A Wake Up Call for Nonprofits
Dear Friends and Colleagues:
Nonprofits nationwide are grappling with a growing fear: the potential reduction or loss of federal grant funding. For organizations heavily reliant on these funds, the uncertainty is more than just stressful—it directly threatens their mission and sustainability. But here’s the hard truth: if your nonprofit is in panic mode over potential grant cuts, it’s likely overdependent on government funding.
And that’s a problem that needs to be addressed before disaster strikes.
It’s easy to find commentary on this issue. Many experts will tell you to “diversify revenue sources,” much like telling someone to “eat less and exercise more” without providing actionable steps. The reality is that making meaningful financial changes requires strategic planning, leadership, and commitment. Nonprofits must take control of their future by engaging their board of directors in meaningful action. Here’s how.
Step 1: Acknowledge the Problem and Engage Your Board
If your nonprofit is highly dependent on federal grants, your board must understand the risks and take an active role in addressing them. The first step is an honest assessment of your organization’s funding structure. What percentage of your budget comes from federal grants? What would happen if those grants were reduced or eliminated?
A board retreat or strategic session is an excellent way to start this conversation. Set aside dedicated time to discuss the organization’s financial vulnerabilities and explore ways to diversify revenue. The goal is to transition the board from a passive oversight role to an engaged group of leaders committed to financial sustainability.
Step 2: Educate and Motivate Board Members for Fundraising
One of the biggest challenges nonprofits face is that board members are often not asked, coached, or motivated to engage in fundraising. Many board members join with a passion for the mission but lack experience or comfort in fundraising. The solution is not to simply demand that they “raise more money” but to provide them with the tools, training, and confidence to do so effectively.
Ways to engage your board in fundraising:
Provide training sessions on fundraising fundamentals, including donor cultivation, making the ask, moves management and storytelling.
Pair board members with experienced colleagues for mentorship and real-world practice.
Give specific, achievable fundraising tasks, such as hosting a small event, introducing potential donors to the executive director, or getting involved in thanking and stewarding major donors.
Prioritize the development of a strong board growth program to identify and nominate new board members who can help grow your board and expand its fundraising impact.
Step 3: Expand Revenue Streams with a Strategic Approach
To reduce dependence on government grants, nonprofits must proactively develop diverse revenue streams. Here are some strategic steps to consider:
Develop Individual Giving Programs: Many nonprofits struggle with individual fundraising because they have not built a strong donor cultivation strategy. Start with your board members, staff, and current supporters—do they give personally? Do they advocate for the organization within their networks? Consider launching a donor membership program, planned giving initiatives, or major gift campaigns.
Engage Corporate Partners and Local Businesses: Businesses increasingly want to support nonprofits in ways that align with their corporate social responsibility goals. Identify potential corporate sponsors, seek in-kind donations, and create mutually beneficial partnerships.
Host Fundraising Events with Purpose: Well-planned fundraising events can bring in significant revenue and introduce new donors to your mission. Make sure every event has a clear financial goal and follow-up plan to cultivate attendees into long-term supporters.
Leverage Earned Income Strategies: Some nonprofits successfully generate income through mission-related services, training programs, or social enterprises. Consider whether your organization has expertise or resources that could be monetized while still furthering your mission.
Step 4: Hold Leadership Accountable
It’s not enough to talk about diversifying revenue—the board and leadership team must hold themselves accountable for taking action. Set clear, measurable goals for reducing dependency on federal grants and increasing other revenue streams. Assign responsibilities to board members, create accountability check-ins, and track progress over time.
If your board struggles to take action, consider bringing in an outside facilitator or consultant (like me!) to guide the process. Sometimes, having an external voice can provide the necessary perspective and momentum to move forward.
Step 5: Commit to Long-Term Financial Health
Building a financially stable nonprofit doesn’t happen overnight. It requires a cultural shift in how fundraising is viewed and executed within the organization. But by taking proactive steps now—engaging your board, diversifying revenue, and creating a sustainable fundraising strategy—you can ensure that your nonprofit isn’t left scrambling when federal grants are reduced or eliminated.
If your organization is feeling the pressure of potential grant cuts, now is the time to act. Don’t wait until it’s too late. Get your board involved, create a strategic plan, and start building a more sustainable financial future today.
Need guidance on leading your board through this process? Set up a time for a call or Zoom here or feel free to email me at roland@cphilanthropy.com.
Best regards,
Komen