Uncertainty was the economic watchword for 2025, and it’s likely to stay in circulation in 2026. So association leaders have reason to think about whether a recession or federal policy changes will impact their fortunes. “Nonprofits are feeling financial strain right now,” said Holly E. Peterson, Esq., counsel at Tenenbaum Law Group, which serves nonprofits. “There have been clients who have contacted me because a grant has dried up, or they’re not pursuing an initiative anymore because of a federal policy change that’s resulting in a program’s discontinuation.”

But if association leaders are thinking about reducing headcount in response to those factors, they have a variety of matters to consider. Recently, Peterson wrote an article cautioning leaders not to characterize a firing for cause or job performance as a “reduction in force” or “reorganization.” “They think calling it that diminishes risk, but it doesn’t,” she said.

If an association leader is considering a reduction in headcount, it’s important from a legal standpoint to make sure a variety of points are addressed. Peterson offered a few of those below.

Have numbers-based criteria, and document them. “In an ideal world, I would love for these reorganizations and positional eliminations to be based on truly objective criteria,” she said. “People are looking at their financial costs, at their business operations, at their future plans, at their strategic priorities, and they’re saying it no longer makes sense to have these positions for these reasons, and they’re documenting all of that.” 

A formal memorandum laying out the financial issues is nice, but emails qualify as documentation too. “Emails are also important in my world as a lawyer—emails that document that people have begun to think about what the reasons are, that they’re starting to think about if a reduction force or position elimination might be needed, and why.”

Make the conversation public. Once a decision has been made, consider a town-hall-style meeting to break the news, both in the name of transparency and to avoid individual employees feeling targeted. “Let people know that the organization has been facing financial strain, or that a grant has been eliminated, or whatever it might be, and explaining that kinds of process that you all are going to go through as you think about what’s going to happen,” she said. “Will there be staff morale problems? Yes, but there’s also going to be staff morale problems when you eventually execute position elimination, and risk too.”
Know the local laws. Different states have different labor laws, and different rules to adhere to around employee termination. Now that more associations have staff distributed around the country, or have gone fully remote, it’s increasingly vital to know how each employee will be affected by a reduction in force in terms of state regulations. “Some of this is going to depend on where those employees are working from and what state laws are governing,” Peterson said. “You’re going to want to check your employee handbook, if you haven’t lately, against state laws, and make sure that it is lawful with respect to all states.”