How Election Cycles Impact Nonprofit Grant Funding

Election cycles can profoundly influence the flow of grant funding to nonprofits. Changes in political leadership – whether a new presidential administration, a shifted congressional majority, or a turnover in state government – often bring budget delays, policy overhauls, and shifts in funding priorities. Nonprofits, many of whom rely heavily on government grants, must navigate these transitions carefully to maintain financial stability. In fact, charitable nonprofits collectively receive roughly 31.8% of their revenue from government grants and contracts, nearly two and a half times more than from all private donations combined . This guide explores the key ways election cycles affect nonprofit grant funding – including delayed federal allocations, policy shifts, increased competition, and state-level opportunities – and provides best practices to weather these changes. You’ll find real-world examples, data, and actionable strategies for staying informed on policy developments, engaging funders, diversifying income, strengthening grant proposals, and ensuring compliance with new regulations. By planning ahead and adapting proactively, nonprofits can remain resilient through political transitions.

Impacts of Election Cycles on Nonprofit Grant Funding

Delayed Federal Funding Allocations

Election transitions often lead to slower disbursement of federal funds and temporary freezes in grant programs. When a new administration takes office, it may pause or review outgoing grants, causing significant delays for organizations expecting those funds. For example, in January 2025 a White House directive ordered the Office of Management and Budget to pause all federal financial assistance programs, affecting roughly $3 trillion in annual spending including grants and loans . Agencies were instructed to halt disbursements and even withdraw funding announcements that conflicted with the new administration’s policies . Nonprofits that depend on federal grants were warned to anticipate “significant delays” in their funding . In the two weeks following this order, nonprofits nationwide were “plunged into uncertainty” as federal payments dried up . In West Virginia – a state highly reliant on federal funds – an economic development group had to pause projects revitalizing abandoned factories, and a youth program for foster care alumni froze plans for school-based mental health support, illustrating how the funding freeze “created chaos” in vulnerable communities .

Even absent an official freeze, election years frequently disrupt the normal federal budget cycle. It is common for Congress to miss budget deadlines in election season, resorting to stopgap measures. In fact, over the past five decades, Congress passed all annual spending bills on time only four times, making delayed appropriations and last-minute continuing resolutions the norm . These delays mean new grant programs may be postponed and agencies operate on prior-year funding levels until a budget is finally enacted. The risk of government shutdowns also increases during political standoffs, which can directly halt grant funding. For instance, the 35-day federal shutdown of 2018–2019 (following a dispute after the midterm elections) suspended payments to many federally funded programs. Nonprofits had to scramble to cover costs – one organization spent about 10% of its net assets to keep services running during the shutdown, essentially paying “for the same service twice” while awaiting reimbursement . These examples show that election-related delays – whether through administrative freezes, late budgets, or shutdowns – can put nonprofit finances in limbo for weeks or months.

Policy Shifts and Changing Funding Priorities

Newly elected leaders often bring shifts in policy and budget priorities that directly impact nonprofit funding. After an election, government grant programs may be expanded, cut back, or refocused to align with the philosophy of the incoming administration or legislature. This can create winners and losers in the nonprofit world depending on issue area. For example, early in 2025, a presidential memorandum ordered a sweeping review of federal funding to stop supporting NGOs that “undermine the national interest.” This directive put thousands of nonprofits – from domestic violence shelters to public health and education programs – at risk of losing federal grants . Around the same time, the National Endowment for the Arts announced the cancellation of its “Challenge America” grants, which had provided funding to small arts organizations in underserved communities . These moves signaled a dramatic shift in funding priorities, defunding certain categories of nonprofits (arts, international aid, etc.) in line with the new administration’s agenda.

