What Your Nonprofit Should Do Right Now If Federal Grants Are Your Primary Revenue Source
If you're reading this, you're probably watching a funding line item that felt stable start to feel very unstable. Here's what to do in the next 30 days.
The Federal Funding Reality: What Nonprofit Leaders Are Facing Right Now
The federal grant funding environment is churning right now — more so than has happened in any of our lifetimes. Longstanding grant programs are being discontinued. Opportunities are posted and then removed from Grants.gov without explanation. The lack of communication from funding agencies is leaving many nonprofits at a loss for how to move forward. Crisis fundraising for nonprofits is no longer a worst-case scenario — for many organizations, it's the current reality.
If your nonprofit is heavily grant-dependent, you are watching your federal funding shift or disappear. This is a scary position to be in, for nonprofit leaders and communities alike. Executive Directors and Boards are being called upon to make hard choices while also running programs and trying to remain calm for their staff. This is not a fun part of our job.
As a former Executive Director who has weathered funding cuts, I have been there. I've lain awake at night worrying about making payroll. I've searched for cuttable expenses in a budget already trimmed to the bone.
I've wondered if somehow, it's my fault.
The current situation is not your fault. And it's not solvable by one person, or one Board, or one organization. The best we can do right now is to stop the hemorrhaging — to stabilize your organization while you work through what to do next. This 30-day plan is designed to help you do just that.
Is This Nonprofit Crisis Fundraising Guide for You?
If 30% or more of your revenue is federal grants, this post is for you. If you're a small nonprofit with limited or no reserves, if your current funding is ending soon, if you have a Board who is unaccustomed to fundraising, if all the hats you're wearing seem to be toppling — then please know that I am thinking about you, and this post is for you.
The 30-Day Nonprofit Crisis Fundraising Framework
Step 1: Assess Your Actual Financial Position
Facing the numbers is a sobering task, but this is where you have to start. What income do you have committed, and for how long? What income can you realistically project over the next 90 days? Over the next quarter? Over the next six months? What are your projected expenses in the same timeframe? What is the gap?
Many smaller nonprofits don't do this much financial analysis on a regular basis, but we must do it now. The good news is, you don't have to do it alone. Get with your financial people — staff, contractors, Board Treasurer, finance committee — and ask for their help. Ask your colleagues in similar-sized organizations for templates or advice on how they project revenue and expenses. It doesn't have to be fancy. Draw it on a napkin if you have to. Just get it done.
Step 2: Talk to Your Board Before You Have To
Being an Executive Director is a lonely job, and there is tremendous pressure on EDs to have it all together, all the time — to present a ready solution to every problem. To be indefatigably unruffled in all situations! (But damn, we are tired, right?)
But this situation is not fixable by one leader alone. You must engage your Board before things get dire. Your Board may not have a ready solution either, but together you can make a plan for stabilizing the organization and communicating the situation to your donors and partners. And it will help you sleep at night that someone else is sharing the burden.
If you're wondering how to start that conversation, go to your Board Chair first for support. Bring that financial analysis you've done — pass the napkin around. Send the Board an email or text ahead of your meeting so they can mentally prepare for a hard conversation. Better yet, call a special meeting to emphasize the importance of the situation. If you have a rubber-stamp Board that is accustomed to letting you do all the work, then say clearly and emphatically: "This is an unprecedented situation, and I cannot solve it alone." Strong leaders tell the truth.
(If your Board doesn't show up or won't engage in this conversation, then you know you do not have leadership support moving forward. And I would skip straight to Step 4.)
Step 3: Have Honest Conversations with Your Donors
Meet with your biggest financial donors — both those who give the most and those who give the most often. Tell them about the situation and ask for advice. This is not the time to play the "everything is fine" game with the people most invested in your mission. Be honest and listen to their feedback.
The goal of these conversations is to determine whether you have a donor pool capable of filling the federal funding gap. To help with that decision, analyze your current donor data. How many donors have you not asked for support in the past year? Do you have donors capable and willing to give more? Can you increase your monthly donors to a larger gift? Remember: your best potential donor is the one you already have.
Once you've met with your donors and analyzed your data, decide with your Board whether you have a donor base capable of filling the federal funding gap. If you do, make a plan for a "fill the funding gap" campaign — a campaign name, a dollar goal, and a timeframe. Create an easy-to-read campaign one-pager and mobilize your Board and staff in asking your donors to step up. This will take much longer than 30 days — but for now, you're just gathering information to help you and your Board decide whether this is the right course.
If you don't have established donors capable of filling the gap, go to Step 4.
Step 4: If the Money Isn't There, Make the Cut
You didn't expect this to be a recommendation, right? Executive Directors instinctively feel that cutting programs is the absolute last resort — something we don't want to look at, don't want to even consider. Just thinking about it makes us feel like a failure.
But if the money isn't there, the money isn't there. That's not a judgment upon you — it's just a fact. If you are losing a large amount of money in a short timeframe and you don't have an established donor base capable of stepping in, then cutting programs is your only viable option. And a strong leader makes the cut as soon as they know it's necessary. In your 30-day window, you and your Board should make a plan for how these cuts will happen and when.
But wait, you're arguing. Our clients need us. Shouldn't we wait until we're absolutely forced — until we've spent every last penny? Isn't it mission-centric to keep programs running right up until the day the money runs out?
Perhaps. But consider: making a plan to cut programs as soon as you know they won't be viable gives you a runway to give your staff adequate notice, which helps them transition to another job. It helps your clients look for alternative resources. It helps you plan for grant closeouts. Making the cut — even though it's painful — will also prevent burnout on yourself, your Board, and your fundraising team, which will enable you to raise the money to reopen the programs in the future.
If you have to cut programs, view this as a temporary measure to keep the organization financially stable while you decide what to do next. You may need to restructure your programming to match what your budget can actually sustain. You may need to scale back to the work that's most central to your mission. Either way, fundraising is your next step.
This Is Triage, Not the Long-Term Solution
This 30-day plan doesn't solve your long-term funding model problem — and it's not trying to. What it does is stabilize the organization, help you sleep at night, and position you to take the next step: building a donor base capable of sustaining your mission for the long haul.
This situation is hard, and it's not your fault that your funding model was built around grants that were stable for a long time. The goal for the next 30 days isn't to fix everything. It's to stop the hemorrhage.
Ready to Work Through This Together?
Book a discovery call and let's work through your specific situation together. I've been in this position — I know the weight of it, and I know the way through.