We generally don't see the words "bankruptcy" and "charity" in the same sentence; yet it may become all too common in the next few months or years.

Recently Diane Aviv, President of the Independent Sector was quoted in a New York Times article as saying “Our expectation is that this is just the tip of the iceberg."

In the past, a nonprofit generally went bankrupt when faced with a sudden and unexpected liability such as a lawsuit. Now are organizations in danger of going out of business as funding sources decline. The declines take place in a variety of ways: earned income lags, annual campaigns fail to meet goal, government grants are cancelled or not renewed, and private grants fail to materialize or come in lower than expected.

While earlier bankruptcies were often sudden, the current situation is like an accident in slow motion. This slower process means that groups often have opportunities to act before bankruptcy becomes inevitable.

What can nonprofit organizations do?

There are many suggestions that could be made, and more than enough written about ideas of how to cope in the current economic times. But one point that can't be repeated too often is that it's better to act sooner rather than later.

With that in mind, several Tacoma-area funders are sponsoring a session on strategic restructuring. In the words of LaPiana Associates, which has done considerable research on the topic, "Strategic restructuring refers to a continuum of partnerships - including but not limited to mergers, joint ventures, administrative consolidations, and joint programming - through which nonprofits strive to anticipate or respond to environmental threats and opportunities."

On March 17th local nonprofits will spend the day with a LaPiana associate to explore ideas on how strategic restructuring applies to our current economic situation. While focused on Tacoma and South Sound, nonprofits can find more information about the session here. And note, funders have a separate session on Monday, and they won't be allowed at Tuesday's event in hopes of fostering more open communication during the case study sessions.

There is no one right answer in these tough times. But we do know that it's better to explore your options sooner rather than later. A key finding of LaPiana's research is that partnerships, collaborations, etc. all work better when the partners are still in fair financial shape; the worse things are, the less any strategy can help.