Likewise, changes in social policy following elections can alter which nonprofits are eligible for funding. A vivid example is the federal Title X family planning program. In 2019, new regulations banned any grantees that provide abortion referrals or co-located abortion services, leading to a mass exodus of clinics (over 400 sites) from the Title X network and a 60% drop in patients served (3.9 million in 2018 down to 1.5 million in 2020) . Many nonprofit clinics forfeited funding rather than comply with the restrictions. After the 2020 election, the policy was reversed; by 2022, those rules were undone and the Title X network rebuilt to even greater capacity than before . This back-and-forth, tied directly to election outcomes, created whiplash for nonprofits in the health sector – first forcing them to find alternate funds for lost grants, then later ramping up services again when funding was restored.

More broadly, nonprofits may find that program areas favored by one administration face cuts under another. For example, an incoming leadership might deprioritize grants for environmental, diversity/equity, or international programs while boosting funding for areas like defense, infrastructure, or religious education. Early signals in 2025 indicated that initiatives focused on DEI, LGBTQIA+ issues, green energy, foreign aid, immigration, or women’s health were likely targets for federal funding reductions or termination . Nonprofits operating in these areas had to brace for potential grant losses. On the other hand, organizations aligned with new priorities (say, workforce development or rural infrastructure) might see new grant opportunities emerge. The key is that elections often realign the funding landscape – nonprofits must quickly understand how the “rules of the game” have changed. Adapting may mean reframing programs to fit new policy priorities, seeking alternative support for work that falls out of favor, or advocating vigorously to preserve threatened funding.

Increased Grant Competition

When public funding tightens or shifts, nonprofits are pushed into heightened competition for the remaining grants. A reduction in federal support doesn’t mean the needs disappear – instead, more organizations start chasing funds from other sources, like foundations and corporations, to fill the gap. As one nonprofit consultant noted, with fewer federal dollars available, a “highly competitive grant-seeking landscape” is emerging as many groups turn to private philanthropy for the first time . Foundations and corporate giving programs are already seeing an influx of grant applications from nonprofits that previously relied on government funding. This surge of demand can strain private funders’ capacities. While some foundations will try to step up (and may even redirect their giving to cover critical services government scaled back), they cannot cover every shortfall. In fact, they may narrow their focus to core safety-net issues, deprioritizing areas like environmental, recreational, or arts programs, which leaves nonprofits in those fields with even fewer options .

The result is that nonprofits must compete not only with traditional peers, but often with new entrants in the funding arena. Larger nonprofits with established fundraising teams and long track records have a competitive edge in securing private grants, whereas small and mid-sized nonprofits face greater challenges. Many grassroots organizations will need to significantly “sharpen their grant readiness” and improve fundraising techniques just to keep up . In some cases, even international NGOs (losing U.S. government contracts due to policy shifts) might pivot to seek funding from U.S. foundations, further crowding the field . Grantmakers, for their part, often become more selective when application volumes rise. Nonprofits report that funders are raising the bar for grants – expecting stronger evidence of impact, detailed outcomes data, and clear sustainability plans before they will award limited dollars . In other words, nonprofits must prove their value more convincingly than ever to win grants in a post-election funding squeeze. This intense competition underscores the importance of diversification and strong grant proposal strategies, discussed later in this guide.

State-Level Funding Opportunities

Election cycles don’t just bring changes at the federal level – state and local elections can also impact nonprofit funding, sometimes creating new opportunities. When federal support wanes, state governments may step in to bolster crucial programs, especially if public need is evident. Nonprofits should pay close attention to state budgets and initiatives following elections, as there may be fresh funding streams to tap into at the state or municipal level.

For example, some states have significantly increased their direct support to nonprofits in recent years. Connecticut provides a notable case: over the past four years, Connecticut’s state government has invested more than $1 billion in additional funding to strengthen nonprofit service providers, including hundreds of millions for wage increases and infrastructure improvements in the nonprofit sector . In April 2024 (an election year in many states), the Connecticut administration announced $35.5 million in new state grants to dozens of nonprofits for capital projects like facility renovations, technology upgrades, and program expansion – all aimed at helping nonprofits better serve vulnerable residents . This infusion is part of an ongoing state Nonprofit Grant Program that has aided hundreds of projects. Such state-level grant programs can act as a buffer during times when federal funds are uncertain.

