Weathering the Storm: How Your Nonprofit Can Navigate Economic Uncertainty in 2025
Consumer confidence has hit its lowest point since mid-2024, with Americans increasingly worried about their financial futures (Cox, 2025). Inflation expectations have surged to 6% - nearly triple the Fed's target - while tariff concerns have returned to levels not seen in years. This economic anxiety spans all demographics and coincides with President Trump's planned March tariffs against Canada and Mexico. Meanwhile, Treasury Secretary Bessent's warnings about "sticky" inflation and sluggish growth add to the uncertainty (Cox, 2025).
In this volatile economic landscape, nonprofits - like their for-profit and government counterparts - face unprecedented challenges [and opportunities]. From inflation and market fluctuations to shifting donor priorities and potential funding cuts, we must adapt quickly to maintain impact and sustainability. At The Funding and Strategy Collaborative, we've observed how diversification has become not just a best practice but a necessity for organizational resilience.
Why Spend Precious Time to Focus On Diversification?
Diversification - spreading funding across multiple revenue sources - protects nonprofits from economic volatility while enabling growth. Organizations with diverse funding typically weather downturns better and bounce back faster when conditions improve. Here's something that might surprise you: 49% of nonprofit revenue in the US is earned from Fees for Services and about 32% from government grants and contracts - find more nonprofit statistics on our page: Why Does The Nonprofit Sector Matter?
Key Benefits of Diversification:
Beneficiary protection: Ensures continuity of critical services when a single funding source ends.
Risk mitigation: When one funding source declines, others can help maintain operations.
Increased organizational autonomy: Less dependency on any single funder's priorities.
Enhanced adaptability: Multiple pathways to adjust to changing conditions.
Improved sustainability: More stable foundation for long-term planning and impact.
Greater innovation potential: Diverse funding can support experimentation with new programs or approaches.
Mission integrity: Maintains commitment to those you serve regardless of shifts in funding landscape.
Start Today
1. Assess your vulnerability - Before implementing diversification strategies, evaluate your current funding mix:
Examples of vulnerability:
"Your nonprofit relies on a single foundation grant that provides 60% of annual funding, with the remainder split between individual donors (25%) and annual gala proceeds (15%)"
"Your primary foundation has announced a strategic shift toward funding early-stage programs, while your established program may no longer align with their priorities"
"Your donor retention rate has dropped from 65% to 48% over the past two years"
"Staff lacks dedicated fundraising expertise beyond grant writing"
2. Start with your strengths - Begin diversification in areas where you already have capabilities
For a Youth Education Nonprofit:
"Your popular summer program consistently fills up - consider expanding capacity or creating a fee-based extension program"
"Your executive director's speaking engagements receive excellent feedback - package this as paid training for teachers"
"Your volunteer base includes marketing professionals - leverage their expertise to launch a monthly giving campaign"
3. Explore Multiple Revenue Streams - The most successful nonprofits create a mix of revenue streams that work for them and mitigate risk:
Earned income: Get paid for your programs and services to bring in steady income
Government contracts: Secure stable, often multi-year funding
Individual giving: Cultivate relationships with major donors and create monthly giving programs
Corporate partnerships: Develop sponsorships and cause marketing initiatives
Volunteer engagement: On average, donors who volunteered also gave 56% more than those who did not volunteer (Falvo, 2018, CCS FUNDRAISING)
4. Implement - Remember that diversification is a marathon, not a sprint. Create an implementation timeline that prevents burnout while maintaining momentum. Engage board members, volunteers, and staff to own different aspects of the implemention.
Assessment (1-2 months): Research options and develop metrics
Early implementation (2-8 months): Test with pilot programs
Scaling (8-24 months): Expand successful initiatives
Need Help? Call Us.
Looking to increase your impact? Strategic planning or grants could be your answer. At The Funding and Strategy Collaborative, we specialize in helping nonprofits develop effective funding strategies and create diversification plans for your unique strengths, needs, and mission. Contact us today to discuss how we can support your journey toward financial sustainability, diversification, and increased impact.
Cox, J. (2025, February 25). February consumer confidence posts biggest drop since 2021 in latest sign of slowing economy. CNBC. https://www.cnbc.com/2025/02/25/february-consumer-confidence-comes-in-lighter-than-expected-in-latest-sign-of-slowing-economy.html
