. Deborah Alvarez Rodriguez and the board of the organisation
has decided not to eliminate any of the services the organisation offers while trying to counter
the economic crisis as over the time the organisation has managed to provide job training and
development services to homeless and severely disabled people. Within the period October 2008
to 2009 the organisation has managed to reduce the budget deficit from 3 million dollar to 1
million dollar without eliminating any service. The whole organisation and its staff showed their
passion for the mission of the goodwill and in order to provide High Quality Services and to
meet the demand that has occurred due to the significant rise in the rate of unemployment in 60
years, the organisation has decided to organise a fundraising campaign for the first time in 93-
year history (Steger, 2017). Deborah Alvarez Rodriguez had two options to reduce the budget
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deficit or the gap; one is by approaching the donors in order to raise 1 million dollar to fill the
gap and the second is by eliminating some services that the organisation offers. But the
organisation had worked really hard in order to get rid of this economic crisis without affecting
the services they provide to the needy people across the country.
Outline the potential solutions, giving the pros and cons for each alternative
solution
Goodwill of San Francisco was facing a budget deficit of 3 million dollar due to economic
downturn in 2008. Goodwill of San Francisco, the non-profit organisation, had failed to achieve
the earning goals for the year or the organisation might have overspent in one or more services.
Due to the projected deficit, the company didn't have enough money to spend for the next year
which has threatened the ability of the organisation to provide the services to the people
(O'connor, 2017). During the economic crisis of 2008 several countries have experienced a
significant drop in in portfolio values of their organisation and like other non-profit organisation
Goodwill San Francisco has also experienced this situation which has threatened its yearly
income. Demand for the services that the organisation offers to the needy citizens has also
increased during this time. Deborah Alvarez Rodriguez and the board of the organisation has
decided not to eliminate any of the services the organisation offers while trying to counter the
economic crisis as over the time the organisation has managed to provide job training and
development services to homeless and severely disabled people (Abratt and Bendixen, 2018).
Between October 2008 to 2009 the organisation has managed to reduce the budget deficit from 3
million dollar to 1 million dollar without eliminating any service. Budget deficit is not a
temporary problem and it requires permanent solutions. In order to deal with reduced income and
budget deficit, the organisation should adjust its expenditures. Sometimes organisations find the
hardest solution of cutting the staffs in order to prevent budget deficit. Maybe cutting staffs is the
quickest way to solve the problem of budget deficit.
Tracking budget
Tracking down the spending and the earnings of the organisation may prevent budget deficit. If
overall economic atmosphere is causing the budget deficit, tracking down the budget every
month will help the organisation by giving an opportunity to adjust the budget as needed. It will
also help the organisation to control spending cost or alert the organisation to overspending.
Tracking down the budget may help the organisation to review those services where the
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organisation is spending their money and allows them to cut some spending. The organisation
will be able to identify the problem areas by tracking down the spending and the earnings
(Liebman and Mahoney, 2017).
Reviewing business spending
Reviewing business spending in order to cut some unnecessary spending will help the company
to prevent the budget deficit. If the organisation is able to limit their spending, they will be able
to avoid deficit (Macaulay, 2018). The organisation will be able to cut some money by reviewing
every areas where they are spending for example employee parties. Reviewing business pending
will also allow the organisation to transfer the spending from unnecessary services to more
important services. There are other options to limit spending such as reducing payroll costs by
decreasing employee hours (Rubin, 2016).
Raising revenue
In order to address the projected deficit, the organisation needs to identify those areas from
where it can raise revenue. Raising revenue is the most effective way to prevent budget deficit.
The organisation should also outline strategic plan in order to increase sales (Bryson, 2018.). If
the organisation is relying on donors, it should build a strong advertising campaign and make its
board members to contact them in order to raise money to prevent deficit. Sometimes deficit can
be covered up by getting a loan from the bank. But banks don't give loans to those organisations
if they don't see any bright future of the organisation. Banks will only lend loans to those
organisations when they figure out that the organisation will be able to cover the loans shortly
(Fuller, 2016.).
Deborah Alvarez Rodriguez had two options to reduce the budget deficit or the gap; one is by
approaching the donors in order to raise 1 million dollar to fill the gap and the second is by
eliminating some services that the organisation offers. But the organisation main head work
really hard in order to get rid of this economic crisis without affecting the services they provide
to the needy people across the country.
Implementing solution to get rid of budget deficit
It is important to manage the intricacies of the finances of non-profit organisations effectively
and to do that, the finance committee, the board of directors and executive members need to
manage and review the financial report very often (Hopkins, 2017). A proper financial
management system should be built and the organisation should have the necessary tools in order
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to make strategic plans, employee policies, annual budget, annual cash flow etc. Without
managing these financial documents and reports, the company will have to face a huge risk of
reduced cash flow and the issues of overspending. The issues of projected budget deficit should
always be taken very carefully. And the most important thing is to determine why it has occurred
in the first place and whether it is a short time problem or it can continue in the future. While
addressing budget deficit, it is important to come up with a solution that can raise funds to cover
the deficit. When budget deficit is occurred to a non-profit organisation, it is important to lower
the expenses of the organisation by eliminating a program it offers or by reducing staff or by
transferring funds to more important services it provides (Gitman, Juchau and Flanagan, 2015).
Budget surplus for a non-profit organisation means the company has managed to bring more
money than It has spent for the services it provides and budget deficit for a non-organisation
means the organisation could not meet the budget goals which is outlined by the finance
committee of the organisation, spending and fundraising etc. When a non-profit organisation is
facing a budget deficit, it should arrange money from restricted funds. The company we can
arrange funds from the grants but there are some certain limitations as grants usually come for a
certain purpose or there is a time limitation. The organisation can also arrange solicited
donations these solicited donations are usually seen as temporarily restricted funds for a specific
program that the organisation is going to offer to the customers (Kerzner and Kerzner, 2017). If
the company manages to make a proper fundraising campaign, it will be able to get some
unsolicited donations which can be referred to as a resource that are given to a non-profit
organisation independently. Raising revenue is the most effective way to prevent budget deficit.
The organisation should also outline strategic plan in order to increase sales. If the organisation
is relying on donors, it should build a strong advertising campaign and make its board members
to contact them in order to raise money to prevent deficit (Weerawardena, 2018).
Conclusion
In February 2009 the company has faced a serious economic problem and there was 3-million-
dollar budget deficit which has threatened the ability of the organisation to provide services to
the citizen. David Alvarez Rodriguez, San Mateo and Martin Counties, the CEO and the
president of the organisation Goodwill San Francisco, has decided to introduce a fundraising
campaign in order to determine how the organisation will be able to do its business for the next
few years. The situation has caused due to a failed sale of its headquarters in July 2008 which
6

has resulted in a severe damage to the cash flow of the organisation. The company has lost 6
million dollar in terms of investment capital and 1 million dollar in terms of operating capitals.
In this article, potential solutions to raise funds and to prevent budget deficit has been provided
with the strategies to implement the most secured solution.
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References
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strengthening and sustaining organizational achievement. John Wiley & Sons.
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https://sfgoodwill.org/about/history/
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Liebman, J.B. and Mahoney, N., 2017. Do expiring budgets lead to wasteful year-end spending?
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Weerawardena, J., 2018. 8 Non-Profit Marketing Strategy. Transformational Leadership and Not
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