Additionally, states and localities often manage pass-through federal funds or one-time recovery programs that nonprofits can access. A good example is the American Rescue Plan Act (ARPA) of 2021, which allocated extensive COVID-19 recovery funds to every state and county. The law explicitly allowed governments to use these funds to support charitable nonprofits and hire them to deliver services . Nonprofits that engaged with state and local officials were able to secure ARPA-funded grants to address pandemic-related needs in their communities. In one nationwide webinar, local nonprofits (such as Goodwill chapters) shared how they successfully pitched “use it or lose it” projects to public officials, ensuring ARPA dollars were put to use in workforce programs rather than returned to Washington . This underscores that relationships and timing matter – nonprofits that are aware of such opportunities and can propose shovel-ready solutions stand to benefit.

Election outcomes can also revive funding mechanisms like congressional earmarks that funnel resources to local projects. In 2021, Congress reinstated earmarks (branded as “community project funding”), and the rules now allow lawmakers to direct federal money to nonprofit-led projects in their districts . Many nonprofits have since worked with their representatives to secure these earmarked grants for community initiatives. Although earmarks are federal, they operate on a state/district level and can be an alternative avenue to funding outside of the typical competitive grant process.

In short, nonprofits should look beyond D.C. and consider state and local government opportunities, especially during transitions. A change in state leadership might mean new grant programs aligned with that governor’s or mayor’s agenda (for example, a state creating a special fund for childcare improvements, or a city launching grants for public safety partnerships with nonprofits). Staying plugged into state policy developments and building relationships with state agency officials can help nonprofits capitalize on these openings. Many states, even amid federal uncertainty, have budget surpluses or initiative funds that they channel to nonprofits addressing local needs. By being proactive at the state level – attending state budget hearings, joining state nonprofit associations, and proposing solutions to state legislators – nonprofits can sometimes offset federal cutbacks with home-grown funding sources.

Best Practices for Nonprofits During Political Transitions

Facing the uncertainties of an election cycle, nonprofits need to be proactive and strategic in managing their funding. Below are key strategies and best practices to help organizations navigate delayed grants, policy changes, and other transition challenges:

1. Stay Informed on Policy Developments

Knowledge is one of the best defenses against sudden funding changes. Nonprofits should establish routines to closely monitor government policy at all levels:

• Track Federal and State Budget Plans: Keep an eye on budget proposals, appropriations bills, and spending news, especially in election years. Knowing the timeline (e.g., federal fiscal year deadlines or state budget cycles) helps predict when funding decisions will occur. If a new budget is delayed or major cuts are proposed, you’ll hear about it early by following legislative updates.
• Subscribe to Policy Alerts: Utilize trusted resources that interpret policy changes for nonprofits. For example, the National Council of Nonprofits provides regular updates on federal and state policy issues affecting charities . Subscribing to such newsletters, or those from your state nonprofit association, can give timely warnings about funding or regulatory shifts. Many nonprofits also follow sector-specific organizations (e.g., an education nonprofit might follow the Department of Education’s announcements or advocacy groups in that field).
• Engage in Networks and Coalitions: Join coalitions relevant to your mission (e.g., a housing coalition, health nonprofit alliance, etc.). These networks often circulate information about upcoming policy changes or collective advocacy efforts. Being plugged in means you won’t be the last to know about a change that impacts your grants.
• Follow Experts and News: Identify a few experts, journalists, or organizations on social media that focus on nonprofit policy or your issue area . Their commentary can provide insight into the “mood” in Washington or your state capital and signal what might be coming. Likewise, regularly reading nonprofit sector publications (such as Nonprofit Quarterly, The Chronicle of Philanthropy, or Independent Sector updates) will keep you informed.

Staying informed goes hand-in-hand with being ready to act. If you learn that a policy shift or funding cut is likely, you can start planning responses (adjust budgets, reach out to alternative funders, or mobilize advocates). In some cases, informed nonprofits can participate in the process – for instance, by providing public comment on proposed regulations or joining campaigns to support programs on the chopping block. As one guide advises, nonprofits should “actively monitor policy changes” and engage in advocacy to protect critical funding streams . Simply put, don’t let election-related changes catch you by surprise. Make policy intelligence-gathering a regular part of your operations.

