Chapter Contents

Financial Strategies to Consider
Thoughtful Financial Leadership During a Crisis
Financial Impact: Decision-Making for Long-Term Success
COVID-19 Lessons Learned: Financial Management

In the event of a pandemic, adeptly managing cash flow and leveraging debt can become vitally important to the financial sustainability of an aging services organization. Providers should be prepared to see potentially large increases in expenses in response to the pandemic, as well as an equivalent decrease in revenue collection, depending on the provider’s ability to maintain services. Considerations such as occupancy of congregate living settings, modifications to service delivery to maintain revenue, and capitalization of federal and state emergency grants should be carefully weighed and structured. Telehealth and other virtual service delivery methods may become essential to continue operations.

When facing the seemingly endless challenges of a pandemic, LeadingAge members often find great wisdom, support, and solutions in consultation with each other. Knowing what strategies and interventions have worked for other members can help the entire field develop its understanding  of best practices, even during a crisis.

Of paramount importance is the ongoing financial solvency of the organization, which certainly will be challenged in multiple and unexpected ways by a pandemic. Aging services providers will need to balance many financial priorities, including resident care and services, employee retention and recruitment, and the overall sustainability of the organization. Here, we explore a variety of member-sourced solutions to developing a financial strategy for navigating a pandemic, including scenario planning, external sources of financial support, and creative ways to support employees financially during a crisis.

Financial Strategies to Consider

Scenario Planning for Pandemic Financial Strategy Development

Just as aging service organizations have a financial strategic plan for periods of “normal operation,” it is important that organizations also engage in scenario planning for unforeseen emergencies or pandemic-like events. Earlier chapters discuss detailed methods to strategically plan for ongoing operations during a pandemic; here, we offer an alternate, simplified method that may serve some organizations well.

Most likely, 2 major issues that an organization will face during a pandemic will be an incredibly high cost of labor (e.g., replacement staff, overtime pay, “hero pay,” enhanced benefits, etc.) and a large drop in revenue (e.g., reduction in service provision and related revenue, delays or cancellations of admissions, closures of services such as adult day programs, etc.). Providers may find it most prudent to project 6-month, 12-month, and 18-month plans for navigating the costs and shortfalls of the pandemic using realistic labor cost estimates and projections for lost revenues.

Scenario planning, if chosen as a planning approach, should include projections for every level of care that a provider offers. Predictions of circumstance, expense, and revenue fluctuations can range from the “most realistic” to the “least realistic.” It may be prudent to list as “most realistic” significant losses of occupancy in levels of care such as skilled nursing, which is likely to see increased occupancy strain as a result of a pandemic. Although projections may vary by location and provider type, the simplest method for scenario planning may be for providers to anticipate a drop (e.g., 10-15%) in census for all levels of care, with a recovery period spanning 6-18 months. Providers will find this revenue loss may drop to the bottom line, as it will be difficult to stop spending due to expanded pandemic-related demands.

Lastly, another prudent scenario planning measure may be to budget an additional liquidity fund for “emergency only” expenses that should only be accessed in situations of absolute necessity. This can help organizations resist the urge to budget for and spend on non-essential items, and reserves can be diverted to pressing needs or preserved.

External Support During Pandemic-Related Financial Instability

Should an organization experience financial instability as a result of a pandemic, there are several potential sources of external financial support that may offset rising expenses and revenue losses. Three possibilities are third-party financial consultants, fundraising and charitable donations, and state and federal funding opportunities.

Third-party financial consultants: If an organization finds itself in dire financial straits during or as a result of a pandemic, it is a worthy investment to seek professional guidance by a third-party financial consultant. Many aging services providers have pre-existing debt with both banks and bondholders. If providers start to miss payments and fail to meet bond covenants, these debt holders may begin to put pressure on providers to make payments, financially restructure, or even call in the debt. Providers who find themselves on the brink of debt default should consider enlisting the counsel of an experienced financial consultant who specializes in aging services finance as early in the process as possible. Receiving timely coaching from a financial consultant can help organizations manage the relationships with their bondholders, and can mean the difference between a temporary financial issue and potential bankruptcy.

