Last night’s news regarding the freeze in federal funding was a shock to the entire sector we serve. Nonprofit organizations across the country are now threatened with the loss of operating funds, program grants and even capital funding. Many, many of our clients could be impacted by this measure.
It is possible that this drastic announcement will be short-lived as the Congress has already approved the budget from which these funds are being spent. But it is also quite possible, and I would say likely, that there will be no turning back to “normal”. In the immediate future, every nonprofit being supported by federal funds in any way will be subject to intense scrutiny and even if the short-term impact is a reprieve of sorts, the message is loud and clear.
Federal funding is about to be used in a manner intended to shape the world in which we live. This is not a budget move. This has happened before. In the early 1980’s, President Ronald Regan proposed massive cuts in federal spending representing a decisive shift away from social programs (this was accompanied by significant tax cuts and increased military spending). History has a way of repeating itself, so here we are again.
A highly politicized move has been made which will affect the lives of millions of people. And while some organizations we serve will be deemed “acceptable” and should have their funding restored, many of our clients will pay the price for a move intended to reward friends and punish foes.
In some ways, I feel like we are back in 2020 when COVID changed our lives. It was sudden and profound. The pandemic created immense uncertainty, and our clients needed to react to the anxiety it caused, along with the very real impacts of lost jobs, decline in funding and general disruption of daily life. Fortunately, we have mostly recovered from the pandemic, but I think some of the advice we gave to our clients helped them through the crisis. Here is how I would apply that advice to our current situation:
Be prepared but do not overreact. Take stock of the situation and be specific. Build your case for support. What does the potential loss of funds mean to your organization and what will the impact be on the constituencies you serve – relate budget numbers to real people and situations.
Reach out to your donors. Make them aware of your situation and make it clear to them that you will keep them informed, this “first touch” is for cultivation and stewardship purposes. The situation must play out – but “donors are like grandparents. They want to hear from you.” Reach them early and keep them in the loop. If you hear good news, share that with them. Schedule follow up contacts and build your contacts from the top/down. (Remember that the market is at an all-time high, and you will need major donors – who will probably be getting a big tax break soon – to help you make up for the loss of federal funds.)
Pay attention to your employees. Keeping them feeling well and safe is essential – a lesson learned during COVID.
Don’t stop fundraising and marketing. Stay top of mind. History has taught us that organizations that pull back during a crisis have a harder time recovering.