🎧 Listen to This Episode:
Apple Podcasts • Spotify • ChangemakerConversations.com
Is your nonprofit struggling financially?
Unfortunately, right now, the answer is yes for the vast majority of nonprofit organizations in America. But we’re here to help.
This post is based on Changemaker Conversations, Episode 10: “Fix Your Funding, Part 2: How To Build a Fundraising Crisis Response Plan
Prefer to read? You’re in the right place — this article summarizes and expands on the full conversation between Alyssa Conrardy and Lindsay Mullen, principals at Prosper Strategies.
Why a Crisis Response Fundraising Plan Is Essential in 2026
Nonprofit leaders are stepping into 2026 facing a reality many of us hoped we could leave behind in 2025.
Funding is volatile. Restricted dollars are more limiting than ever. Public funding priorities continue to shift overnight. Grant requirements are harder to satisfy while staying true to your mission. And inflation continues to raise the cost of delivering programs and retaining staff.
In this environment, the instinct is to panic — and to try everything at once:
- launch a new fundraising initiative
- add an event
- send more emails
- apply for more grants
- scramble for emergency cash
- ask staff to “just do more”
But in a financial crisis, trying to fix everything at once usually makes things worse.
A crisis response fundraising plan gives you a different path, providing:
- clarity on what’s actually broken
- discipline about what you’ll fix first
- a focused strategy that brings in money faster
- a stronger, more transparent relationship with your board and funders
- ultimately, a return to stability for your nonprofit
Start Here: You Can’t Fix Everything at Once — So You Need to Choose What to Fix First
This episode builds on Part 1 of the Fix Your Funding series, where we shared the four financial gauges nonprofits must track during volatile times.
Before you build a fundraising crisis response plan, you need to know which gauge is most off track — because that determines the smartest strategy.
The Four Funding Gauges (From Part 1)
- Operating reserves (cash on hand)
- Restricted revenue ratio (restricted vs. flexible dollars)
- Budget surplus or deficit (projected, not just year-to-date)
- Revenue diversification (dependency on any single source)
In a crisis, your job is to identify where the biggest disruption is happening and focus there first.
Trying to address all four at once can actually lead to a worsening financial situation by scattering your focus and burning out your staff, board and donors.
The Crisis Response Strategy Depends on Which Gauge Is Off Track
Below are the four common scenarios nonprofits are facing right now — and the best crisis response approach for each.
1) If Your Budget Shows a Deficit
Definition: Budget Deficit
A budget deficit is the projected gap between your nonprofit’s revenue and expenses over a full fiscal year. It is most meaningful when based on updated projections, not just year-to-date numbers.
Crisis response approach: Raise Quickly While Cutting Expenses
When you’re running or approaching a deficit, your plan must focus on getting back to a balanced budget by both raising money quickly, and cutting unnecessary expenses.
This is not a time to experiment. It’s time to go back to fundamentals and pull the most effective levers so that you can keep paying staff and covering costs.
2) If Your Operating Reserves Are Too Low
Definition: Operating Reserves
Operating reserves are the unrestricted funds available to cover expenses if new revenue stopped tomorrow. They represent your organization’s ability to withstand delays, disruptions, or unexpected changes in funding.
A healthy benchmark is often 4–6 months of cash on hand, though many nonprofits may need more depending on risk and funding structure. If you’re operating at 1–2 months, you may be one or two payroll cycles away from serious disruption.
Crisis response approach: Address cashflow
If you’re running low on operating reserves, it’s often a function of funds coming in at the wrong time. Consider whether you can compel your donors to give at a different time in the year so that your cash flow is better timed to meet your financial obligations. This is often an especially easy sell for your board members, who are likely planning to give anyway and would be happy to reschedule their contributions if they better understood your cash needs.
3) If You Have Too Much Restricted Revenue
Definition: Restricted Revenue Ratio
The restricted revenue ratio measures what percentage of your nonprofit’s revenue comes with funder-imposed restrictions — such as funding for a specific program or activity, rather than flexible organizational needs.