Fundraising and charitable donations: Earlier in this section, a brief discussion regarding charitable donations referenced working with existing funders and financial supporters to help fill in the gaps between rising expenses and revenue shortfalls. (Note: If considering the possibility of staff furloughs, it may be prudent to keep your philanthropy team intact and active, so fundraising efforts may continue.) In addition to working with existing funders, an organization may find great success in alternate funding by seeking new charitable donors and pursuing private, state, and federal grant-funding opportunities.

While seeking funding from organizational donors, providers may do well to seek support from new and existing individual donors as well. Individuals may be inspired to donate in response to the impact of the pandemic on aging services. These donors may include local small businesspersons, influential community members, public figures, family members, and others.

In addition to philanthropy team members, board members and executive staff may be enlisted to help recruit charitable giving through their own connections and networks. Your organization may consider launching a charitable campaign, aimed at concerned individual and organizational donors, as a measure to offset the losses and expenses your organization has experienced due to the pandemic. Teaming up with local businesses, health care systems, or charitable foundations who may pledge to make matching contributions is just one of many strategies organizations enlist to inspire donations for a specific cause.

Federal and state funding sources: In the event of a pandemic, it is highly likely that state and federal relief may be made available to aging services and health care organizations. Providers who were hardest hit by the COVID-19 pandemic in 2020 did find some financial support in programs funded by the federal CARES Act, in the form of Provider Relief Funds, FEMA emergency relief, Small Business Association Payroll Protection Plan loans, and other such measures.

During that time, states offered similar supports, including payment or logistical support for testing, provisions for PPE, “strike teams” to handle outbreaks of COVID and, in some instances, mental health support services for beleaguered staff.

In the event of a subsequent pandemic, providers should enroll in any and all state and federal programs for which they qualify at the earliest possible opportunity. These funding and support programs can help offset the unplanned and excessive costs of PPE, testing, staff pay, specialty care units, expanded services for residents, and other needs. Because state and federal funding and support may not be perennial, providers should make the most of what support they can receive at a given time, and should simultaneously budget for expenses, using realistic and worst-case scenario projections, as if such external support will not continue in the future.

Supporting Staff With Financial Incentives During a Pandemic

Managing expenses during a pandemic requires care and financial scrutiny; measures to reduce staff, staff benefits, and/or pay should be undertaken only as a last resort. Given the number of essential functions that staff provide in aging service organizations, there are few practical positions to reduce, with the possible exception of marketing or philanthropy positions (though those employees have valuable roles in bringing resources into the organization). Even so, in many provider organizations, the employees who perform these functions may be retrained and repurposed into alternative roles (security, screening, meal delivery, etc.) as organizations are likely to experience absenteeism and “rolling vacancies” as a result of pandemic-related illness and fear of infection among staff.

Organizations should also weigh whether they are willing and able to endure the reputational damage that may result from layoffs, especially since this will likely unsettle already anxious residents and families. In this field, cost-cutting by reducing staff and services may result in a perceived or actual decline in quality to persons served.

Alternately, an organization can double down on its commitment to staff and to maintaining quality services by investing in financial incentives for staff during a pandemic. Providers may consider offering “hero pay” to direct-care workers who experience the highest exposure risk to the illness or, in the most dire circumstances, to any staff who are well and able to come to work to fulfill a needed function amidst widespread vacancies or absenteeism.

“Hero pay” acknowledges and rewards the dedication of staff during a pandemic, when many may be tempted to stay home to avoid exposure. In addition, organizations may offer other incentives, such as free meals for staff, flexible work schedules and hours, enhanced mental health benefits to manage stress, low- or no-interest loans negotiated with approved lenders to help staff with financial burdens, or free childcare. Of course, all of these additional expenses must be planned and paid for by the organization; resources such as those discussed above under “External Support during Financial Instability” may not only help offset those expenses, but may also be earmarked by federal and state agencies for such staff-oriented pandemic benefits.

Across the LeadingAge membership, there are numerous examples of how organizations can structure and deploy such a benefit. One notable example comes from Wellspring Lutheran Services, based in Flint, MI. Early in the COVID-19 pandemic, Wellspring Lutheran pursued a creative strategy for funding additional pay for all staff in their system: a bank-approved, 3-month “holiday” during which the organization paid only interest to its lenders. Wellspring used the money that would have been spent on principal to ensure all staff received additional pay. In addition, the organization launched a “daily pay app” that enabled staff to access their earned pay at the end of each shift. This measure was immensely popular with the staff, who now had greater flexibility in accessing earned pay when it was needed.

