Ever-tightening government funds and rollbacks to longstanding social programs continue to impact millions of Americans — with job losses and, in many cases, diminished access to vital programs and services. Nonprofits are on the frontlines, filling in many of these service gaps, but they’re doing so with fewer governmental grants, less capital and a revolving door of policy changes that make budgeting for the future even more challenging.
Nonprofits are quickly learning that private philanthropy, alone, is not filling those immense budget-cut gaps that often trickle down from the federal to state levels.
To survive, nonprofits are, in many cases, partnering with organizations they once viewed as competitors. They’re also taking cues from funders — individuals, foundations and corporations — noting the way they, too, have pivoted during these trying times. Today, many funders are moving toward:
- Supporting programs that provide for basic human needs,
- Prioritizing their financing in support of previously funded institutions with good track records, and
- Avoiding multi-year pledges and funding requests for capital investments and capital campaigns.
What does an executive sitting on a nonprofit board do with this insight? For starters, she suggests that her nonprofit postpone building and major renovation projects, because support for these projects is increasingly difficult to attract. Funders are, instead, focused on the increasing numbers of unhoused Americans, those who cannot afford meals and those without access to basic healthcare.
Show Up with Strategy
Nonprofits also need to come to their funders in solution mode, and with a good dose of resolve. “As the landscape changes for nonprofit organizations, so does the ability for funders to support all the organizations in need,” says Gene D’Adamo, president and CEO of Nina Mason Pulliam Charitable Trust. “Now, more than ever, there is more need than resources available, and foundations are having to make very tough decisions. If nonprofits are able to demonstrate sustainability, strategic vision and resiliency, foundations can see how they might be able to navigate and withstand challenging times.”
Put a Best Foot Forward
Funders also stress a need to trust the nonprofits with whom they partner, but Randall Lewis, executive vice president and principal for his family’s businesses, the Lewis Group of Companies, says confidence might be even more important. “Trust is part of it, but confidence that the nonprofit can execute is equally important.” He admits to providing a substantial gift to a California university, driven 99% by his confidence in the leader at the helm, whose assured style made him feel that his company had invested wisely.
D’Adamo agrees, adding that honesty is another key hallmark between funders and recipients. “In our foundation, we have long-term relationships with the agencies we fund,” he says, “which means a relationship of trust is already established. Our grantees also know not to hide anything from us. If they’re struggling in some way, we want to know. We exist to support them.”
If a nonprofit senses it might not be able to fulfill the expectations of a grant — or if its leadership faces challenges in its ability to serve its constituency — D’Adamo says the worst thing to do is pretend that all is well. The funders and philanthropists often provide the solution.
Consider New Funding Models
In this age of funding uncertainty, nonprofits must begin to think outside the confines of old-fashioned models: no more top-heavy reliance on government funding, grants-only, specific individuals or corporations for the brunt of the nonprofit’s finances.
Yes, include a combination of philanthropy from individuals and institutions, but nonprofits should also establish innovative new programs. One idea is to consider social enterprise. Could the nonprofit initiate a fee-for-service model? Those nonprofits producing industry-leading content could consider monetizing or licensing it. Another idea is to analyze the nonprofit’s unique, distinct functions and programs — and sell them. It is the job of board members to bring their business acumen to the nonprofit, to help in brainstorming outside-the-box fundraising strategies.
Engineering-oriented nonprofits? Build something the community needs, something they can purchase that helps keep the organization afloat until this funding storm is weathered. Build other things, including partnerships with like-organizations to reduce overhead. Even better, consider partnerships and alliances with nonprofits that are not completely confined to their space. Organizations will find their priorities overlap and working together is going to be the way through.
Understand Your Philanthropic Ecosystem
Key to fundraising is understanding a geographic area’s social and economic realities, says Randall Lewis, executive vice president and principal for his family’s businesses, the Lewis Group of Companies. In his home near the counties of San Bernardino and Riverside in California, the area has long been considered a philanthropic desert.
Lewis says he and his foundation board are discussing their region’s local trend of founders/owners of businesses “giving where they live,” thereby focusing their philanthropy near their corporate headquarters, and less in the communities where satellite offices exist.
“We are asking ourselves how we might build a generosity ecosystem to create a culture of philanthropy — how to sell philanthropy better — to make it more commonplace and expected in our community, and to illustrate its benefit and impact.”
Richard Tollefson is founder and president of The Phoenix Philanthropy Group, an Arizona-based international consulting firm serving nonprofit organizations as well as institutional and individual philanthropists.
Did You Know: In early 2025, approximately one-third of U.S. nonprofits experienced disruptions in federal, state, or local funding, including direct cuts, freezes and delays, with some reporting budget reductions of 40-50%. —United Way Worldwide
