How Nonprofit Leaders Can Navigate Financial Uncertainty

For many nonprofit leaders, this is an unpredictable and chaotic time. The simultaneous challenges of policy shifts and economic pressures are making it harder to secure funding, even as service delivery costs rise and demand continues to grow.

NFF’s 2025 State of the Sector Survey reflects this uncertainty: 85% of nonprofits expect demand to rise in 2025, but over half don’t believe they can meet it. Among those relying on government funding, 84% anticipate cuts, leading to reduced services, paused programs, and budget shortfalls. Inflation has already hit hard, with 86% reporting significant financial strain in 2024.

Many leaders are feeling anxious and exhausted – and not for the first time. From NFF’s 45 years of experience working with nonprofit leaders on the front lines, we know that this sector has a rich legacy of resilience and movement-building. Even when faced with staggering odds, leaders have forged through before (often with much sacrifice) and they will do it again to serve and protect their communities.

While many challenges are beyond nonprofit leaders’ control, there are still steps leaders can take to navigate and adapt to the current moment. At NFF, we find hope in the wisdom and resilience of the many leaders we have the privilege to support. Drawing from their experience and expertise, we highlight four key actions to focus on – even when so much else feels uncertain.

Step 1: Don't go it alone; engage your people.

With nonprofit leaders so stretched right now, they shouldn’t work through financial challenges alone. Now is the time to engage board and team members in financial planning and have honest conversations with them about the organization’s current state and what lies ahead amidst rising demand, dwindling resources, and ongoing uncertainty.

Including your board in these hard conversations early will help your organization move quickly when decisions need to be made. One leader recently shared with me the value of having started scenario planning conversations in October 2024, before the presidential election. Starting those conversations early made it easier for his staff to activate their options when federal funding cuts came abruptly and furiously in January 2025.

As policy changes continue to loom, it is valuable to pull your team and board together to talk through the range of possible scenarios ahead and the organization’s options and decisions. These are tough, messy conversations, but having them early provides you and your team more space to think, plan, and avoid knee-jerk reactions when challenges arise.

We’re also seeing board members provide valuable legal, financial, and other technical expertise, and making connections to helpful partners.

Step 2: Clarify and focus on work that is mission-critical.

Right now we’re seeing leaders having hard conversations with their board and staff about what is truly core to their mission: Do board and staff have a common understanding about the core business model? What things are truly non-negotiable for mission and values? Are there things that we do that are mission-adjacent and nice to do, but not mission-critical? Can they be reduced or redirected to support core mission activities?

This level of discussion helps define and affirm core operations and what is non-negotiable as an organization. Having these conversations before getting too deep in financial planning can give your team something to anchor to when difficult conversations arise about whether and which expenses to reduce or eliminate, and what to say yes and no to programmatically.

Step 3: Lean into financial planning.

It’s important to be rigorous in your financial planning and analysis, whether or not you’re in a crisis. If it feels hard to start, now is the time to ask for help from your board, your accountant, or even a trusted peer organization. If you need financial planning templates, there are free templates available from NFF and other resources. Many organizations are engaging in financial planning to understand their safety net and project cash flow. They are clarifying their current financial position and how much access to cash or savings they have, so that they are clear on how long they could operate if they had to pivot in response to a sudden change (such as funding, existing relationships or partnerships, or personnel).

Leaders and their teams are reforecasting their budgets or developing scenario budgets. They are reviewing their operating budget one line at a time to check for items that represent:

1. Core business model or mission-critical activities (see Step 2 above)
2. Full costs of the core business model

Full cost budgeting is a comprehensive approach that captures what an organization needs to fully deliver its core mission, including often overlooked or unfunded expenses. These include the sweat equity that many nonprofit staff contribute to their organization either through unpaid or below-market wages, or operating with outdated technology due to limited resources. Full cost budgeting ensures all necessary expenses – such as fair compensation and adequate support for staff – are fully identified and included as budget line items. 

In this moment where leaders are faced with constant threats, this idea of articulating the full cost of your budget or scenario budget can feel counterintuitive and even daunting, but it is necessary – not only for planning and decision-making purposes, but also to clearly advocate and tell the story externally about what your organization needs to deliver on mission.

Remember that the goal of any financial planning is not perfection. Budgets are inherently built on imperfect, uncertain information. What’s most important is starting the process and involving your people, so that leadership, board, and team can face the big questions together.

Step 4: Tell your financial story clearly and often to advocate for what you need.

It would be disingenuous not to fully acknowledge the long-standing power dynamics that make it difficult for leaders to reach out to and have honest conversations with their funders. But from what we are seeing, we recommend all nonprofit leaders ask for what you need right now. It is more important now than ever before to reach out to your program officers and your donors.

NFF’s work has shown us that some funders want to help but are unsure where to start. Some will say no to your request, and some will continue to remain quiet. The key is to start the conversation and try.

Funders own a part of the solution. Above are the steps that nonprofit leaders can take – but the onus cannot only be on nonprofits. The actions of nonprofits must be matched by actions of funders.

Philanthropy and individual donors cannot make up the financial gap of federal funding cuts, but we are seeing examples of grantmakers who are stepping up by increasing their payouts, employing the principles of trust-based philanthropy, and accelerating payment disbursements. One of the more obvious things funders can do is provide funding that is unrestricted, flexible, general operating, and multi-year in nature.

We are also seeing bright spots in funders who are finding creative ways to reduce the burden on their grantees. Some funders are simplifying or automating their reporting requirements or removing previous contingent requirements on payments. Some are researching what kind of legal, fundraising, partnership structure, and other kinds of supports their grantees need right now. Some are making legal and other expertise available to grantees, while others are making connections and opening doors to new contacts.

The funders who are leading in this way understand how stretched their grantees are and are working to minimize as much of the burden as possible.

Nonprofits may feel like they shouldn’t have to ask for a lifeline when they’re drowning. But funders may want to help and be unsure of where or how to start. So for leaders who want to open the conversation, bring some of these examples as a starting point along with telling your financial story.

Where do we go from here?

Resilient nonprofit leaders, many of whom are working through the four steps shared here, are building the adaptive capacity needed to navigate this sustained uncertainty. From our work with organizations on the front lines, we see many reasons to be hopeful even in during this challenging moment.

Nonprofit leaders will respond to the urgency this moment demands, as they always do. Marshaling resources to carry out mission work is the priority right now. And we know that the time is coming for the sector to mobilize to reimagine and rebuild again.