Imagine walking into your office on a Tuesday morning. You find that $421,000 of expected government funding was cut. You have 11 days' notice.
For most nonprofit leaders, this sounds like a nightmare scenario. For Jenny Konkin, Whole Way House, it was a reality.
During Enkel's recent panel, "Women and the Hidden Crisis in Canada's Nonprofit Sector," the group discussed the instability of government funding. Jenny’s story of losing a third of her budget overnight showed a key risk in the sector. Funding volatility is no longer rare. It is the new normal.
If your organization relies heavily on a few key grants, how do you prepare for the unthinkable? Here is what the panel had to say about navigating funding volatility and building financial resilience.
Building Financial Resilience Before the Crisis
You cannot control when a funder changes their priorities or when a government grant is delayed. But you can control how prepared your organization is to weather the storm.
Here are three financial strategies to protect your nonprofit from funding volatility:
1. Implement Rolling Cash Flow Forecasts
A static annual budget is useless in a crisis. When funding is cut with 11 days' notice, you need to know exactly how much cash you have on hand and how long it will last.
A rolling 12-month cash flow forecast allows you to see the financial impact of a lost grant immediately. It gives you time to make smart choices, like using a line of credit or launching an emergency appeal, before you hit a wall.
2. Establish a Formal Operating Reserve
An operating reserve is not a luxury; it is a necessity. Best practices suggest maintaining 3 to 6 months of operating expenses in unrestricted, highly liquid assets.
If your organization does not have a reserve, the board must make building one a strategic priority. This may require tough talks with funders. Ask them to allow part of the grants for admin costs. Also, ask to build reserves.
3. Diversify Your Revenue Streams
If a single grant makes up more than 25% of your total revenue, your organization is at high risk. Nonprofits must actively diversify their income sources through individual giving, corporate sponsorships, earned revenue models, and community partnerships.
The 2026 Nonprofit Financial Checklist
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"Find Your People"
When Jenny's organization lost $421,000, she didn't close the doors. She turned to her community.
"Our donors stepped up and stepped in, and I find hope in that," Jenny shared. "I believe that people want to do good. Find your people, find your corner... It's our role as a nonprofit to help educate people to help people know about what we do."
Surviving funding volatility requires strong financial systems, but it also requires a strong community. When your financial house is in order, you have the clarity and confidence to go to your supporters and say, "Here is the situation, here is our plan, and here is how you can help."
Is your nonprofit prepared for funding volatility? Enkel's fractional CFOs and controllers can help you build the cash flow forecasts and scenario plans you need to navigate uncertainty with confidence. Reach out today.