Another notable example was Presbyterian Homes & Services, based in Roseville, MN. All employees of Presbyterian Homes received “appreciation pay” during the COVID-19 pandemic, funded by private donors through a special campaign led by the Presbyterian Homes Foundation.

For more advice on supporting the workforce, see the section below.

Just as aging service organizations have a financial strategic plan for periods of “normal operation,” it is important that organizations also engage in scenario planning for unforeseen emergencies or pandemic-like events.

Thoughtful Financial Leadership During a Crisis

This section comes courtesy of CLA, a LeadingAge Silver Partner


Financial instability amid a crisis can threaten vital provider organizations and remove critical social safety networks when they are needed most. The realities of operating during a pandemic could discourage even the most resolute nonprofit leader. You may be forced to reduce personnel costs, decrease or delay programs and services, or take other drastic measures just to keep your organization afloat.

During a pandemic, your ability to provide adaptive, creative, and considerate financial leadership is more crucial than ever before. It requires an unflinching look at your current fiscal state and a willingness to seek and share solutions across your entire organization. But if you hold true to your mission, you can make thoughtful, compassionate, and effective decisions in the midst of hardship.

Learn about some simple financial tools and creative approaches you can use to help make informed financial decisions during these unprecedented times.

Financial Tools Focused on the Future

In economic downturns, organizations may face tough financial choices to remain open. Accurately assess where you stand in the present to plot your future carefully. To understand your current situation, use a simple spreadsheet (our examples in Figures 1 and 2 are adapted from a template created by Propel Nonprofits) to map out cash flow over the next 6 to 12 months.

In practice, the process resembles budgeting. However, because your cash position is so important during a crisis, the estimates you enter into the spreadsheet must be cash figures. Enter accurate projections of the actual cash you are certain to receive and the actual dollars you expect to pay toward expenses. While it may be difficult, your estimates must be bluntly realistic. Stick to what you know is certain, not what you hope will occur. Use that truth to form strategies to fill funding gaps and cut costs.

In the examples below, you will notice line items for cash expenditures that are not usually present on a statement of activities. Items like accounts receivable collected and mortgage payments (the principal portion) involve transactions that would not normally affect the income statement. Because these items involve cash receipts and cash outlays, you must include them to create an accurate picture of where you stand on a cash basis. Include these items as you establish the cash flow projection for your organization.

The Gaps Become Your Goals

A negative bottom line translates into a shortage of cash. No one wants to see trouble on the horizon, but if you identify it quickly you can do everything possible to push it further into the future. Figure 1 shows that an expected shortfall of $45,161 is looming 5 months out. Under normal circumstances, you could cut expenses or raise additional revenue now to solve this problem without major hardship.

Figure 1

Source: Adapted from a template created by Propel Nonprofits

Solving for one month may only be a partial fix, but it buys you some time. While your estimates for the most immediate future will be your most accurate, your organization should try to project your cash forecast out as many as 12 months.

It is important to understand that you cannot simply take an annual figure and assume you will receive or pay out an even amount of cash each month. Very few revenue or expense items actually spread uniformly month by month. Consider exactly when each revenue item is received as cash and when each bill must be paid.

Figure 2 shows the $45,161 shortfall predicted in July balloons to a negative $387,915 by February, illustrating why it’s critical to see both the short-term and long-term impacts. The measures you take to counter the initial shortfall may be too little to make much difference if you face a larger shortfall just 6 months later.

Figure 2

Source: Adapted from a template created by Propel Nonprofits

Use Your Revenue and Expense Levers

Include only definite sources of funding in your cash projection, since your ability to plan effectively depends on the accuracy of your estimates. Make no assumptions based on how revenue came in previously.

Once you have a reliable picture of your upcoming revenue streams, identify ways to bend it in your favor. Consider asking contributors to release any time and purpose restrictions they have placed on their contribution.