1. Engage Proactively with Funders and Stakeholders

In times of uncertainty, communication with funders is critical. Rather than taking a wait-and-see approach, nonprofits should reach out early and often to the people and organizations that fund their work:

• Maintain Regular Contact with Grant Officers: If you receive government grants, establish a rapport with your agency’s grant program officer or contract manager. Don’t hesitate to ask if they anticipate any changes or delays given the political climate. By keeping in touch, you might learn about pending issues (like a potential freeze or a shift in priorities) before formal notices go out. Also, use these communications to highlight your ongoing work and compliance. Sharing data and success stories reminds agency staff of the value you provide, which is important if they have to make tough choices on continuing grants. Regular contact ensures they know your organization is meeting all requirements – this can only help when funding is re-evaluated . If you are a subrecipient of federal funds passed through a state or larger nonprofit, stay in close touch with that pass-through entity as well to understand any timing issues .
• Be Alert to Personnel Changes: After an election, personnel at funding agencies may change – your grant’s point of contact could retire or be reassigned. Try to find out if such changes occur. If a key contact or champion of your program in the government leaves, promptly identify their replacement and introduce your organization and project to them . A new administration might bring in new program officers who are unfamiliar with your grant; it’s up to you to educate them about your program’s goals and progress.
• Demonstrate Transparency and Compliance: Proactively share required reports and even go beyond by sending brief updates on how you’re using grant funds effectively. For example, you might email your grant officer a one-page summary of quarterly outcomes or a client success story tied to the grant. This shows accountability. During uncertain periods (like continuing resolutions or transitions), some funders appreciate reassurance that their grantees are steady and compliant. By “providing detailed grant impact data” and ensuring you mirror all grant requirements in your reporting, you give funders no reason to pull back support .
• Engage Elected Officials: Funders aren’t limited to agencies – elected officials who vote on budgets are also stakeholders. Make sure your local, state, and federal representatives know your organization and the value of your programs. Invite them for site visits or virtual presentations. Explain how proposed funding changes will affect their constituents (e.g., “If this grant is cut, X number of local families will lose access to services”) . Showing lawmakers the human impact can encourage them to speak up for preserving funds or to direct resources to your cause. This advocacy is especially important in transition periods when new budgets are being drafted. Many nonprofits formed relationships with legislators during the 2018–2019 shutdown and were later able to leverage those when future budget votes occurred. Remember, as a 501(c)(3) you must remain nonpartisan, but you can educate officials about issues and impacts – in fact, it’s often vital to do so. (Just be sure not to cross into campaigning, as nonprofits are prohibited from intervening in political campaigns .)
• Communicate with Private Funders and Donors: If your nonprofit is supported by foundations or major donors, keep them in the loop about how political changes are affecting you. For instance, if a federal grant that underpins a program is delayed, you might inform a foundation that funds a related program at your nonprofit. They might offer a no-interest loan, an emergency grant, or at least be understanding if outcomes need to be adjusted. Showing private funders that you’re managing the situation proactively (perhaps by diversifying funding or cutting costs) can maintain their confidence. Also, many community foundations and United Ways created special funds during government shutdowns or crises; by communicating your needs, you could become a candidate for such relief funding.

In summary, don’t go silent when uncertainty hits. Whether it’s a program officer, a foundation liaison, or a major donor, open lines of communication can lead to flexibility or support that wouldn’t arise if you stay quiet. Funders generally appreciate honesty and initiative. By engaging them, you position your nonprofit as a proactive partner rather than a passive grantee. This can make a real difference in preserving funding through transitions.