A high restricted revenue ratio means you technically have money, but not the right money, and not the flexibility to manage reality. Many nonprofits discover in a crisis that restricted revenue becomes a trap: you’re obligated to deliver, but unable to cover core costs.
Crisis response approach: Convert funds to unrestricted
Here, the challenge is often more communications and funder education than fundraising mechanics. You may be surprised at the amount of previously restricted money can be converted to unrestricted if you simply have transparent conversations with your donors and funders about why you need funds to be more flexible, especially in an environment like this one.
4) If Revenue Diversification Is the Problem
Definition: Revenue Diversification
Revenue diversification refers to how dependent your nonprofit is on one funder, revenue stream, or funding source. A common benchmark is that no single source should represent more than ~30% of total revenue.
Crisis response approach: Experiment with 1-2 new revenue sources
If diversification is your biggest problem, it’s tempting to attempt a full overhaul in fear of a tenuous funding source disappearing. But in a crisis, you need creativity with discipline. Hopefully you’ve already been working toward greater diversification, but if not, now is the time to experiment with one or two new revenue strategies at most. Then, when you’ve successfully built up those revenue sources, try others. Diversification is essential, but it’s often a multi-year journey. Your crisis plan should aim for stability first, not a perfect revenue pie chart.
Which levers should you pull first in a funding crisis?
Prioritizing your focus is more critical than ever when your nonprofit is facing a financial crisis. Typically, we suggest pulling the following levers, in the following order:
Lever 1: Your Board
If your nonprofit is facing a deficit or dwindling reserves your first lever should be your board.
Remember, your board has a fiduciary responsibility to your organization. That means that when board members sign on, they are agreeing to share the responsibility of monitoring your nonprofit’s financial health, reducing risk and ensuring sustainability. In practice, it means board members are responsible for understanding the organization’s financial reality and actively participating in stabilization when needed.
The most important first step is transparency.
Many CEOs try to sugarcoat financials because they fear that admitting to financial challenges will be a mark against their performance, but doing so actually delays action, misplaces accountability and undermines trust.
In a crisis, your board needs a clear picture of:
- what is happening
- what will happen if nothing changes
- what you are asking them to do
- how quickly you need results
The Fastest Board Strategy: Pull Forward Board Giving
If board members typically give later in the year (e.g., at the gala), you can ask them to give now instead. This isn’t necessarily asking for more — it’s asking for earlier, which solves a very real cash-flow risk. You can still recognize their gift at the gala or at the time they’d typically give, but this way, your organization gets the cash when it needs it most.
How to Activate Your Board Members as Fundraisers — Without Adding a Huge Burden
Most of the time, board members don’t fail to help because they don’t care. They fail to help because fundraising asks feel vague and time-consuming. In a crisis scenario, your job is to make board engagement in fundraising clear, structured, time-bound, low friction and high return. Some example strategies include:
The Board Outreach Window
One proven approach is creating a “board outreach window,” where board members commit to:
- a set number of emails
- a set number of calls
- introductions to specific contacts
- or hosting small conversations with their networks
This can happen:
- during the first 30–45 minutes of a board meeting
- or over a defined two- to three-week sprint
- Within a specific month or quarter
The key is making it easy and visible — so board members can feel momentum.
The Thankathon
A “thankathon” is a board-led donor stewardship sprint — calling donors simply to thank them and deepen trust. Even without direct asks, stewardship can lead to increased giving, renewed relationships, and deeper engagement — especially when donors sense urgency and transparency.
Lever 2: Your Current Funders
After your board, your next lowest-hanging fruit is usually your current funders.
Why? They already know you. They already trust your mission. And many of them want to help — but only if they understand what’s happening.
Many nonprofits delay these conversations because they fear appearing unstable. However, funders are already seeing instability across the sector, it’s not a secret. They often appreciate honesty and will be more likely to help if they know how much you need them.
