Federal cost-cutting measures have sent shockwaves through the nonprofit sector. Many organizations are bracing for — or already facing — reduced support, both from direct government funding and the ripple effect it has on foundations and individual donors. What once felt like a stable revenue stream may now be on shaky ground.
If you’re starting to see the signs or are simply worried about what’s ahead, you’re not alone. These moments of uncertainty can be overwhelming, but they also present an opportunity to pause, reassess, and prepare. If your organization depends on government support, now is the time to ask the tough questions and make strategic decisions that will help safeguard your mission for the future.
What Should You Be Doing Right Now?
Start with a clear snapshot of your revenue mix. Which grants or contracts are most at risk, and how quickly would a cut hit your cash flow? Map out multiple “what-if” scenarios (for example, 10%, 25%, and 50% reductions) and calculate how long reserves could cover operating costs in each case.
At the same time, examine your negotiated indirect cost rate agreement (NICRA). Staffing changes or furloughs may have altered your fringe and overhead rates. Billing an outdated rate could result in lost reimbursement or raise compliance concerns.
How Do You Restructure?
If a major funding source disappears, the budget becomes obsolete. Organizations should reforecast their operating budgets based on realistic or updated revenue assumptions and should assess opportunities to cut fixed costs. Consider whether your organization’s current salary structure still aligns with your projected income and any additional revenue that may be needed in order to maintain current operations.
Next, rethink your fundraising strategy. If an annual gala is suddenly off the table, where else can you turn? It is likely time to explore alternative revenue streams.
Finally, don’t overlook vendor and banking relationships. A candid conversation with suppliers about temporary discounts or extended payment terms can provide short-term relief. Your bank may be willing to revisit credit card processing fees, for instance, but have you pinpointed which concessions would make the most significant difference, and how quickly?
How Can CBIZ Help?
Answering these questions often requires more than a quick spreadsheet tweak. CBIZ’s nonprofit advisors will:
- Recalculate — and if necessary, renegotiate — your NICRA so it reflects your current cost structure
- Assist with reforecasting your organization’s budget
- Pressure-test new fundraising and revenue ideas before you invest precious staff time
- Review vendor contracts and banking terms to identify potential savings opportunities
We understand that every nonprofit’s situation is unique. A brief conversation can help determine whether a deeper look at your cost structure or revenue strategy would pay for itself.
Moving Forward Together
No organization can prevent shifts in federal priorities, but every nonprofit can act quickly to ensure adequate resources exist to accomplish its mission. By updating your budget, broadening revenue streams, and trimming costs, you’ll be better positioned to serve your community, whatever comes next. If you need assistance in analyzing the numbers or crafting a strategic roadmap, the CBIZ nonprofit team is ready to stand beside you. Connect with our professionals today.
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