1. Diversify Funding Streams

If election cycles teach nonprofits anything, it’s not to put all your eggs in one basket. When a single source (like federal grants) dominates your revenue, your organization is extremely vulnerable to political winds. Diversifying your funding streams is therefore a crucial long-term strategy:

• Reduce Over-Reliance on Government Grants: Take a hard look at what percentage of your budget comes from government sources. If it’s very high, make a strategic plan to lower that dependency over time. As experts advise, if you rely heavily on government funding, now is the time to “flex your diversification muscles.” Seek out alternative revenue to mitigate potential gaps .
• Expand Individual Giving and Major Donors: Many nonprofits can grow their individual donor base with relatively modest investment. Consider launching new fundraising campaigns targeting individuals – for example, an annual fund drive, a crowdfunding campaign for a specific project, or a membership program. Major donors (including your board members) might be willing to contribute more if they understand it helps buffer your organization through a funding transition. Don’t be afraid to explain the situation: e.g., “We’re facing some uncertainty in federal funding next year due to changes in Washington, so we’re asking our community of supporters to help ensure our programs remain steady.” Oftentimes, donors rally to preserve services they care about.
• Pursue Foundation and Corporate Grants: If you haven’t already, research private foundations that fund in your service area or region. With federal grants becoming scarcer or more competitive, you may find foundations increasing their support for certain needs – but you have to get on their radar. Adapt your grantwriting (as discussed below) to appeal to these private funders. Similarly, look for corporate partnerships or sponsorships: local businesses might sponsor an event or program, especially if it fills a gap in public funding. Even in tough economic times, many companies have budgets for community giving or marketing sponsorships.
• Develop Earned Income or Fees for Service: Think creatively about services or assets your nonprofit has that could generate revenue. Could you charge a sliding-scale fee for some services without compromising your mission? Do you have a training program that could sell materials or expertise to other organizations? Perhaps you own a facility with unused space that could be rented to other groups, or you could host public workshops for a fee. During tight funding periods, even modest earned income streams help. Some nonprofits have set up social enterprises (like a thrift store or café supporting a job-training program) to create an independent revenue stream. Others have monetized small things – for instance, selling branded merchandise or running charity auctions – to engage donors and raise extra funds .
• Explore New Funding Avenues: Diversification might also mean tapping new types of support. Is your nonprofit eligible for state or local government grants that you haven’t pursued before? (Refer back to state-level opportunities – a new city initiative or county contract could become a steady source of income.) Have you considered federated campaigns like the Combined Federal Campaign or state employee giving programs? These are ways to get individual donations via workplace giving. What about online fundraising events (e.g., GivingTuesday or local “giving days”)? Broadening your horizons ensures you’re not overly exposed to risk in any one area.

The goal of diversification is not to replace one dependency with another, but to build a balanced portfolio of funding. In practice, even well-diversified nonprofits may still feel a hit from political changes – but the impact will be cushioned by other incoming resources. A recent guidance noted that while revenue diversity may not make up for all lost federal funding, it can mitigate a significant portion of the gap if pursued proactively . For example, when one environmental nonprofit saw its federal grant cut, it had already cultivated a mix of foundation grants and public donations that covered 50% of that program’s cost, allowing it to continue operating at a reduced scale until new funds were found. Such resilience comes from years of diversification work.

Best Practice Tips: Create a written fundraising and revenue plan each year that sets targets for different sources (government, foundation, individual, corporate, events, etc.). If one area is too high, set a reasonable goal to grow other areas. Also, work on building an operating reserve (rainy-day fund) when times are good. Many nonprofits learned during past shutdowns and recessions that having even a few months of reserves can make the difference between survival and closure. Unfortunately, more than 60% of nonprofits cite financial stability as a top challenge , often due to thin reserves. Aim to save any surplus or unrestricted funds to build up a reserve that can cover at least 3–6 months of critical expenses. This reserve, combined with diverse revenue streams, is your safety net for the next unexpected political storm.

