Weathering the storm: How nonprofits can build resilience in the face of uncertainty

Nonprofits have faced a great deal of uncertainty, amid a wave of regulatory, policy, and funding changes since the new US administration came into office.

At the end of January 2025, the Office of Management and Budget issued a $3 trillion federal funding freeze, pausing all activity for existing and new grants while a review of federal programs was carried out.

The sector was thrown into disarray, with leaders expressing their confusion, fear, and uncertainty about what the future holds. 

Thankfully the freeze was reversed less than 48 hours later after mounting legal challenges (although some organizations say they’re still locked out of the federal payment system).

Soon after, there was the threat of a government shutdown if the new administration’s funding bill could not be passed.

That crisis was also averted but numerous grant-making federal agencies, including USAID and the US Department of Education, have been heavily impacted by cuts.

At least 30% of US nonprofits rely on government grants, so these events have understandably raised important questions about how much the sector can rely on federal funding in the future.

It’s uncertainty that comes at the same time as demand for nonprofit services and programs continues to increase.

In the face of such uncertainty, it’s up to nonprofit finance leaders to build the resilience and agility of their organizations, so they can continue their vital work.

Here’s what we’ll cover:

Keeping pace with executive orders

The new US administration has passed many executive orders and indicated policy changes that could affect nonprofits and their work.

These might include limits or changes to how funding is distributed, new compliance requirements, and changes to how nonprofits are able to communicate their mission and impact.

Some examples include:

• Rolling back federal diversity, equity and inclusion (DEI) programs, and issuing cease and desist orders for DEI initiatives. Some nonprofit organizations have already had to remove or revise public-facing DEI programs or content.
• Removing support for community services including libraries, museums and nonprofit arts and culture programs.
• Strict enforcement of immigration laws, which could impact nonprofits that work in areas around immigration, refugee or humanitarian aid. Most recently, the administration ended a federal contract that provides legal aid representation to 26,000 migrant children.
• Pausing foreign aid. One executive order has paused US foreign assistance for 90 days to evaluate its alignment with US foreign policy. Many nonprofits that are reliant on this funding have received notices to cease their work immediately.
• The significant workforce reductions across federal agencies has led to slower response times and is making it hard for nonprofits to ask questions and get help to navigate new regulatory requirements.

How nonprofits can build resilience

Some of these policy changes are seismic and have the potential to create a permanent shift in funding landscapes for the whole sector.

But nonprofits shouldn’t panic. This sector has weathered rough storms before.

There was a funding freeze under the Bush administration in 2004, before a budget proposal that undercut social programs for low-income Americans.

When the pandemic hit in 2020, 83% of nonprofits reported significant declines in earned revenue, and 53% saw drops in individual giving.

The sector lost an estimated half a million jobs over that period, all while demand surged.

So, this is a sector that knows how to make it through tough times.

But it is also possible to take proactive measures to protect your organization.

Here are 10 practical steps finance leaders can take to build resilience and agility, so you’re able to pivot more easily, respond to crises more quickly, and better adapt to an unpredictable world.

1. Draw up a risk management plan

Work with your board to determine the potential risks that would affect your work including financial, legal, operational, reputational and program-related risks.

Prioritize those that pose the greatest threat and develop mitigation strategies to minimize each one.

2. Look after your people

Employees will be feeling this uncertainty particularly acutely.

One study found crises can cause staff burnout and brain drain as workers leave for more stable opportunities in the private and public sectors.

Check in with your team, be transparent about the challenges at hand, and share your plans to combat them.

3. Use technology to build capacity

You’re going to need more time for strategy.

Automating repetitive tasks will minimize data entry errors, boost real-time insights and free you and your team up for higher level tasks.

When there’s a new crisis, you need to be nimble enough to spend time on it. 

4. Strengthen budget and forecasting capabilities with technology

With AI-powered budgets and cash flow forecasts, you’ll be able to anticipate cash flow fluctuations, identify trends and potential issues earlier on, and change strategies accordingly.

5. Diversify funding sources

Analyze your current funding sources and consider how you might diversify them to reduce dependence on federal funding.

If possible, nonprofits may also want to bolster their cash reserves in case there are delays or shortfalls while new funding streams are being established.

6. Use hard data

Strengthen impact measurement and financial monitoring systems to measure your results more accurately.

Ensure your KPIs are in line with what your donors care about.

7. Communicate impact to build trust and support from stakeholders

Evaluate your communication channels.

Are you using real stories to engage and mobilize your supporters?

Are you following up with beneficiaries to show the long-term impact of your work?

8. Get creative about service delivery

The reality is, you may need to expand core services that are working, decrease those that aren’t, or find more creative ways to deliver services.

Do all your programs make financial sense?

Can you make better use of your volunteer base, or cut costs in other ways?

9. Review and enhance processes

Now is a good time to evaluate your current risk management, data and privacy processes and frameworks.

That way, if there are changes announced, you’ll already know how that applies to your organization.

10. Stay informed and look for opportunities to collaborate with other industry partners

A recent study found 73% of nonprofit collaborations showed evidence of success in the face of economic pressures.

Network with your peers and share your challenges and advice. We’re all in this together.

The time to prepare is now

Research shows that government grants are the primary revenue source for about a third of government grantees, who rely on them for more than 50% of their total revenue. Replacing that stream in its entirety would be challenging.

Private foundations, for example, would need to increase their grant making by 282%.

If you’re an organization that’s currently heavily funded by federal grants, you’ll want to make sure you have a robust grant management system set up to track deadlines, reporting requirements and compliance documentation, particularly if they change.

Ensure you provide staff with relevant training and updates and engage in active dialogue with federal grantors wherever possible.

Final thoughts

As policies shift, you’ll need to do all you can to guarantee you’re one step ahead.

Nonprofits are no strangers to navigating tough financial situations.

By preparing now, you can ensure you’re in the best possible place to respond to any uncertainty when it occurs.

The world needs the nonprofit sector now more than ever.

This crisis is the latest opportunity for innovation for those that are adaptable, resourceful and willing to embrace change.

Ready to learn more?

Download The rise of the data-driven nonprofit finance leader e-book to discover more strategies for navigating uncertainty.