Four key steps to face government funding shifts with energy and courage

How are you and your team finding stability and clarity in the shifting sands of 2024?

Around the country, many states and cities face decreases in government revenue and spending. This is certainly the case in the State of California, with recent news of a budget deficit and budget cuts. Similar news has emerged from the cities of San Francisco and Oakland, where The Ross Collective does much of our planning and facilitation work.

In writing this series on current challenges, we have observed that several of our clients are encountering the challenge of a potential decrease in government funding - or other budget changes.

ID: a yellow path leading to the top of the mountain, with several dollar signs blocking the path.

Here are four steps we recommend to deal with these budget shifts:

1. Get clarity

As we have written before, a fiscal review is a powerful tool for high-level conversations about revenue and spending. The fiscal review surfaces funding patterns over the recent past so that staff and board members can explore the implications of these patterns together.

When we do the fiscal review and use it for strategic planning conversations, leaders often ask us why the fiscal review is important.

We explain that planning needs to happen in the context of the organization’s financial situation. Leadership includes transparency around finances, so that all staff members have the opportunity to deepen their understanding of the organization's budget and empower themselves to better understand nonprofit financials.

2. Get alignment

Strong organizations have a team of people, such as the Chief Financial Officer (CFO), Executive Director, and possibly some additional board members, monitoring funding shifts. If you anticipate shifts in government funding, spend some time discussing what has been learned and potential strategies to offset the loss of revenue in a certain area.

3. Speak up!

If you’re concerned about budget cuts or potential budget cuts, this is the time to reach out to elected officials - some of whom may be seeking reelection. Our recent post on nonprofit advocacy describes some safe and legal steps your organization’s leaders can take.

4. Plan for alternative funding sources - and see the silver lining

Although there is a myth that nonprofits should diversify their funding, research indicates that over 90% of very large ($50 million USD and above budget size) nonprofits have concentrated their revenue in one or two categories - among Philanthropy, Corporate, Service Fees, or Government.  

Several of our clients have found a silver lining in these budget cuts - their strategy has been to shift their focus from government funding to individual or institutional funders. As they communicate compelling community needs and discuss the potential shortfall from state, city or county deficits, they are finding receptive donors among those who appreciate their organization’s work.

Finding the energy and courage to meet this moment

In our initial post of this series, we wrote about how challenges contain energy and possibility - although, admittedly, it does not always feel that way!

Challenges push each of us to find resilience, presence and love. When we get to the hard stuff, we can look away - or we can find a path through. We are inspired by how our clients — and so many of you — are finding that resilience.

The bottom line is that building a more equitable world in which all people thrive demands funding. We need to rally ourselves and our teams to see what is happening and keep all of us moving forward. In these times, it is more important than ever to be clear, aligned, vocal and proactive.

And we are curious to hear from you: If you’ve been through a previously difficult budget season, what are some of the successful ways you weathered the storm?