1. Strengthen Grant Proposals and Demonstrate Impact

With competition for grants rising and funders becoming more selective, nonprofits must elevate the quality of their grant proposals and clearly demonstrate their impact. A strong proposal can make you stand out in a crowded field, and strong performance data can persuade funders to renew support even in tight times. Here’s how to boost your grant-seeking success:

• Align with Funder Priorities: In a post-election environment, funder priorities may have shifted. Always research and tailor each grant application to the current goals of the funder. If you’re applying for a federal grant under a new administration, read the agency’s strategic plan or recent statements to discern emphasis areas. Reflect that understanding in your proposal. Similarly, when approaching foundations, reference how your work advances the specific outcomes they care about. Thorough prospect research is key – identify funders whose missions genuinely align with yours, and focus efforts there for a higher success rate .
• Craft a Compelling Narrative: Even with great data (which we’ll address next), your proposal needs to tell a story. Describe the community need you address in clear, relatable terms. Use real examples or testimonials to put a human face on the issue. Then show how your organization is equipped to meet that need. Highlight your track record and unique strengths. In times of scarce funding, reviewers look for projects that will deliver the greatest impact – so make a strong case for why your program is critical now (perhaps needs have spiked, or you serve an underserved population) and why your approach works. If possible, tie your work to timely issues. For instance, if the political climate has shifted focus to workforce development, an education nonprofit might emphasize how its literacy program ultimately improves employability.
• Provide Data-Driven Outcomes: In a competitive grant landscape, funders increasingly demand evidence of impact . Strengthen your evaluation methods so you can include solid outcomes data in proposals. Instead of just saying “we provide mentorship to youth,” quantify the results: e.g., “95% of teens in our mentoring program graduated high school, compared to 75% citywide .” Use surveys, statistics, and research to back up your claims. Also articulate how you will measure success during the grant period – funders want to know you’ll track progress and be accountable. Showing past and projected outcomes builds confidence that their grant will make a difference.
• Address Sustainability and Risk: Funders worry about what happens after the grant or if challenges arise. Strengthen your proposals by including a brief sustainability plan – how will you continue the project or maintain the benefits after the grant funds are spent? Maybe you’re diversifying revenue (as above) or engaging community volunteers to sustain parts of the work. Also acknowledge potential obstacles and how you’ll mitigate them. This honesty coupled with a plan can set you apart as a thoughtful and prepared grantee .
• Double-Check Compliance with Guidelines: In competitive times, many grant proposals get rejected for small technical reasons. Don’t give funders an easy reason to eliminate yours. Ensure you follow every instruction in the RFP (page limits, formatting, required attachments, etc.). Have someone not involved in writing use the checklist of requirements to verify everything is included. If the funder is a government agency, confirm that you have all up-to-date registrations (SAM.gov, Grants.gov accounts, etc.) well before the deadline. A flawless proposal submission reflects well on your organization’s professionalism.
• Improve Grant Readiness: Use downtime (if any) to gather and refine common proposal elements so you can respond quickly to new opportunities. This includes having an updated needs statement with current data, fresh letters of support or partnership agreements, resumes of key staff, and audited financials or IRS 990s ready to go. Many organizations have found a “grant readiness checklist” helpful to ensure they have all necessary documents on hand . Being ready means when a surprise grant opportunity pops up (maybe as a result of election promises turning into new grants), you can submit a high-quality proposal on short notice.
• Seek Feedback and Build Skills: If you aren’t winning grants at the rate you’d like, seek feedback. Some funders (especially foundations or state agencies) are willing to provide brief comments on why a proposal wasn’t selected. That insight is gold – use it to improve future applications. Additionally, invest in training for your team: attend a grant writing workshop or webinar to learn new best practices. In a tight funding climate, even hiring a professional grant writer or consultant to review your proposal can yield a strong ROI if it helps secure a large grant.

By strengthening proposals in these ways, nonprofits can improve their hit rate even under difficult conditions. As one consultant put it, grant proposals need to be “stronger than ever” and nonprofits must research and write with great care to showcase their impact . The extra effort in polish and precision can make the difference between an application that gets funded and one that just misses the cut.

