Editorial Note: This was last updated on January 29, 2025. We recognize that events are rapidly evolving. For timely and direct news on current federal updates impacting nonprofits, visit the National Council of Nonprofits Press Room.
Uncertainty looms large over the nonprofit space this week. Monday evening, the White House Office of Management and Budget (OMB) issued guidance ordering federal agencies to pause payments on grants and loans to organizations. Tuesday, moments before the memo took effect, a federal judge blocked it. Wednesday afternoon, the guidance was rescinded. The week has been marked by flurries of questions as people—from nonprofit leaders to administration officials—sought clarity around the impact of this order on their funding and most importantly, their ability to serve their communities.
The nonprofit space is inextricably linked to governmental funding and policy-making decisions. The new administration has ushered in a dynamic period of change that has exposed the vulnerability of many organizations and their fiduciary resilience. As a result, leaders must quickly assess their programs, their staffing, and their ability to reallocate resources.
Thomas Friedman, the New York Times columnist, once wrote an article about the declining role of the government in the post-Cold War era. Many nonprofits heeded this caution and began to diversify their funding. The current situation is sounding this alarm again and creates a need for nonprofit and advancement leaders to once again meet the moment and partner in pursuit of solutions. What should leaders do to help their organizations navigate this rapidly evolving nonprofit landscape?
Partner with Finance and Program Leaders to Diagnose the Need
Advancement and finance leaders must partner to identify the potential impact policy changes will have on their organization, programs, and people. Important questions to consider include:
- Which of our programs could be impacted?
- What will our funding needs be to sustain programs if a policy change occurs? What will our needs be next week, month, and quarter?
- How urgent are those needs? Does the organization have the funds on hand to sustain operations? For how long?
Whether you are a large or small organization, these challenges will impact every organization at some level. The ability to sustain through funding pauses will vary significantly – but there is one truth: a diversity of funding sources creates great flexibility. It is unlikely that government funding will increase over the next two-plus years. Organizations will need to act purposefully and quickly to build resiliency.
Review Existing Funds to Available Funds
Advancement leaders need to review existing funds to identify where the organization may have unspent funds or be able to deploy restricted or unspent funds to cover funding gaps appropriately.
Donor relations professionals know well that ensuring funds are utilized and spent is critical to nonprofit success. Now is a moment to lean into those professionals and work to put all donor dollars to work with renewed vigor.
Identify Opportunities to Increase or Accelerate Philanthropic Support
Engage with donors who support impacted causes or programs. Ensure they understand the potential impact on the program and the people served, and create clarity about how they may help. Consider your donors and projected revenues and ask:
- Does the uncertainty of the moment or the organization’s financial health through this change warrant adding appeals to key constituencies who fund related programs?
- Could the donor move up a pledge payment to help sustain an impacted research program they support?
- Should we move up or reorder planned solicitation activity, noting a potential urgent need?
- What is the impact on our business plan?
- How might increased philanthropy help in the short term? What would be necessary for the long term?
These questions must be considered with great care. Existing fundraising plans and strategies may be sufficient to address financial concerns, and those plans should not be abandoned if the need is not high. Leaders must also consider their donor base and how they may react to appeals and adjusted strategies resulting from the administration’s policies.
Communicate with Your Team and Key Constituents
Uncertainty breeds anxiety and worry. Staff, board members, and top donors will wonder if and how policy changes may impact their work, their job, and the organization. Leaders must be transparent about what they know, what they don’t know, and what’s in the works. Helping people understand the organization’s plan will help them direct their worry into concrete actions they can take based on what we know, not speculation about what’s to come.
Create some stability by reconnecting with and reaffirming your organization’s mission. Nonprofits play a critical role and are essential to serving the needs of our communities. Reminding yourself, your team and your constituents of the continued importance of your mission will provide an anchor to your work.
Be passionate about the work that must be done, while providing calm leadership in identifying the situation and addressing the challenges ahead. These challenges will offer new opportunities to engage prospective donors around your work and how you fulfill the organization’s mission. This will also require you to build a structured communications plan.
Plan for Continued Uncertainty Ahead
This administration has promised to challenge the status quo and has delivered on that promise. Nonprofit and advancement leaders need to partner together and plan to ensure their organization develops strategies to continue delivering on their life-changing missions. It will be key to understand how changes in federal grant-making, federal funding, and federal policies may impact the organization and its donors in the long term.
Nonprofit executives, advancement leaders, and boards should take this moment to strategically assess their business models and identify opportunities to grow and invest in funding sources and development programs that will create long-term stability and diversify the organization’s revenue streams. Fortifying base- and mid-level giving programs, enhancing the major gifts program, or growing the endowment all offer sustainable pathways to less policy-dependent futures.
As the policy objectives and approach of the new administration become clearer so too will the way nonprofits plan and pivot to deliver on their mission. Stay focused on the people you serve and the impact on them.
Continue to Change the World
Nonprofits turn human generosity into solutions to humanity and the world’s problems. Philanthropy powers innovation, saves lives, and uplifts communities. While fast-paced, political uncertainty and the headlines that surround it will shape and reshape our work, leaders must remain committed to—and remind their teams of— the unwavering importance of nonprofit work.