The Strategy That Works Right Now: A Time-Bound Stabilization Appeal
One of the strongest crisis response strategies is a time-bound appeal with:
- a clear dollar goal
- a clear use of funds
- a clear deadline (30/60/90 days)
- and a clear explanation of what happens if the gap isn’t filled
Think of it as a micro-capital campaign for stabilization. This works because it is concrete, measurable, urgent, easy to say yes to and anchored in reality.
How to Know If Your Crisis Response Plan Is Working
It’s easy to get lost in the emotions of a funding crisis, but your success measures are actually really straightforward.
Your plan is working if your metrics that were off target move toward on target. For example:
- cash on hand increases
- deficit shrinks
- your year-end projection trends toward a balanced budget
- funders respond positively to transparency and urgency by giving more or earlier
What If All Four Gauges Are Off Track?
Unfortunately, in today’s climate, this isn’t all that uncommon.
Many nonprofits are facing:
- dwindling cash
- a deficit
- heavy restrictions
- and weak diversification
If that’s you, you’re not alone — and you’re not a failure.
It’s a reflection of how the sector is structured and the pressure it is under right now: enormous demand, limited resources, constant volatility and more existential threats than ever.
The approach remains the same:
Prioritize the lowest-hanging fruit, focus on high return, and move step by step instead of trying to solve everything at once.
This is exactly what we teach through the Nonprofit Strategy System™: clear diagnosis, disciplined sequencing and prioritization, and decisions grounded in reality — not panic.
Quick Summary
A Crisis Response Fundraising Plan That Stabilizes Your Nonprofit Should:
- Start by identifying which of the four financial gauges is most off track
- Focus on one or two priorities, not everything at once
- Begin with the board, with transparency and concrete action steps
- Move quickly to current funders with honest, specific conversations
- Use time-bound stabilization goals (30/60/90 days)
- Convert restricted dollars through funder education and clearer messaging
- Pursue diversification with discipline, not overcorrection
Why It Matters:
In 2026, funding volatility isn’t a fluke, or a knee jerk reaction to a new administration. It is a reality we’re going to be dealing with for at least the next few years. A crisis response plan gives nonprofit leaders a clear, structured way to stabilize finances, reduce overwhelm, and protect their mission. And though it’s going to be an uphill battle, we’re seeing firsthand that these simple, straightforward strategies really work if you have the discipline to avoid panic and employ them.
️ From the Podcast
This post was inspired by Changemaker Conversations, our podcast for nonprofit leaders navigating change, uncertainty, and strategy.
Listen to the full episode:
About the Authors
Alyssa Conrardy
Alyssa is the Co-Founder of Prosper Strategies and a national expert in nonprofit strategy, stakeholder engagement, and the Shared Power Strategy™ approach. She leads nonprofits through complex strategic planning and crisis response efforts with a focus on alignment, equity and impact.
Connect with Alyssa: https://www.linkedin.com/in/alyssaconrardy/
Lindsay Mullen
Lindsay is the Co-Founder of Prosper Strategies and a seasoned advisor to nonprofits navigating change, culture, and strategic decision-making. She brings deep expertise in board engagement, communications, and the Nonprofit Strategy System™.
Connect with Lindsay: https://www.linkedin.com/in/lindsaymmullen/
About Prosper Strategies
Alyssa Conrardy and Lindsay Mullen are the co-founders of Prosper Strategies, a strategic consulting firm that helps nonprofits align mission, strategy, and culture through the Nonprofit Strategy System™ and Shared Power Strategy™ philosophy.
Learn more: https://www.prosper-strategies.com
About Changemaker Conversations
Changemaker Conversations is a podcast for nonprofit leaders who are ready to build smarter, more strategic organizations with less friction and more joy.
Subscribe wherever you get your podcasts and visit ChangemakerConversations.com for show notes and additional resources.