During a pandemic, your funders are aware of the extraordinary circumstances. If asked directly, most contributors would consider themselves supporters of your organization’s long-term survival. Share the truth about your emergent situation to potentially expand and deepen your relationship with contributors—and prompt them to make an immediate donation to the cause.

Another strategy is to approach individual contributors with a direct request to help fill all or part of the funding gap. Individual donors often respond well to this sort of clarity and transparency. If you take a “we’re all in this together” approach to fundraising in difficult times, it can give donors an opportunity to assist your organization through challenging situations.

Do Everything Possible Before Cutting Staff

The work done by provider organizations is the result of wonderfully dedicated staff. For many nonprofits, the combined line items for staff salary and wages, along with the accompanying benefits and taxes, are the largest expense category. Many senior services organizations look to personnel as the first place to cut when finances tighten.

At a glance, a decrease in personnel reduces expenses dramatically and efficiently. Staff reductions may be needed when faced with impossible choices, but there’s an opportunity to think creatively so you can powerfully hold to your organization’s values.

Explore other line items for savings. To control your cash flow, you can:

  • Monitor your accounts payable aging report.
  • Delay payments to certain vendors.
  • Arrange a payment plan with vendors to influence the amount of cash you expend on a daily or weekly basis.

Of course, consider the impact any delays might have on your vendors. Small businesses and sole proprietors are often more vulnerable to slowed payment streams.

If forced to turn to personnel expenses, leave any open positions unfilled to keep costs down. Though obvious, vacancy savings are a real way to contain costs. This is especially useful if the budget you have worked from has future expenses built in for new positions.

Another tool to reduce costs is to look at all the related benefits layered on top of your salaries and wages. If your organization contributes any amount to employee retirement plans or health savings accounts, consider amending your plans to eliminate or greatly reduce the employer contribution.

Yes, this reduces compensation, but most employees will appreciate the effort to sustain their employment over the long run in exchange for temporary reductions in benefits. Review other lesser benefits as well, such as paid parking or public transportation benefits. Do the math to see if these auxiliary benefits can provide cost savings sufficient enough to avoid staff reductions.

If You Have To Cut Staff Salaries, Be Compassionate and Creative

If drastic cuts in personnel expenses are the only way to keep an organization alive, then explore ways to share the sacrifice across the organization. When you face something as all-encompassing as a global pandemic, many of us understand and expect that we are going to have to share the burden.

Handle your organization’s financial hardship thoughtfully, to ease employee transitions and potentially boost morale. Short of laying off individuals, consider alternative salary-saving initiatives that distribute the impact more equitably across the whole organization, such as:

  • Rolling furloughs.
  • Universal part-time hours.
  • Universal compensation reductions.
  • Temporary leveling of salaries.

These creative cost-saving measures can send a powerful message about your commitment to staff and promote the belief that the organization’s financial health is a shared responsibility.

Weigh these temporary measures against your own culture and values. These options are only a few of many choices and combinations that might offer a solution that aligns with your mission and principles.

Rolling furloughs: Furloughs can be implemented in a number of ways. One is to give all non-essential employees one week off without pay per month to stagger which employees are off at any given time. Employees receive less than their regular pay, but they also receive more time off than usual. It does not ignore the financial impact, but the time off is at least a symbolic acknowledgment that all is not normal. This method would save 25% of total non-essential wages and some portion of benefits and taxes. There are many configurations of this basic idea.

Universal part-time hours: Establish universal part-time hours to reduce salary expense in an egalitarian fashion. If you move all staff to a 30-hour workweek, it will bring the same 25% salary reduction as the rolling furlough example above. Adjust the calculations to create the needed cost savings.

Universal compensation reductions: Reduce all salaries by the same percentage or implement a graduated reduction (with compensation for the highest earners reduced by greater percentages). This method can be specifically targeted to achieve the necessary savings.

Temporary leveling of salaries: Temporarily setting all salaries to the same level is the most far-reaching of any of these suggestions. The example in Figure 3 assumes an organization of 8 employees where the CEO makes $150,000 and the lowest paid staff person makes $45,000. Leveling salaries across the board would provide over 50% savings in personnel costs.

This tactic demands the most sacrifice at the top of the organizational pay scale. It also inherently honors the fact that the lowest paid staff are likely the most vulnerable in any financial downturn of significant duration.

