Coronavirus Financial Planning for Education Organizations: A Q&A With Bellwether’s Lina Bankert

While public health concerns remain top of mind, we know many leaders are also thinking about the unfolding economic consequences of the COVID-19 pandemic. How can you be smart about finances to minimize impacts on your employees and the communities you serve?

Quote from Bellwether Partner Lina Bankert: "In times of uncertainty and unrest, come back to what you are trying to do and why it is important. What are the things you will not compromise on?"

Partner Lina Bankert has been at Bellwether for eight years, supporting school systems, foundations, organizations, and others on their key financial and strategic decisions. In the conversation below, she offers some guiding principles for education organizations as they navigate the public health and economic crisis facing our country.

This conversation has been edited for length and clarity.

Why are we even talking about financial planning when a crisis is still unfolding?

Part of the challenge of this scary and unsettled time is that we don’t know how long things are going to be shut down, when the economy will recover, when we can travel again, or what the new normal will look like. A plan can help you weather uncertainty. 

If we don’t know the answers to these questions, how can we plan?

We can imagine different scenarios and how we would respond to each. If businesses stay shut, we’re certainly going to see a reduction in the per-pupil funds that states are able to distribute to schools. Philanthropy is also taking a big hit, which impacts how much they can pass along to grantees. I also have to wonder if federal and state education funding streams will dry up or pause due to lost tax revenue and as dollars are channeled to critical needs responding to this crisis.

Past events tell us that it’s not an overreaction to plan for leaner times. Planning can help generate options to react to reductions in funding. This isn’t the first crisis the world has seen. We know that organizations which are smart heading into a downturn can accelerate out of it.

Leaner times could mean reductions in staff, which I imagine is stressful for people to hear.

I understand that imagining potential cuts is scary, but sitting back and waiting is also scary, because then you’re paralyzed. I recommend that organizational leaders look at their work, lead with impact, triage the most important needs for kids and communities, and, in parallel, look ahead to the future.

What do you mean by “lead with impact”?

In times of uncertainty and unrest, come back to what you are trying to do and why it is important. What are the things you will not compromise on? Maybe it’s a particular way you are supporting kids and families. Maybe it’s how you’ve committed to engaging stakeholders.

There are non-negotiable things, and then there are things you are willing to flex or interrogate. While maintaining the impact you’re trying to achieve, what modifications are on the table?

How does financial planning figure into this kind of thinking?

It means leaning into evolution. When an organization works with Bellwether to develop a strategic plan — and then a financial model that supports the strategy — we typically look at the biggest drivers of that organization’s revenue. Where are their dollars coming from: Philanthropy, federal or state dollars, earned revenue, something else? Are they dependent on a small number of revenue streams, like a group of large donors, or a distributed set? What other peer organizations are vying for the same dollars? Are there other pools of funds to consider, such as the bond market?

We do the same with cost. A lot of costs in our sector are driven by people. We encourage organizations to think about their staffing and organizational chart as well any other significant costs inherent in delivering services. For example, if you are a digital curriculum provider, what are the costs of the underlying technology? Are there additional expenses around provisioning, rostering, or sharing agreements that need to be executed? What will it take to equip customers or partners with the tools they need (e.g., hardware and connectivity) to get to the results you target?

There’s no need to get as granular as the number of pens and pencils purchased for staff — we just map out the biggest drivers of cost. These big chunks of earning and spending go into the financial model.

Once you build a financial model, how do you use it to prepare for and respond to a crisis?

We take the assumptions from the financial model and imagine different potential outcomes. This is called scenario planning, and it’s something I encourage education leaders to do in the midst of this crisis.

That doesn’t mean we assume the worst — or the best. We always run what we call the “base case,” or the most likely scenario, and then bookend with the most optimistic and conservative scenarios. We imagine the likelihood of different revenue streams eroding or maintaining, and then imagine what an organization would do in response. Can the organization get more effective and efficient by pausing non-essential activities, getting leaner on staffing, or not doing certain programs? Organizations layer on a few different possibilities and plan for the most likely, while staying flexible as changes continue to unfold.

If you do nothing now, that’s also risky. You’re assuming you’re going to keep doing what you’re doing, with maybe a few modifications at the margins, and that philanthropic and government funding streams are going to remain. But if you plan now, you can come out of a period of uncertainty with strength. 

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