1. Ensure Compliance with Regulatory Changes

Political transitions can bring about new laws, regulations, and administrative rules that affect nonprofit operations and grant compliance. It’s essential for nonprofits to stay compliant with all requirements – both to avoid penalties and to preserve eligibility for funding. Here’s how to manage regulatory changes:

• Stay Current on Grant Regulations: Federal grants are governed by frameworks like the Uniform Guidance (2 CFR Part 200) which can be amended over time. A new administration might introduce additional requirements (for instance, new reporting mandates, procurement rules, or cost principles) either through legislation or executive action. Nonprofits should monitor communications from grant-making agencies for any changes in grant terms. After the 2025 transition, for example, organizations had to be on alert for new grant conditions aligned with administration policies – agencies were directed to cancel awards “in conflict” with the new policies . If you receive such notices, act promptly to understand and comply. Designate a compliance officer or team to review any updates in contracts or grant agreements that come through during transition periods.
• Document Everything and Maintain Internal Controls: During turbulent times (e.g., a funding pause or administrative changeover), it’s critical to keep meticulous records of your grant-related activities and expenses. Even if your funding is delayed or interrupted, continue to document how you use any remaining funds and what costs you incur in the interim. As a legal advisory cautioned nonprofits during a recent freeze, you should maintain records of all costs incurred and steps taken during any funding suspension . Strong documentation will be your friend if you need to justify expenditures or seek reimbursement once funds flow again. Additionally, periodically review and update internal controls to ensure they align with current rules . For example, if staffing changes occurred (layoffs or role shifts due to funding cuts), make sure responsibilities like financial approvals or recordkeeping are reassigned appropriately so no compliance duties slip through the cracks .
• Train Staff on New Requirements: When regulations change, frontline staff and program managers need to know. If, say, a new federal executive order prohibits use of grant funds for a certain activity, or a state law adds an extra step to client eligibility verification, ensure your team is informed. Hold brief refresher trainings or send written updates about the do’s and don’ts. This is especially pertinent if the change is sensitive (for example, changes in non-discrimination rules or allowable content in programs). By educating staff, you prevent accidental non-compliance that could jeopardize funding.
• Mind Your 501(c)(3) Boundaries: Election seasons can blur lines, so remember that nonprofits cannot engage in partisan campaign activity . While this isn’t a new regulation, enforcement attention can heighten around elections. Make sure your organization refrains from endorsing candidates or donating to campaigns – such actions risk your tax-exempt status and can definitely scare off funders. If your staff or board members participate in political campaigns in their personal capacity, ensure they separate that from any organizational resources or time. It’s wise to review IRS rules on lobbying and political activity with your team to avoid any inadvertent violations. Staying compliant in advocacy (e.g., only engaging in permissible nonpartisan advocacy) will keep your organization out of legal trouble as the political winds blow.
• Adapt to State and Local Regulatory Shifts: After elections, new state or local laws can affect nonprofits too. These might not directly target grant funding but can change labor rules, financial reporting, or licensing that indirectly impact your operations. For instance, a state might raise the minimum wage or mandate paid sick leave – important for nonprofits to budget for, especially if grants need adjustment to cover higher personnel costs. Or a state might change charitable solicitation regulations or audit thresholds. Keep an eye on such changes via your state nonprofit association or legal counsel, and adjust policies accordingly. Compliance isn’t just about federal grants; you need to remain in good standing on all fronts to continue receiving any funds.
• Consult Legal Counsel When in Doubt: If a significant regulatory change occurs and you’re unsure how it applies to your nonprofit or your grants, don’t hesitate to seek expert advice. For example, during the 2025 federal grant freeze, many nonprofits consulted attorneys to understand their rights and options . Legal counsel can help interpret contract clauses (e.g., termination or “stop-work” orders), assist in drafting any required notices to subrecipients, or guide you in worst-case scenarios. Investing in a bit of legal guidance is worthwhile if it helps you avoid inadvertently violating a rule or missing a critical requirement.

Maintaining rigorous compliance may not be glamorous, but it’s non-negotiable, especially during political transitions. The last thing a nonprofit needs in a tough funding climate is to lose existing grants or face clawbacks because of a compliance error. By staying disciplined and up-to-date with all regulations, you protect your current funding and position yourself as a reliable grantee for future opportunities.

