Article
Meeting the demand: bring in the reinforcements for grants, contributions and other revenues
Collaborations to advance your NFP – A Baker Tilly series
Jan. 18, 2024 · Authored by Laurie Horvath
This is the third article in our NFP collaboration series.
Large donors lessen their giving. Grants are reduced or denied. Federal funding expires. These are real challenges facing not-for-profit organizations. These revenue challenges, combined with increased service demand, inflation-induced costs and dwindling reserves, can result in difficulty when creating and managing a budget that fulfills your organization’s mission and impact.
Financial challenges unique to not-for-profit organizations
- Grant funding – foundations or significant family offices may change funding priorities and/or limit repeat grant requests. As the funders shift course, dependent organizations are impacted by recurring grants and funding challenges that arise when new sources are sought after
- Federal funding – the phase out of COVID-19 funding in 2023 along with the vulnerability of qualifying and/or receiving Employee Retention Credit (ERC) funds has created a hole in some organizations’ budgets where they haven’t fully recovered to pre-2020 levels of giving and grants
- Depleting cash reserves – with inflation and increased demand for services, it costs more for organizations to deliver their services. Organizations have been offsetting rising costs by using surplus cash or operating reserves in the short-term in anticipation of replenishing revenue goals
- Reduced demand for special events – during the pandemic, many organizations were forced to halt traditional, annual special events. Since then, many events have failed to recover back to pre-pandemic numbers and many attendees remain hesitant to attend large events with continual concerns on public health
- Generational shifts – many mature, large not-for-profit organizations have been the beneficiaries of several generations of donors. Consistent methods of fundraising, including direct mail, annual year-end gifts and office wide campaigns are not always as attractive to newer generations. It presents a challenge for development teams to lessen dependence on these consistent methods and learn the preferences of newer generations
