Surviving the Squeeze
Nonprofit Financial Resilience in Uncertain Times
You’re passionate about your nonprofit baby, and you want to see it flourish for years to come. But with federal funding cuts, tariff fears and inflation barely held at bay, those precious dollars you worked your ass off to raise are not only harder to come by – they’re buying less and less.
Now more than ever, the resilience of our nonprofit structures will determine the future of social justice and equity initiatives. And that means more than avoiding a shutdown. It also means continuing to deliver vital services under pressure, and bouncing back stronger than ever.
At SMC, we love data. So, we turned to evidence-based literature to uncover what specific strategies have helped nonprofits survive past financial challenges. The good news? Nonprofits, old and young, have been there, done that and lived to serve another day. Here’s what recent research suggests about staying afloat – and thriving – when things get tough:
- Not all nonprofits are alike: Chen and colleagues (2024) found that older, larger nonprofits were typically more resilient due to larger reserves and established community relationships. However, if your nonprofit is younger and still building a foundation, all is not lost. We found that partnership and collaboration were the biggest predictors of operational success across the board.
- A strong and focused network is essential: Research by Woznyj and colleagues (2024) highlights that successful nonprofits tend to cultivate fewer, but more impactful, partnerships. Instead of chasing after a large number of funding sources or community relationships, thriving organizations intentionally focus on mission-aligned partnerships. Young nonprofits, in particular, benefit from prioritizing early investment in relationships with key funders, community organizations and local stakeholders.
- Develop an operational crisis plan: Searing and colleagues (2021) found that organizations that proactively communicated with stakeholders, clearly articulated their challenges and quickly adjusted operations fared significantly better during sustained crises like budget impasses. Effective leadership involves making timely, informed decisions and ensuring transparency during uncertainty.
- Cultivate manageable, reliable revenue streams: Rather than pursuing many small, unpredictable sources, organizations benefit from focusing on stable, predictable revenue. Chen’s research suggests that earned service revenue and direct contributions tend to offer greater stability during economic uncertainty compared to investments or event-based fundraising.
- Reconsider traditional wisdom about revenue diversification While diversification is helpful in stable times, it may not always offer protection during economic downturns. Choi (2025) found that in a major recession, multiple income streams can fail simultaneously. Lin and Wang (2015) further warned that excessive diversification may amplify fiscal stress, adding stress rather than stability. While it’s dangerous to rely on a single revenue source, diversifying should never come at the cost of organizational health.
In uncertain economic climates, financial resilience isn’t merely about surviving immediate crises – it’s about cultivating thoughtful, strategic practices that enable your nonprofit to thrive long-term. The data are clear – nonprofits that foster strong community ties and prioritize effective collaboration are better positioned to weather financial downturns and continue fulfilling their critical missions.
Food for Thought
- What is your organization’s definition of resilience?
- Where can you diversify revenue with the least strain on time and staff resources?
- Who are your natural partners? What organizations have complementary or shared missions?
P.S. Don’t forget self-care! Too stressed to think of ways to participate in self-care? Try this personalizable self-care wheel.
References:
- Chen X, Kuenzi K, Evans L, Stewart A. True Grit: Exploring Nonprofit Sector Resilience Following Economic Recessions. Nonprofit Polic Forum. 2024;0(0). doi:10.1515/npf-2023-0058 Choi SY. How Does Nonprofit Revenue Diversification Affect Revenue Volatility Before, During, and After External Economic Crisis? Nonprofit Volunt Sect Q. Published online 2025. doi:10.1177/08997640251316487
- Lin W, Wang Q. What Helped Nonprofits Weather the Great Recession? Nonprofit Manag Leadersh. 2016;26(3):257-276. doi:10.1002/nml.21197
- Searing EAM, Wiley KK, Young SL. Resiliency tactics during financial crisis: The nonprofit resiliency framework. Nonprofit Manag Leadersh. 2021;32(2):179-196. doi:10.1002/nml.21478
- Woznyj HM, Stewart OJ, Beck TE. Stronger together: Building nonprofit resilience through a network with a shared Mission and organizational humility. Nonprofit Management and Leadership. 2024;34(4):753-775. doi:10.1002/nml.21590
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At SMC, we partner with organizations on the frontlines of change. We’re not consultants who write reports and disappear—we’re embedded thought partners who bring strategy, storytelling, and infrastructure support when it matters most.