How to strengthen your nonprofit’s financials in a time of uncertainty
Funding for nonprofits is experiencing a moment of significant volatility. Major policy changes, federal grants paused or threatened, and shifts in individual donor behavior have created new uncertainty and challenges for nonprofit leaders to navigate.
If you feel like your organization is on shaky financial ground, you are not alone. However, there are steps you can take to strengthen your organization’s financial position.
Keep reading to learn more.
What are the key financial challenges facing nonprofits in 2025?
Nonprofits are facing a series of challenges that have weakened their financial stability. The biggest issue here is that most nonprofit organizations are grant-funded, typically via federal or state grants — and some of that money is becoming more unpredictable.
- The Trump administration has delayed some federal grants and made moves to cut funding for nonprofits. The narrative is often changing, which causes fear and an inability to plan and budget effectively, even as rising costs increase operating expenses.
- The last remnants of federal and state COVID-era funding have ended, depriving organizations of that funding stream to provide needed support for families and communities.
- Leaders of some larger nonprofit organizations are also reporting that individual, smaller-dollar donors are contributing less. One factor here is that employees are given more options, with employers now willing to match employee contributions to a larger number of organizations than before. This means the same giving pool is now split between more recipients.
- Donors are also less event-driven and more likely to give through social media, which has proven challenging for organizations used to fundraising through the former.
How do nonprofits get new funding sources?
Beyond federal funding, nonprofits can think creatively about new ways to seek out donations, private foundations and more local funding. To get started, here are specific steps you can take, including assessing your needs, tapping into new funding sources and getting better at sharing the story of what you do and who you are.
- Assess your organization’s current financial state: Get specific on how much of your funding comes from the federal government, how much from your state or local government and how much you bring in from private donors or other less restricted sources. Once you know this, analyze your funding ratios and assess how much of that funding is currently at risk. Ideally, you should not rely on a single source of income.
- Decide where to put your energy: Ask yourself and your team: How can you best continue to achieve your mission? Do you need to refocus around your most effective, most sustainable programs or tap into other funding sources like state and local, private donors, corporate sponsorships or foundations? What about charging for services you already provide or hiring out your expertise to other institutions?
- Work with your board: Include your board in conversations about how to diversify your funding sources and focus on your core mission. How can you leverage your board member’s expertise or relationships for additional support? Bring together your board and leadership team to create a strategic funding plan that you can start taking action on now.
- Prepare to tell your story: Donations or other nongovernmental funding sources are key tools to help you patch holes in your budget or bolster your rainy-day fund. But you have to know how to ask. Donors today, especially younger donors, are driven by values and making an impact: they want to hear practical, concise stories about how their money is helping make people’s lives better.
- Start new outreach: Once you feel ready to share your story, identify your target audience and platforms. This could be a social media campaign, starting a conversation with a foundation, approaching like-minded partners for resource sharing or hosting a fundraiser event — whatever works for your specific mission and audience.
- Experiment: Try sprints where you explore one or two new funding options at a time. Don’t feel like you need to do everything at once, or you’ll get overwhelmed. See what works and what doesn’t, and evolve your approach over time. Get creative.
- Think in terms of building relationships: Relationships, whether with individual high-dollar donors or with a broader audience over social media, can help your organization survive challenging times. Being able to tell your story is essential here, but so is honesty, transparency, showing appreciation and consistent presence. Remember that your donors are human beings, too, so a strong relationship built over time can make any ask easier, to the point where giving feels intuitive.
Now is a good time to make your organization more efficient
If your books aren’t balanced, your two options are to increase income or reduce costs. For most organizations, the latter is also an important part of the conversation. But this doesn’t have to mean layoffs. Consider key questions like:
- Are there cost savings you could find by making your workflows more efficient?
- Are there open positions you don’t need to hire for?
- What can you automate to free up team members to focus on core mission work?
- Are there facilities you’re using that you don’t need to keep paying for?
- Could you share office space with another nonprofit?
Also, be sure to talk regularly and consistently with your team about your internal efficiency efforts. Be honest and ask for honest feedback. Open communication here is essential to making this process a success and giving everyone involved peace of mind.
What additional resources can help nonprofits improve their financial position?
While many of the ideas suggested so far can be implemented without new resources, some approaches do require specific tools or skills to be effective. So, what should you consider investing in?
It’s valuable to have access to someone who can do financial modeling — whether in-house or as an external adviser. This person can help you set financial goals and model potential scenarios for your organization, which will give you a clearer idea of both your current state and possible futures to plan for.
Likewise, a decent enterprise resource planning (ERP) platform can be useful here because it will allow you to organize all of your financial data in one place. An ERP will also help you demonstrate credibility, efficiency and impact to potential funders.
You also do need basic competency with social media and crowdfunding platforms. If you know how to tell your story online and use it to drive donations, that crowdsourced funding can be a lifeline for your nonprofit in an otherwise uncertain funding environment.
Consider experimenting with AI here as well. Try using it as a tool to research grant opportunities you may not be familiar with, but which could be available to organizations serving your specific population or with your particular mission.
How Wipfli can help
We help you navigate uncertainty and strengthen your organization's finances. Let’s talk about your current financial situation, assess your needs and develop an action plan to start shoring you up over the next three to six months. Start a conversation.
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