Rhea Wong (0:00)

Hey you, it's Ria Wong. If you're listening to Nonprofit Load On, I'm pretty sure that you'd love my weekly newsletter. Every Tuesday morning, you get updates on the newest podcast episodes and then interspersed, we have fun special invitations for newsletter subscribers only and fundraising inspo because I know what it feels like to be in the trenches alone. On top of that, you get cute dog photos. Best of all, it is free. So what are you waiting for? Head over to riawong.com now to sign up. Foreign welcome to Nonprofit Lowdown. I'm your host, Rhea Wong. Hey Nonprofit Lowdown fans, it's Rhea Wong with Nonprofit Lowdown. Today I wanted to do a podcast episode prompted in part by a coaching call that I recently did, but also by the general vibe in the air. I think nonprofits are feeling very anxious and very stressed around federal funding and uncertainty with that, as well as uncertainty about shifting priorities from institutional funders and I think a general malaise and anxiety with individuals and where the money is coming from. So I wanted to just step into the fire and address the elephant in the room. Finish federal funding uncertainty. So look, if you've been relying on federal grants and state grants to keep your programs running, I get it. The moment might feel scary, but I want you to take a deep breath because this is not an episode about panic. It is an episode about power. You are not at the mercy of Washington. And the other thing I just want to point out is federal funding for for now is not going anywhere. And so I think a lot of us spend a lot of time and a lot of mental energy and emotional energy on catastrophizing and what could happen. And I understand it like you care so deeply about the work that you do and I want to remind you that nothing has changed as yet. And even if things do change, if circumstances do change, you have a options. And today I'm giving you a step by step playbook for strengthening your nonprofit's financial position, diversifying your revenue, and using your numbers to tell a compelling fundraising story. Plus, if you're wondering how to actually get your board to step up and support your fundraising efforts, I've got something for you. So on March 4, I'm running a free live board training for board members about funding fundraising, particularly major gift fundraising. This hopefully will help turn your board members into allies and at least will help them understand the urgency of major gift fundraising and their role in it. Head over to riawong.com and get your board members registered for that March 4th free board training okay, let's dig in. So section one, let's understand the moment that we're in. First things first, what is happening right now as of this taping, February 20, 2025, I can only speak to what's happened so far. I don't have a crystal ball, unfortunately. But I'm hoping if you're listening to this sometime in the future that things haven't changed so drastically and in the wrong direction. But right now we have a lot of political uncertainty at this moment. Trump and Elon Musk are really shaking things up in D.C. and depending on how things shake out, federal funding priorities could shift dramatically. Two, we could be looking at delayed approvals and disbursement. So even if you have grants secured, even if you have contracts with the federal government, payments may be delayed and you may see some cash flow issues. And three, increase scrutiny, particularly for organizations that are in so called dei or underserved populations or any of the apparently now forbidden words. There will be more hoops to jump, there will be more paperwork and possibly more restrictions on how funds can be used. One of the things that I would strongly recommend that you do if you are serving populations that are considered deia, is to speak to a lawyer about what you're saying on your website so that you can be proactive about making sure that you are not opening yourself up for either litigation or having your or having your 501C3 revoked. Let's go back. If your nonprofit depends heavily on federal grants, it's time to prepare for potential gaps and get proactive, not reactive. So the first thing I want you to do is a financial analysis. Know your numbers. Before we can talk about fundraising solutions, we need to get clear on your numbers. Too many nonprofits avoid financial analysis until there's a crisis and then it is too late. So step one, I want you to assess your funding sources. Pull your last 12 to 24 months of financials and categorize your revenue. Federal grants, individual giving, foundation grants, corporate partnerships, earnings, earned revenue, et cetera. Red flag here. If more than 50% of your revenue comes from government sources, this should be the fire under your butt to rebalance your portfolio. Step 2 Identify your fixed versus variable costs. So fixed costs are like salary, rent, insurance, technology, stuff that you have to pay month over month. Variable costs are things that you could cut. Things like events, marketing, program supplies. So if cuts are necessary, start with discretionary spending. But protect the areas that drive fundraising and donor engagement. One of the things that I did during the 2008 crisis for you babies out there who don't know what that is. It's when basically Wall street melted down. I had three different budget scenarios. First was bare bones. This is the bare minimum we need to survive. The second one was pretty lean, but we added some extras in, some variables in. And the third was our optimistic best case scenario. And so I think it's important to have those budget scenario planning conversations with your board and your finance team. Okay, step three, forecast your cash flow. So if your federal grants disappear or get delayed, how many months of Runway do you have? If the answer is less than three months, you need to tighten your spending. You need to accelerate your fundraising efforts and start building a reserve fund. Now. Step four, use your numbers to tell a story. So donors and board members need to see the financial reality, not just hear about it. They need to see it in black and white. And not just that. You need to tie it to a narrative. You're creating both a visual breakdown of where funding comes from and what's at risk, but you're putting a real face to it, a real narrative. If we cut by this much, there are why fewer kids we can serve, there are why fewer whales we can save, whatever it might be. So when you show them what's at stake and you tie a narrative to it, it makes it a little bit more real and perhaps will encourage them to step up to the plate. Step three, how to hedge against federal funding. So once you've done your financial analysis, let's talk about actionable strategies to create financial stability. 