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Uncertainty is exhausting.
Right now, many nonprofit leaders are navigating funding instability, shifting policies, delayed grants and rising demand for services, all at the same time. In Parts 1 and 2 of this series, we talked about how to diagnose what’s going wrong in your fundraising strategy and how to build a focused crisis response plan.
Now we’re taking the next step.
If funding declines further…
If a major grant doesn’t come through…
If demand spikes while revenue drops…
What will you do?
That’s where scenario planning comes in. And while it’s not the most exciting leadership exercise, it may be one of the most important, at least right now.
What Is Nonprofit Scenario Planning?
Scenario planning is a structured way to answer one critical question:
What are the different financial realities we could face in the next 12 months, and what decisions would we make in each one?
Instead of hoping things stabilize, you proactively define:
- A “bad” scenario
- A “worse” scenario
- A “catastrophe” scenario
For example:
- Scenario A: 10% reduction in revenue
- Scenario B: 30% reduction
- Scenario C: 50–70% reduction
The exact percentages will depend on your organization. The point is to attach real numbers to potential realities. Then, once those are defined, you establish decision triggers: clear thresholds that signal when it’s time to act. That clarity reduces panic and increases control.
Why Scenario Planning Matters Right Now
Nonprofits across the country are facing two converging pressures:
- Funding uncertainty, especially government and grant funding
- Increased demand for services
Human services organizations are feeling this most acutely: hunger relief, homelessness services, crisis support and other frontline programs are seeing more need with fewer resources.
You can’t predict exactly how this will play out, but you can prepare. Scenario planning shifts leadership from reactive to proactive. Instead of saying, “We’ll deal with it if it happens,” you say, “If this happens, here’s what we’ll do.” That shift alone builds confidence.
What Scenario Planning Looks Like in Practice
This should not be a solo exercise. Ideally, scenario planning should include your Executive Director or CEO, your leadership team and possibly a small subset of board leadership (at a high level). Here’s a practical three-step approach.
Step 1: Identify All Potential Risks
Start by asking:
- What risks are we currently facing?
- What funding sources feel unstable?
- What external policy shifts could affect us?
- What internal vulnerabilities exist?
- What keeps us up at night?
Put everything on the whiteboard, even the uncomfortable or unlikely concerns. Getting it out of your head and into the room reduces anxiety and increases clarity.
Step 2: Build Your A, B, and C Scenarios
Next, organize those risks into three levels:
- Scenario A (Bad): A manageable but painful combination of risks
- Scenario B (Worse): A severe but survivable outcome
- Scenario C (Catastrophe): Multiple major risks happening simultaneously
Then attach dollar figures. For example:
- Scenario A → 10% revenue loss
- Scenario B → 30% revenue loss
- Scenario C → 60% revenue loss
You may also factor in increased service demand or delayed reimbursements. This step transforms vague fear into concrete planning.
Step 3: Define the Decisions in Advance
For each scenario, answer:
- What expenses would we cut first?
- What programs would we reduce, pause or eliminate?
- What staffing changes might be required?
- What fundraising adjustments would we implement?
You are not executing these decisions. You are pre-deciding them. hat way, if you hit a financial threshold, you’re not scrambling in the heat of crisis. You’re acting on thoughtful, measured conversations you’ve already had.
The Three Areas That Typically Surface
When organizations walk through this process, three categories for potential cuts or adjustments almost always emerge.
1. Operating Expenses
These are often the easiest to address:
- Software subscriptions
- Vendor contracts
- Office costs
- Events or discretionary perks
If something would be an easy cut in Scenario A, ask yourself whether it’s essential now. Scenario planning often exposes opportunities to streamline before an emergency hits.
2. Programs
This is more difficult. If a specific program consistently appears as the first one you’d cut in Scenario B, ask:
- Is it fully aligned with our mission?
- Is it effective?
- Is it financially sustainable?
- Could it be merged or redesigned?
- Could another organization carry it forward?
Sometimes scenario planning reveals strategic misalignment that existed long before funding pressures surfaced.
3. People
This is the hardest category. Staff are the lifeblood of nonprofit organizations. However, if certain roles repeatedly come up in worst-case planning discussions, it’s worth examining:
- Is there a performance issue?
- Is there role misalignment?
- Do we need structural adjustments?
Addressing concerns early can prevent emergency decisions later.
How Do You Know When to Act?
Your decision triggers should be tied to clear financial metrics. If your organization is tracking key financial gauges (like revenue trends, cash flow, reserves and expense ratios) you can monitor whether you’re approaching one of your predefined thresholds.
When a metric shifts in the wrong direction, you don’t panic. Instead, you consult the plan. That’s the power of scenario planning.
What About the Board?
Boards should be informed — but not overwhelmed. Best practice for involving the board in scenario planning activities includes:
- Letting the board know you are engaging in scenario planning
- Sharing high-level summaries of potential scenarios
- Keeping them updated on financial indicators (this is critical)
- Ensuring they are not surprised if a major decision is required
Boards generally do not need to be involved in operational details. High-level transparency builds trust without creating unnecessary anxiety.
Yes, It’s Uncomfortable. Do It Anyway.
Scenario planning is not fun. It’s not visionary strategic planning. It’s not blue-sky dreaming. It requires naming fears and confronting uncomfortable possibilities, but leadership is not about avoiding discomfort. Clearheaded decisions are far easier to make before you’re in crisis than during one. On the upside, there is something surprisingly therapeutic about putting worst-case scenarios on paper. Once articulated, they often feel less overwhelming.
Most importantly, planning ahead allows you to:
- Move quickly if necessary
- Communicate clearly with your board
- Reassure funders
- Protect your mission
- Sleep better at night (yes!)
The goal is simple: Survive today, and position your organization to thrive tomorrow, no matter what unfolds.
Quick Summary
If funding uncertainty is keeping you up at night, scenario planning can help you lead with clarity instead of fear.
Here’s the simple framework:
- Identify your risks. Get everything on the table, realistic, worst-case and everything in between.
- Create three scenarios. Define a “bad,” “worse,” and “catastrophe” financial outcome.
- Attach real numbers. Tie each scenario to a specific revenue reduction or budget shift.
- Set decision triggers. Determine in advance what actions you’ll take at each threshold.
- Communicate at a high level. Keep your board informed without pulling them into operational weeds.
You hope you never need Scenario C.
But if you do, you won’t be making emotional decisions under pressure. You’ll be executing a plan you’ve already thought through.
Why This Matters
Nonprofit leaders are carrying an enormous amount of uncertainty right now. When funding feels unstable and demand is rising, it’s easy to operate in constant reaction mode, putting out fires instead of leading strategically. Scenario planning shifts you from reactive to proactive.
It helps you:
- Protect your mission during instability
- Make clearheaded decisions before crisis hits
- Reduce leadership anxiety by naming real risks
- Move quickly and confidently if financial triggers are reached
- Reassure your board and funders that you are prepared
Uncertainty isn’t going away anytime soon, but panic doesn’t have to define how you lead through it. Scenario planning gives you something powerful in uncertain times: a plan.
️ 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.
