Due to a mix of budgetary constraints, changing political priorities and a contemporary emphasis on fiscal responsibilities, nonprofit organizations nationwide have been subject to monumental losses in federal funding. This poses a challenge for not just the organizations themselves, but the programs and resources they offer, as well as the communities they serve. This financial strain also compels nonprofits to innovate in how they deliver services, engage stakeholders, and build resilience within their organizational structures.

These organizations have taken to a number of novel and unique approaches to secure the necessary funding required for their continued operations, highlighting the versatility of the nonprofit sector and the advocacy efforts made to mitigate the decline in government funding. These strategies include, but are certainly not limited to:

• Diversifying revenue streams
• Community-based fundraising
• Tapping into foundation and philanthropic grants
• Collaborating with other nonprofit organizations
• Using state and local government contracts
• Building stronger corporate partnerships
• Expanding advocacy efforts
• Leveraging technology to increase donor engagement

Diversifying revenue streams

Rather than relying solely on the benevolence of the federal government, nonprofit organizations are reducing their dependence on government funding by eliciting individual donations, developing and maintaining corporate sponsorships and utilizing earned-income strategies, such as a fee-for-service business model. Foundations and philanthropic institutions also remain critical, especially for nonprofits that can demonstrate measurable impact and innovation.

Community-based fundraising

Another strategy which has been heavily employed in the nonprofit sector as a result of the decline in federal funding is leaning into grassroots support from the local communities they serve. This can be done in a variety of ways, including hosting local events, utilizing peer-to-peer campaign strategies and engaging with their donor networks through social media and digital storytelling.

Tapping into foundation and philanthropic grants

As federal funding becomes more limited and competitive, nonprofits are increasingly turning to private foundations and philanthropic organizations to fill the gap. These entities—ranging from national foundations like the Ford Foundation to local family trusts and community foundations—are often more agile in their funding and willing to support innovative, targeted solutions.

Collaborating with other nonprofits

Nonprofits have been able to reduce or cut costs, as well as increase their impact by partnering with other nonprofits that are closely aligned with their missions and values. This development has been mutually beneficial to the organizations themselves, as well as making them more appealing to alternative funders. By forming strategic partnerships, organizations can pool resources, share expertise, and streamline operations to serve communities more effectively. 

Exploring government contracts at local and state levels

Nearly 80 cents of every dollar that a nonprofit organization receives is through government funding or grants and fees for services. However, that doesn’t need to be restricted only to government agencies at the federal level. Many nonprofits have begun to lean more heavily into funding from their local or state governments, which are often more accessible and aligned with the individual mission of the organizations themselves.

Building stronger corporate partnerships

As federal grants diminish, nonprofits are increasingly looking to corporate partnerships to both increase their funding and for strategic alliances that add mutual value. This draws upon the idea that many modern companies are becoming more socially conscious and eager to demonstrate their corporate social responsibility (CSR). This includes co-branded campaigns, employee giving programs and custom partnership packages.

Expanding advocacy efforts: 

Advocacy encompasses various activities beyond lobbying, such as engaging with policymakers, mobilizing communities, and raising public awareness. By advocating, nonprofits can prevent resource losses, reduce service barriers, and highlight community needs. ​The National Council of Nonprofits emphasizes that advocacy is essential for nonprofit organizations to fulfill their missions.

Leveraging technology for donor engagement: 

Nonprofits have taken the decrease in federal funding as an opportunity to use technology as a means to connect with their donors in more intuitive, personalized ways. With the continued emergence of AI-based tools, nonprofits are able to quickly and proactively predict donor churn, recommend donation amounts or identify potential major givers. They have also been able to utilize social media and livestreaming tools to create digital fundraising events, which can reach a much larger audience without the need for restrictive overhead costs.

With so much uncertainty in the nonprofit sector in terms of federal funding, it’s become progressively more imperative that these organizations remain flexible and willing to adapt to new challenges in securing essential funding. In doing so, they not only safeguard their missions but also reaffirm their commitment to the communities that rely on them most.

Image by Lillian Finley

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