Nonprofits have always operated with some level of uncertainty, but the current environment feels more intense than usual. The pace of change is faster, information is harder to evaluate, and the inputs organizations rely on to make decisions don’t always feel consistent.
At the same time, expectations haven’t changed. Boards, funders, and other stakeholders still expect a clear path forward, creating tension and a need to act with confidence, even when confidence is harder to come by. Waiting for improved certainty isn’t a strategy, especially when there’s no clear indication of when uncertainty might be reduced.
Sustainability Is a Spectrum, Not a Yes-or-No Question
Financial sustainability is often framed as a binary; you’re either sustainable or you’re not. In reality, most organizations sit somewhere in the middle. They’re operating, delivering on their mission, and moving forward, but with underlying risks that are never reduced to zero. Because there’s no single metric that defines sustainability, assessing your organization’s sustainability requires judgment. That’s part of what makes these conversations uncomfortable. But keep in mind that avoiding discussion about your organization’s sustainability typically creates more risk. Transparent, straightforward communication fosters an understanding of sustainability factors among senior management and the Board is critical to effectively move forward.
Where Risk Tends to Show Up
Financial challenges rarely exist in isolation. More often, they’re tied to broader issues related to governance, strategy, structure, and culture. A few factors indicate heightened risk consistently across organizations:
- Over-reliance on one person: When key knowledge and processes live with a single individual, or one person is responsible for “everything” the organization is vulnerable. This is especially true in founder-led or founder-like environments where succession planning hasn’t been fully addressed.
- Limited collaboration: Many nonprofits prioritize independence, but avoiding collaboration altogether can limit access to resources, efficiency, and even funding opportunities. Collaboration doesn’t have to mean loss of control; it can be a practical tool for sustainability.
- Reliance on a narrow set of funding sources: In a shifting funding environment, depending too heavily on one or two sources of funding increases exposure. In all but extreme cases, iversification is critical for long-term stability.
- Lack of strategy or lack of action on strategy: If there isn’t a clear answer to “what is our strategy?”, credibility is at risk. And if a strategy exists but doesn’t drive action, it’s not serving its purpose.
- Inadequate understanding of financials: Timely, accurate, understandable financial reporting is essential. Without it, decision-making becomes reactive and more challenging. Management and Boards must have adequate understanding of financial information and related data.
What More Sustainable Organizations Do Differently
Organizations that are more financially sustainable tend to operate with a different level of intentionality. It’s all about consistency in a few key areas:
- Institutional knowledge is documented and shared, not concentrated
- Collaboration is part of the culture, not an exception
- Revenue streams are diversified and actively developed
- Strategy is clear, communicated, and used in decision-making
- Financial reporting is timely, accurate, and understood by leadership
It’s important to keep in mind that high performing organizations are never “done” with these items. These factors require ongoing attention, so much so that they become part of the organization’s culture. Striving for continuous improvement on these items will elevate an organization over time.
Less Comfortable (but Critical) Factors
Beyond the structural and financial elements, there are a few factors that can quietly impede an organization’s ability to move forward.
- Ego: It can show up as resistance to collaboration, reluctance to change, an insistence on always getting credit, or hesitation to acknowledge challenges. Ego happens, but if identified and addressed early, an organization can ego-related problems.
- Focusing on cost instead of value: Cost is easy to measure, which makes it tempting to prioritize. But long-term sustainability depends on value and what actually strengthens the organization over time, not just what reduces cost in the moment.
- Lack of objective perspective: Having someone who can provide an honest, unbiased view, especially during periods of stress, can make a significant difference. Does your organization foster an environment where people are encouraged to make a valid point that leadership doesn’t necessarily want to hear?
Moving Forward
Navigating uncertainty requires a clear understanding of where your organization stands today. That starts with asking direct questions about risk, capacity, and priorities, and being willing to act on the answers.
In practice, that might look like documenting key processes, exploring collaboration opportunities, investing in fundraising, refining strategy, or strengthening financial reporting. None of these are quick fixes, but they are the kinds of steps that move organizations toward greater stability.
If you have any questions or are interested in learning more, we are here to help. Please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
