In recent weeks, we’ve had countless conversations with our colleagues and partners in the nonprofit sector about ways to continue fueling their work in the midst of a volatile funding climate. Below, some highlights and takeaways:
The elephant in the room:
Nonprofits are assessing the cash flow implications of federal funding cuts. Funding cuts generally mean program cuts; and program cuts in one area can have knock-on effects on other areas. Some nonprofits are in a position to reallocate funding from unrestricted streams or programs deemed less essential—at least for a while—to protect vital programs while replacement funding is sought. Organizations may feel inclined to hide funding challenges from donors; however, with transparency comes building trust and support. Fundraisers should clearly communicate the impact of federal funding on their programs without framing the situation as a crisis. Maintaining a commitment to continuity of programs and the organization’s mission will reinforce donor confidence.
Revenue diversification in real time:
Nonprofits are also shifting more of their time and attention to revenue sources other than the federal government. This includes long-committed individual donors, the broad base of everyday donors, and grantmaking foundations. While revenue diversification is not novel in and of itself, we’re hearing from our colleagues at nonprofits that they are mobilizing to prioritize individual and foundation giving in 2025 even more than usual. We’re also hearing broad agreement that though private philanthropy cannot wholly replace federal funding, philanthropic individuals and groups will come to recognize the urgency of their support.”
Bold asks and bridge funding:
Volunteer leaders and leadership-level donors are indeed making moves to minimize negative impacts of federal cuts. Oftentimes, this results in swift action and deliberate messaging on their part to clarify what can be done to continue their mission despite federal cuts. By illustrating the challenges and path forward, leaders can encourage donors to help keep vital programs afloat
At Yes& Lipman Hearne, we continue to be inspired by the creativity and resilience that defines sector—and proud to do our part to champion solutions, surface actionable insights, and build the bond between organizaitons and their audiences.
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