Figure 3

Inventive Strategies Still Have Regulatory Limits

Consider each of the strategies presented above within the context of wage and hour laws and unemployment regulations specific to your state. In some states, a reduction of employee salaries or hours may trigger special labor requirements or unemployment eligibility concerns.

At the same time, state and federal agencies must adapt to the crisis as well. Special programs may extend unemployment benefits or offer other financial relief to you and your employees during the crisis. Know the details of employment regulations to help you decide which, if any, of these creative approaches are right for your organization.

Financial Facts, Your Mission, and Innovative Solutions

As nonprofit leaders, you are asked to respond to human suffering, act as anchors to communities in crisis, and sustain your own staff and organizations with few, and potentially diminishing, financial resources. To survive these uncertain times, take a courageous, clear-eyed look at your current financial state and the knowable future. Where drastic measures are needed, you have the opportunity to stay true to your mission while acting prudently and compassionately for the sake of both our communities and your organizations.

Adapted from a post by Curtis Klotz on CLA’s Innovation in Nonprofit Finance Blog.

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, investment, or tax advice or opinion provided by CliftonLarsonAllen LLP (CliftonLarsonAllen) to the reader. For more information, visit

Financial Impact: Decision-Making for Long-Term Success

This section comes courtesy of CLA, a LeadingAge Silver Partner


Organizations are often forced to adapt on the fly during times of crisis. To have sustained organizational success—even during a protracted crisis like we’ve seen with COVID-19—you must manage cash and cash flow effectively.

For many organizations, a sense of panic may set in as you attempt to function during a pandemic and weather the related economic decline. In this scenario, you have to be proactive: Leap into action to assess available support programs, lessen the financial impact of delayed or restricted business, and maintain your ability to provide appropriate care and protection to your residents, patients, families, and staff.

To get started, develop clear insights on what impacts your cash flow. Then you can make sound decisions and chart a strategic path forward. Here are some key steps you can take to start that process.

Understand Your Expenses

Start your cash or cash flow management initiative with a clear line of sight into your expenses. Work to uncover new expenses incurred as a result of the specific crisis, as well as expenses that can be reduced, deferred, or flexed.

Pandemic-related expenses: Identify new expenses incurred to develop an adequate response. Understand these costs to inform your strategy and capture them to help identify potential future reimbursement from federal, state, and local agencies. Plan and establish tracking systems to help reduce the risk of lost reimbursement in the future.

Pandemic-related expenses will vary. Examples include, but are not limited to:

  • Supply and equipment costs.
  • Staffing costs such as overtime, agency staff, sick leave, and free meals.
  • Additional security.
  • Screening of patients, residents, and guests, which includes the setup of remote testing locations

During this time, create not only a system to identify increased expenses, but also a structure to account for those expenses to understand their full magnitude.

Reduced, deferred, or flexed expenses: Create a roster of specific areas where your organization can alter costs. When you create this inventory, it allows leadership to focus on expenses that can be reduced, deferred, or flexed in order to preserve cash flow.

Consider the following items:

  • Minimize lost productivity in departments that have temporarily closed or reduced services.
  • Utilize on-call pay vs. having clinical staff scheduled on-site with no activity.
  • Encourage use of paid time off for any non-essential employees.

Cancel any purchase orders for supplies that are not immediately necessary.

These are just a few of the expense modifications to review—and there are undoubtedly more. Create as broad of an inventory as possible, to provide leadership with financial levers that may be pushed to guide the organization to financial health.

Quantify Lost Revenue

Providers will be impacted differently based on their service mix, geography, and relationships with health systems (which are also experiencing their own varied impacts). Quantify the impact of lost and/or delayed business by service line, so leaders can plan accordingly.

Consider items such as:

  • Patient demand for services that have been delayed, which may create pressure on capacity after the crisis is over.
  • Volume that may be lost permanently to competitors.
  • Resident move-ins that may be reduced or halted due to governmental restrictions and changing consumer preferences.

This is far from a complete listing of the potential revenue impact your organization may experience. Document these impacts so key decision-makers can use this information throughout the economic downturn and as they look to the future.