1. And you knew I was going to say this, Strengthen your major donor program. Look, I always think it's a good idea to strengthen your major donor program. But now more than ever, because what is going to happen if a bunch of federal money gets cut? Everybody is going to be jumping into the pool of individual donors and that's going to mean that you are fighting over a potentially smaller piece of the pie. So I think the people who are are starting their major donor program now. Before things get really potentially crazy, it will be the ones that come out ahead. So what does that look like to strengthen your major donor program? If you do not already have a major donor program, now is the time to start one. Book a call. We will talk about that. If you do have a major donor program, here's what you do. You identify your top 20 prospects and you set up one on one meetings to engage them. Now, I know a lot of you are out here saying, why would they meet with me? I've been trying to meet with them. No one is calling me. Never let a good crisis pass. So in this case, if it were me, I would write in emails something along the lines of we're in a tremendous moment right now, there is a threat of federal funding and more than ever we need to continue our services to send kids to college, save the whales, et cetera, et cetera. Would you be opposed to a meeting to discuss how we might face this challenge together? The wording here is would you be opposed to is powerful because it makes people feel safe by saying no. Now normally this flies in the face of advice I would normally give about major gift fundraising. However, I think extraordinary circumstances go call for extraordinary efforts. And here's the other thing. People do respond to a crisis like we can look historically, over the years, any major crisis that we've seen has actually been a catalyst for giving. So people are out there, they want to be generous and I feel like a lot of people are wanting something positive to do. So send that email. And in the course of that email, I maybe would not necessarily jump to a solicitation after the first meeting, but maybe the second meeting. Once you understand who they are, why they care, why this might be important to them as well. I encourage you to consider asking for three year commitments instead of one time gifts because it is going to be a long four years people. So remember, multi year commitments, some messaging around why now, why this, why it's important, and focusing on your top 20. Aside from your major donors, here are some other things you can do. Build a Recurring Revenue stream so if you don't already have a strong monthly giving program, you can start one. Having a monthly giving program can be helpful in terms of building a predictable revenue stream. If you don't have one, start today. You can start with your small dollar donors and ask them to give $10 a month because over time that $10 will add up. So just as an example, if you're asking someone to give a $10 a month gift, that's $120 by the end of the year, they may have, if it had been a one time gift, have been inclined to give 20. So you see how this works. I don't want to get too far into a monthly giving strategy. I definitely want to refer you to my podcast episode with Erica Carley on the topic. But remember, when you're doing a monthly giving program, it does require ongoing support. It's not a set it and forget it kind of situation. You do need to have fresh content to give people a reason to keep that money from leaving their bank account or their credit card every month, this now is a great opportunity to start one. Okay. I want you also to consider alternative grant funding. So shifting away from federal to private foundation grants. Now. I think that this is an interesting strategy. I think it's harder than it sounds because right now I think a lot of institutional funders are changing their priorities. They're waiting to see which way the wind is blowing. And I think that many of them are going to be loath to invest in new organizations. However, Spigot is not shut off. So if you haven't spent any time doing some basic prospecting and sending a couple of Lois, now would be the time to do it. And if you have the opportunity to build relationships with program officers or read the Chronicle Philanthropy or attend any roundtables to understand what's trending in philanthropy and to see if you can connect your work to the the conversations that folks are having in philanthropy. That's always helpful. 4. Engage your board in fundraising. Now, I know a lot of you are out here saying, my board has not been engaged before. Why would they be so now? Guess what? Never let a good crisis pass. I'm going to assume your board cares about you. And in this moment, when it feels like you might be under existential threat, your board should be engaged. They should be opening doors, not just sitting in meetings. And if they're not engaged, it's likely because they don't know how to fundraise, they don't feel comfortable asking, or they don't see it as their job. And that's exactly why I'm running the March 4 board training to teach board members how to fundraise and invest in major donor fundraising in a way that feels natural, not salesy. So if you need your board to step up and send them to this free training riawong.com There are no excuses not to. And then finally, create a cash reserve plan. So I would aim for at least three to six months of expenses in the bank. If you don't have one, start setting aside 5 to 10% of each major gift until you do. One tip I'll offer you is when I created my annual budget, I put in a budget line for the reserve fund so that I knew that I was on purpose putting away money for a rainy