Transparency Above All
Trust is the cornerstone of any relationship between a nonprofit and its funders. When organizations face adversity, funders want to know their contributions are managed with integrity and foresight. Openness and transparency are not just courtesies; they are fundamental expectations.
When funding takes a significant hit, we often want to hide losses or sugarcoat challenges in conversations with our funders.
RESIST THAT URGE!
Instead, share the reality of your situation directly with your funders. Explain, in clear and honest terms, the financial impact on your organization. Frame the discussion around both challenges and the strategies you are employing to address them. Showing them your resiliency builds trust and will often result in additional investment from funders.
Being transparent allows you to communicate what has changed, why those changes are necessary, and how you are adapting to ensure long-term sustainability. By being upfront, you build credibility.
While honesty about difficulties is essential, so too is optimism. Funders are investors. Investors in any business want to see demonstrated resilience, adaptability, and a forward-thinking approach. Confidence, in this context, is not bravado but an expression of your belief in your mission and your team’s ability to persevere.
Share with your funders a vision for the future. Acknowledge the setbacks but shine a light on your strengths and your commitment to overcoming obstacles. By demonstrating that you are not only surviving but actively pursuing sustainability, you reinforce the idea that their investment is still yielding returns, even if you are facing cuts to the programs or services you provide.
When communicating funding losses, it’s vital to place these changes in the broader context of your organization's sustainability plan. Explain what steps you are taking to ensure your programs and mission continue, even if at a reduced scale. If program cuts or restructuring have been necessary articulate the rationale behind them. Emphasize that each decision is driven by a commitment to steward resources wisely and protect your core mission so you can stay sustainable.
Reassurance is rooted in facts, data, and concrete actions. Provide your funders with relevant data on your organization’s effectiveness and the impact of their support. This might include statistics on program outcomes, financial statements that show prudent management, and stories that illustrate resilience in action.
Be specific about what is being cut and why. For example, “Due to a 30% reduction in operational funding, we have temporarily paused our outreach in three rural counties to preserve our core educational programs.” Such clarity demystifies your decision-making process and communicates that your organization is making tough choices with the utmost care.
Funders want to back organizations that can weather difficult periods. Highlight the steps you have taken to build resilience. Have you diversified your funding sources? Have you built strategic partnerships or leveraged technology to increase efficiency? Have you engaged your board, staff, or volunteers in new ways to maximize resources? Have you been able to preserve some essential work by using your reserve funds, while you are also continuing to contribute to that fund?
Share examples of innovation and adaptability. Perhaps you launched a virtual program that expanded your reach, or perhaps you revised your budget to deliver a service in a less expensive way. These actions signal to funders that you are proactive, not passive, in the face of adversity.
Funders appreciate organizations that can demonstrate impact with evidence. Share your data and celebrate all the wins…even those that may be smaller due to decreased funding:
Year-over-year program outcomes (e.g., “In the past year, we served 2,000 youth despite a 20% budget reduction.”)
Cost savings achieved through operational changes
Quantifiable improvements in service delivery or outreach
Positive changes in beneficiary outcomes
Personal stories from those that you serve
Effective communication is never one-size-fits-all. Different funders have different preferences—some may appreciate a simple check-in by email, while others expect formal annual reports with comprehensive financials.
Take time to understand each funder’s communication style and needs. Segment your updates accordingly, ensuring that each supporter receives the information most meaningful to them. For one, a casual phone call or personalized letter may be just perfect; for another, a structured report with key performance indicators may be better.
Regular, proactive communication keeps funders engaged and reassured. Even when the news is less than positive, consistent updates show that you value the partnership and are committed to transparency.
Challenging periods are also opportunities to strengthen relationships with funders. When you communicate openly about losses and setbacks and pair that transparency with optimism, data, and resilience you send a powerful message: your organization is worthy of continued investment.
