In the past few weeks, nonprofits across the country have been scrambling to understand the implications of the new administration’s policies. From federal freezes (and unfreezes) to halts on global foreign aid, shifting funding priorities, the threat of tariffs, and more, uncertainty has become the norm. As organizations work to navigate these turbulent times, it’s critical for nonprofit leaders to take proactive steps to protect their missions and financial stability.
Here are key actions nonprofits should prioritize immediately:
Review and Update Your Budget
The budget your organization created and approved at the end of last year likely needs to be updated to reflect the current political and economic environment. In addition to revising the annual budget, consider creating scenario budgets or forecasts. These tools can help your organization quickly adjust and demonstrate how it will pivot if specific scenarios arise, such as changes in funding or increased expenses.
When updating your budget, consider potential risks:
- Government Funding: Federal funds may be delayed or halted altogether.
- Foundation Giving: Foundations may slow down their grantmaking as they wait to understand government priorities and decide whether to redirect their funding.
- Individual Support: Contributions, memberships, and conference attendance could decline as individuals face job layoffs or early retirements.
- Rising Costs: The cost of goods and services may increase due to proposed tariffs, putting additional pressure on already tight budgets.
Analyze Your Reserves and Strategic Plan
It’s essential to evaluate your current reserves and multi-year strategic plan. Ask yourself:
- Do we have enough in our reserves to weather potential funding delays or cuts?
- If not, what spending cuts or adjustments should we make now?
- What new funding opportunities can we pursue immediately to address potential shortfalls?
If your reserves are not sufficient to provide a financial buffer, start planning for potential cost reductions and diversifying revenue streams to maintain operations during uncertain times.
Act Quickly with Federal Funding
If your organization receives federal funding, time is of the essence. Submit drawdown requests as soon as possible to ensure access to funds before any delays or changes are implemented. Additionally, prepare for increased oversight of federal funds. This means ensuring your documentation is complete, accurate, and easily accessible. Compliance will be key as federal scrutiny may increase under new policies.
Diversify Funders and Revenue Streams
If your organization relies heavily on government funding, now is the time to diversify your funding base. Consider reaching out to corporations, foundations, and individual donors to build new relationships and secure alternative sources of support. Research grant opportunities and explore earned revenue models to create additional stability. By reducing dependency on a single funding source, your organization will be better positioned to weather future uncertainties.
While the current political climate presents challenges for nonprofits, it also offers an opportunity to reassess financial strategies and strengthen organizational resilience. By updating budgets, analyzing reserves, acting swiftly on federal funding, and diversifying revenue streams, nonprofits can proactively prepare for the road ahead.
At Han Group, we’re here to help. As your strategic and financial partner, we can guide you through these uncertain times, offering tailored solutions to protect your mission and ensure your organization’s long-term success. Reach out to us today to learn how we can support your nonprofit in navigating these challenges.
