For nonprofit organizations, any unexpected loss in funding can feel devastating. When a nonprofit client of ours was notified of an unexpected loss of $1.2m in grant funding, we could see the disappointment resonate through their organization. The team was deflated not only because of the impact on their organizational health (though significant), but because of the direct impact this loss would have on the community they serve. While unexpected losses cannot always be prevented, there are steps you can take to mitigate their impact and bolster your organization for long term resiliency.
Assess the ripple effect
Determine why the funding was integral to your organization. Look beyond your daily financial operations to understand the ripple effect of the funding loss both across your organization and the community you serve. Determine which components of the loss are critical to restore in the short-term, and if any might be considered nonessential. Fundraise to restore the critical before the nonessential.
In the case of our client, they reassessed their organizational budget to make smart decisions about where to slim down. Instead of cutting existing positions, they delayed new hiring. Instead of cutting existing programs, they delayed their plans for expansion.
Bridge the gap
Plan a strategy that will help bridge the gap between now and when funding levels stabilize. Create a modified budget to address the gap in funding. Track and share your progress with stakeholders. Be honest about how much money needs to be raised before you reach full recovery: It may seem easier to not talk about this loss at all, but open and honest communication will enable you to celebrate your progress while also helping your stakeholders understand the reality of the funding loss.
Our client got creative with applications to other funders. We spoke about the funding loss openly and added to program budgets (for other funders) in smart ways to help make up for the loss.
Find your friends
Identifying new funding sources can be difficult when time and resources are scarce, so your first step should be to talk to your organization’s friends. Engaging with loyal donors and foundations that have consistently supported your cause is not only strategic but serves as a testament to your ongoing impact. Additionally, this moment calls for the nurturing of new partnerships. Understand that factors such as altruism, empathy, and a drive for social change profoundly influence the decision-making of funders. In times of unforeseen challenges, both existing and potential supporters are often propelled to step forward and act as champions for your cause.
Our client approached their friends. Fortunately, they had cultivated many great funder relationships over the years, and we were able to approach those funders and have conversations regarding off-cycle, emergency funding to help make up for the loss.
Tell authentic stories
Tell the real stories of those impacted by your nonprofit’s work. Don’t sugarcoat it. Give yourself permission to be honest about the people and communities who will suffer because of this funding loss. These stories can help you stay connected with funders along the way, and displaying healthy vulnerability can strengthen your existing relationships.
Unexpected losses can happen at any time, to any nonprofit, even yours. It is during these challenging times that the strength of your mission and the depth of your commitment to those you serve are most critical. By engaging trusted partners, bridging gaps in capacity, and sharing the transformative stories of those impacted by your work, you can withstand the unexpected and underpin the resilience that defines the communities you serve.