day. Maybe it's just the Asian in me, but I'm always ready for catastrophe to strike. And often, and I don't know why this happened, I often fundraised up to our operating budget every year. So even though I knew that there was a 5% cushion in there. Somehow, mentally, I could convince myself that this was the bare minimum for operating, and I would raise against it. Let's talk about your own mindset. Own your fundraising. So here's the truth. Federal funding is just one, one tool in your toolbox. If your entire fundraising strategy is built around it, you're standing on shaky ground. So it's time to step into proactive leadership to recap. Diversify your revenue, engage your board. Make major gifts a priority. Build financial resilience. You are not powerless. You have options. And the sooner you act, the stronger your nonprofit will be. Often when we feel overwhelmed, when we feel stressed, when we feel like we don't have control over a situation, is usually when our fear center, our amygdala, is running the show. I know a lot of us can get into fear, can get into anxiety. We either fight flight or freeze. So we either fight back, and we feel a lot of anger. We freeze, and maybe we react with the inability to move. I know some of us have analysis paralysis, or we flee and we pretend it's not happening. But the truth is, we can regulate our nervous system. We can tap into executive function, which is our prefrontal cortex. So when we're in our amygdala, that's when we're in survival mode. And the truth is, for many of us, we're not quite at the point of having to worry about survival. So a couple things that you can do in order to calm the nervous system down and get into the executive function of your prefrontal cortex, I'll just give you quick things that you can do. 1. Box breathing. Hey, the Navy seals use it. So if it's good enough for the Navy SEALs, should be good for you. I doubt that many of you are doing work quite as dangerous as the Navy seals. For those of you who don't know what box breathing is, it is the conscious slow breathing of taking an in breath of four counts, holding four counts, breathing out four counts, and holding four counts. Therefore, it's like a box. Do a couple of rounds of these every day. Maybe you set an alarm, you do an hour a day, and this will actually help to regulate your nervous system so that you're getting out of your fear anxiety state. The other thing that you can do, courtesy of my friend Dr. Adrian Choi, is, is you can think about the feeling that you're feeling right now. I feel anxious, I feel stressed, whatever it may be. And you actually take a moment and you say what it is you put a name to the emotion that you feeling and the very act of having to think about that emotion will actually move the energy to the front of your brain, which is the prefrontal cortex, which is responsible for executive functioning. So it will actually calm you down by being able to name the emotion. And it's really important to say I feel stressed or I feel sad or I feel anxious versus I am sad. I am anxious because I am is an identity statement. You are not your emotion. Your identity is different than that. And yet so many of us identify with the feeling that we are feeling. I am depressed, I am. I am stressed. Right. As opposed to I feel. And a feeling passes. And then the last tool I will offer, which I found to be tremendously helpful, I know I can go off on like a meditation diatribe here. I'm not going to do that though. I'm very pro. Meditation would direct you to the work of Byron Katie and she has a process called the Work, which is essentially self inquiry. And you can find it online, it's free. It's called the Work by Byron Katie and it's a series of questions that you ask yourself. So for example, if I have a feeling about something, maybe I feel stressed about losing federal funding. The sky is falling. Everything is terrible. The series of questions that Byron Katie prompts, is it true at this moment, no federal funding is not under threat, but it could be. And lots of people are losing their jobs. Right. Then the next question is, can you really know what's true? That's when we start to use our prefrontal cortex to calm down our lizard brain, our amygdala. And then it asks you to do things like who would you be without the thought? And it helps you to explore the questions that are in your mind that are creating disruption in the waters. And it helps you, I think, to right size you your anxiety to truly examine what's really happening versus what you are imagining is happening in your mind. And at the end of the day, I'm not going to pretend that we are not in a tough time. We are absolutely. It's probably one of the toughest times I've seen and I've been in the nonprofit for a while. But remember, nothing has happened as yet with federal funding. And so I think we need to be proactive. But I don't think that there's is a moment to panic. I don't think that this is a moment to overreact to something that hasn't happened yet. However, there is an opportunity to be proactive about it. So to recap, run your financial analysis, know where you stand, where you can cut and what you need to raise. 2. Make a list of your top 20 potential major donors and get those meetings scheduled as soon as you can. And three send your board members to my March 4th training the they need to be in the room if you want their support in fundraising. Remember, you can sign up@riowong.com so let's stop waiting for federal funding to save us and start building organizations that are strong, sustainable and independent of Washington's politics. If you found this helpful, share this episode with your board, your ed friends or your fundraising team. Alright, go out there and get that money honey. I'll see you next time. Hey fundraisers. Looking to nail those big funds? Fundraising Asks Check out my Big Ask gift program@riawong.com Bag say goodbye to uncertainty and hello to confidence with my program. Get expert strategies and personalized support to secure those game changing donations. Don't let fear hold you back. Join me and take your fundraising to new heights. We're enrolling now@riawong.com bag. That's riawong.com bag. So if you like big asks and you cannot lie, I'll see you in the program.