Plan for Balance Sheet Impact

For some organizations, positive investment returns play a large role in driving total margin and mitigating unfavorable operating results, lower cash reserves, and rating/outlook downgrades. Pandemics and their associated economic impact, however, can create significant stock market volatility, which can dramatically reduce balance sheet investment values. Organizations should model the impact of a prolonged event on the balance sheet to glean key information for short-term decision-making.

Incorporate Financial Modeling and Scenario Planning

Use the information gathered in the steps above to create models to help guide the strategic thinking and decision-making of your organization’s leadership. Financial models and scenario planning can help your organization adapt and plan for the new normal of a pandemic environment.

Specifically, scenario planning models allow you to simulate the impact of changes on your organization’s financial performance and cash flow over a period of time. These models can be further leveraged to develop longer-term plans, projections, and budgets.

Develop a model that provides the following key benefits:

  • Establishes a consistent organizational understanding of the economic impacts of the variables.
  • Brings focus to the big pulleys and levers, to avoid getting distracted by too many details.
  • Creates actionable financial intelligence.
  • Supports an interactive, team-based approach to financial planning.

Pandemic-specific models can benefit from several distinct parts (illustrated in Figure 1):

  • Baseline: Refers to historical financial performance, which is usually determined based on actual revenues and expenses, as well as the budget for the current year.
  • Dip: The decline from the current economic environment. Estimate how big that dip will be and how long it will last.
  • Turn: The point in time when the organization begins its ascent to the new normal. Consider how big the turn will be and how long it will take.
  • Recapture: As we approach the new normal, determine how much of the lost revenue you expect to regain.

Figure 1

When you begin to develop scenario planning models, engage your board and management team to identify the situations you need to plan for. Common scenarios that organizations model include:

  • What will happen to your revenue if you do not accept (or accept fewer) patient referrals? What happens if the slowdown in referral volume is longer than expected?
  • How will your cash flow be impacted by fewer (or more) move-ins, as consumers respond to pandemic situations?
  • Should you use your reserves to support the organization during the time of pandemic? Or should you seek out debt options like a line of credit or a longer-term loan? Will you have the cash to repay the loan when the time comes?
  • How long can you afford to keep your staff employed? What will the impact of furloughs or layoffs be?

Define the assumptions used in your model to help others understand and, ultimately, leverage the strength of the model as a decision-making tool.

Financial Model Presentation

Management and governance decision-making is enhanced by visual representations, so use charts and graphs (see Figure 2) when you present the data. A model with the ability to toggle assumptions—such as CLA Intuition® (Figure 2)—allows you and your leaders to see potential outcomes in real time. When your model generates information in a format that can be shared and digested, everyone can easily see the impact of different decisions as you review possible scenarios.

Figure 2

Source: CLA Intuition®

In times of chaos, utilize a model that can seamlessly illustrate the impact on cash flows of changing revenues and various strategic responses. This will keep leadership as informed as possible, and help create directional unity in decision-making.

Adapted from articles written by Rob Schile, and Lisa Stover, CAE. (Stover’s article originally appeared on and was reprinted with permission within the CLA Sage Intacct Blog. Copyright ASAE: The Center for Association Leadership (June 2020), Washington, DC.) The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, investment, or tax advice or opinion provided by CliftonLarsonAllen LLP (CliftonLarsonAllen) to the reader. For more information, visit

COVID-19 Lessons Learned: Financial Management

In the midst of an emergency as impactful as a pandemic, we must often act first and reflect later. It’s common for leaders to ask themselves retrospective questions, such as:

  • Did I act too quickly or too slowly?
  • What could I have done differently?
  • Did my approach of choice work as well as I anticipated it would?
  • How can I improve my responses if a pandemic recurs?

And then, of course, there are a lengthy series of “What ifs?” that we ponder. LeadingAge has received numerous Lessons Learned tips from members during the COVID-19 pandemic, which we are sharing at the conclusion of each related Playbook Chapter. In addition, a compilation of shared Lessons Learned may be referenced in the Playbook Appendix.

LeadingAge LTSS Center resources:

LeadingAge Wisconsin resources:

LeadingAge resources:

LeadingAge audio interviews:

Related articles and resources:

Back to Top | Home | Next Chapter