How Nonprofits Are Navigating a Shifting Funding Landscape

With many nonprofits nationwide casting an uneasy eye toward the future of government funding, many philanthropic organizations still have some very traditional concerns.

Rachel Smathers, a partner with Citrin Cooperman, a national accounting, tax, and advisory firm, has been working with nonprofits for almost two and a half decades.

“Government funding is definitely still the primary concern of many of our nonprofit clients,” says Smathers. “But funding comes from a wide variety of sources, whether it be general, corporate or individuals.”

“The challenge we will face in the future is the same challenge we always have as a nonprofit that operates under the grants and contracts we receive: ensuring that we have funding so we can continue to support the Ohio parents, families, children and professionals that we serve,” says Lisa Hickman, executive director of the Ohio Coalition for the Education of Children with Disabilities (OCECD). 

“We always keep a close eye on our budget, which helps maintain fiscal integrity and allows us to pivot if we need to,” adds Hickman. “We always keep an eye on posted grants and contracts so we can apply if they align with our mission, vision, values and work.”

Nonprofit leaders warn that recent legislative changes could ultimately harm millions of Americans by weakening the nonprofit sector’s ability to meet rising needs — needs that are increasingly going unmet by both the government and the private market.

“There is a fear that the millions of people in America who rely on their local nonprofit organizations for essential services may no longer get the help that they need,” says Diane Yentel, president and CEO of the National Council of Nonprofits, which represents more than 30,000 organizations nationwide. 

“It may be more difficult now for nonprofits to meet the critical needs of their communities, whether in small towns or big cities, in every congressional district and state. Nonprofits show up in times of crisis, providing disaster relief, crisis support and safety from danger, and they meet everyday needs from providing childcare and eldercare, job training, or essential food and shelter,” says Yentel. 

However, the caveats expressed by Yentel have not yet become a true concern for many Ohio-based nonprofits, who seem to be more concerned with just day-to-day operations at this point. Ohio’s nonprofits are addressing their concerns through traditional approaches. Most of the respondents to the informal survey said they have strategic plans already in place.

“Many of our nonprofits are finding out that if you don’t have a strategic plan, it is really hard to survive,” says Smathers. “And again, a lot of that has to do with funding. Many of our clients are seeking partnerships with similar organizations which may not do exactly what they do but still play an integral role in their mission.”

“In collaboration with the board, we are developing a contingency plan, which helps a nonprofit know which steps to take and when to take them,” says Hickman. “Hopefully we will never have to draw on this plan, but it is good to have one in place. 

“We have always partnered with other nonprofits when opportunities arise, to create a strong safety net of support for those we serve and allowing us to pool efforts,” Hickman adds. “Partnerships also are a way to collaborate with others in our space, and a way to bring even more support to parents and families when possible. Working together strengthens efforts and can ensure broader support for parents and families. For us, collaboration is just good practice.” 

Nonprofit respondents were split between whether they would see an increase or a decrease in the demand for services this year. They were in almost total agreement, however, that the current administration will have an “extreme to moderate impact” on their operations in the coming year. They were also big proponents for having strategies in place to respond to potential dramatic losses in funding.

“Our organization’s leadership and our board pay a lot of attention to our program efficiency ratio, current ratio, quick ratio and daily cash on hand ratio that is part of our auditing report each year (thank you to our auditors!),” says Hickman. “This helps us keep the big picture in mind so we can continue our work in general and should something happen. Helping with this is that we have, historically, had a very savvy strategy (thanks to previous directors) of investing nonrestricted funds whenever possible, in times when we can. This has helped us in the long run.”

Citrin Cooperman is one of the nation’s largest and fastest-growing professional services firms. Since 1979 its mission has been to help middle-market companies, not-for-profit organizations and high-net-worth individuals find success through proactive guidance, specialized services and passion for excellence.

The firm’s dedicated Not-for-Profit Industry Practice forms collaborative relationships with its clients that go well beyond the compliance needs of a given organization. Its team of professionals have specialized technical skill sets to address nonprofit needs in accounting and regulatory requirements. 

A partner in Citrin Cooperman’s Audit and Attest Practice based out of the company’s Westerville, Ohio, office, Rachel Smathers draws on her years of experience serving not-for-profit clients. She focuses her practice on accounting and auditing matters and specializes in financial reporting. 

“Citrin Cooperman” is the brand name under which Citrin Cooperman Advisors LLC and Citrin Cooperman & Company, LLP, independently owned entities, provide professional services in an alternative practice structure in accordance with applicable professional standards.