Excerpt: Plan for the Worst
Although the impact of the financial situation will vary significantly according to the size and type of organization, nonprofits should plan for the worst. It makes sense to prepare several varying budgets, one for a best case scenario, one for the worst case scenario, and perhaps one or two in between.
Then the organization must constantly watch income and expense against the budget to retain flexibility to react and adjust. The Audit Committee, created in response to Sarbanes-Oxley, is supposed to understand the financial risks of the organization and should monitor what is going on on a regular basis.