Recent federal funding cuts and freezes have caught many nonprofits by surprise, impacting their services to individuals and groups. It does not help that legal challenges, executive orders, and scrutiny over nonprofits adds to the growing uncertainty and sustainability to continue operations. However, the federal government’s actions should have served as a wake-up call to the nonprofit industry. As a result, nonprofits will need to understand the potential and pending risks that comes with the federal government’s actions. To do so, nonprofits will need to take a more proactive look at those risks that come from the federal government’s actions. This understanding could come in the form of a risk assessment plan in which nonprofits identify, assess, and act on the risks that could impact meeting your objectives. Here is a list of some risks that could result from federal government actions to nonprofits’ funding.
Risks that could impact nonprofits
This list is not all inclusive, but provides you with an idea of the risks that could impact nonprofits’ ability to meet objectives.
- Freezing or withholding of government funding focused on groups or issues not aligned with elected officials.
- Donor revolts and retreats.
- Blocked from competing for and receiving federal funding.
- Loss of tax exemption status.
- Loss of collaborations or partnerships.
- Heavy federal compliance and performance audits and monitoring.
- Restrictive access to government data or information to perform research.
- Blackballing of principals and other relevant individuals associated with the nonprofit.
- Slow review process of funding and contracts.
- Beneficiaries of the nonprofits’ services look somewhere else for services.
Takeaway
Given the current environment, nonprofits will need to pay closer attention to the federal government’s action and adapt accordingly. The risks mentioned above are a few examples of risks that could hurt your nonprofit and its objectives. Knowing the risks and develop a plan of action in addressing to those risks. It will help you weather the storm and become more resilient in this current situation.