Is Your Nonprofit Facing Inflation? Five Strategies to Cope

by | Oct 25, 2022 | Strategic Planning

With inflation on the rise, families are getting hit hard. New data shows that “32% of Americans are struggling to pay their bills.” Most every nonprofit facing inflation is feeling the pain too.

Whether it’s staff salaries that aren’t keeping up with inflation, rising operating costs, or the looming threat of lower charitable giving—the current climate is enough to give any Executive Director heartburn.

At the same time, demand for your services may be on the rise.

What’s a nonprofit leader facing inflation to do?


1) Trim costs without hurting programs

Nonprofit leaders often think about cost-cutting once a year: during annual budget season. But inflation changes the equation. Whether your organization is large or small, it’s a perfect moment to take a step back and assess simple ways to cut costs. Small-dollar items can quickly add up, so consider everything from printing to office supplies to software subscriptions. You may be eligible for more nonprofit discounts or you may be paying for services your team no longer uses.


2) Enlist your Board of Directors when your nonprofit is facing inflation

One of the key roles your nonprofit’s Board of Directors plays is to “ensure resources required to fulfill the organization’s mission.” Your board members are committed to your organization’s success, and know first-hand how hard you’re working. They’re also in the unique position of having a birds-eye view of your nonprofit’s finances, while also being contributors. We always recommend organizations aim for 100% board giving–meaning every single member of your Board of Directors makes a meaningful financial contribution.

If your budget is suddenly tight, ask your board members to make their annual contributions earlier this year–and, where possible, higher. Further, they may be able to look through their networks and identify potential new donors. Board members may also be able to assist with cost cutting measures, such as by providing free meeting space or connecting you with pro bono services.


3) Be honest with donors about your impact and challenges alike

Now is the perfect moment to revisit your donor relations strategy. At Funding for Good, we recommend starting by assessing your current donor base and how you’re engaging them. This is both efficient and cost-effective: Nonprofit Quarterly estimates that it costs ten times more to acquire a new donor than it does to keep a current one.

You can begin with a quick analysis of the last twelve months.

  • How often are you connecting with your donors?
  • What methods are you using to connect—email, direct mail, meetings, events?
  • In your communications, how often are you providing impact reports vs asking for money?
  • What percentage of your donors renewed or increased their gifts over the last 12 months?

Address any gaps in your donor relations strategy to make sure donors are hearing about the great work you’re doing. Once your donors feel connected to your work, you can be honest with them about the impact the economy is having on your organization. Is the demand for your services rising, even as the cost of providing those services increases? Engaged donors will feel more inclined to step up and support your nonprofit’s critical programming.


4) Invest in a nonprofit strategic plan to better manage inflation pressures

While spending funds on strategic planning may sound counterintuitive during uncertain economic times, the payoff can be significant. A strategic plan will enable you to assess and hone your services and operations. You’ll better understand your organization’s strengths and weaknesses, and chart a path that takes into account future challenges ahead. With this perspective, you may find areas where spending isn’t matching impact. Then you can work with your staff and board leadership to optimize both budget and programming.


5) Build capacity without burdening payroll

As part of your strategic planning process, you may also identify areas where you still need more capacity. This is when it’s time to get creative. Consider innovative solutions, such as a staff swap, that can provide temporary capacity and create growth opportunities for your team members.

You may also consider targeted consulting contracts. For example, if your fundraising team is struggling to find time to craft regular impact reports or donor appeals, a skilled copywriter could quickly ease the burden, freeing up critical staff time to fundraise even more!

Luckily, with strategic thinking and planning, tough financial times don’t have to reduce your organization’s impact.


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