(On a related note, compliance extends to delivering on what your grants promise. In uncertain times, do your best to continue providing services as outlined in your grant agreements, or communicate proactively with funders if adjustments are needed. Your reputation for accountability during crises will affect future funding decisions.)

Maintaining Financial Stability Through Political Transitions

Putting all these pieces together, nonprofits can chart a path to financial stability even amid political upheaval. Below is a summary of actionable recommendations to strengthen your organization’s fiscal resilience during election cycles and transitions:

• Build and Protect Operating Reserves: Strive to maintain a reserve fund that can cover several months of operating expenses. This cushion buys you time if government payments are delayed or a grant is suddenly cut. During the 2019 shutdown, nonprofits with some cash reserves were able to float costs until reimbursements arrived, whereas those without reserves faced immediate crises. Aim to save any surplus into a reserve – it’s a top indicator of fiscal health. (If you don’t have a reserve yet, start small: even one month’s worth of expenses in savings is a start, then grow it over time to 3–6 months.) An analysis of your finances can help determine what can be set aside for short-term operations and gap funding .
• Run Scenario Plans (“What-If” Budgets): Don’t wait for a crisis to figure out your response – forecast it now. Develop contingency budgets based on different funding scenarios: e.g., “Scenario A: federal grants flat, Scenario B: federal grants cut 20%, Scenario C: federal grants cut 50%.” Model the revenue shortfall and decide which expenses or programs you would reduce in each case . This exercise forces you to prioritize core mission-critical costs versus nice-to-haves. It also surfaces decisions early – perhaps identifying contracts you could pause, vacancies you wouldn’t fill, or costs you could trim if needed. Having a playbook for various outcomes means you can react swiftly and calmly if one of those scenarios comes true. Update these plans annually (especially before and after elections or budget votes) to reflect current realities.
• Secure Access to Credit or Emergency Funds: In addition to reserves, explore external backup funding for short-term needs. Talk to your bank about establishing a line of credit for your nonprofit, if you haven’t already. Even a modest line (secured by your receivables or other assets) can help cover payroll or critical bills during a gap. It’s much easier to secure credit when your finances are stable than during a crisis, so arrange it in advance as a precaution. Some nonprofits also maintain relationships with community foundations or federated funds that offer bridge loans or emergency grants in tough times. Know what safety nets are available in your community. If you never need them, great – but if you do, you’ll be glad to have them. The key is to “explore short-term funding strategies, such as loans or board contributions, in advance” so cash flow blips don’t become catastrophes.
• Tighten Financial Management: During periods of uncertainty, double-down on sound financial practices:
  • Monitor your cash flow closely (weekly or daily if needed). Forecast when major inflows (like grant reimbursements) and outflows (payroll, rent) occur, so you spot potential shortfalls ahead of time .
  • Contain costs where possible. Prioritize essential program and staff expenses, and delay discretionary spending (new initiatives, major equipment purchases) until funding stabilizes. Renegotiate vendor contracts for better rates or seek nonprofit discounts . Implement spending approvals so that management is aware of any unusual expenditures .
  • If facing a funding squeeze, consider interim measures like furloughs or hour reductions rather than permanent layoffs, to bridge a short period. Many nonprofits did this during past shutdowns, and it allowed them to ramp back up quickly when funds returned.
  • Keep your board of directors informed and engaged in financial oversight. Provide them with scenario plans and cash flow updates. In turbulent times, a finance or executive committee might meet more frequently to help navigate decisions. Board members may also personally assist – some might offer short-term financial help or connect you to emergency funding sources.

• Diversify and Innovate (Ongoing): As discussed, diversification is a preventive strategy that pays dividends in a crisis. Continue seeking new funding partners and creative revenue streams. Even in the middle of a political transition, you can lay groundwork by reaching out to potential funders or starting small earned-income ventures. Every bit of diversification increases stability. During the 2020 election and subsequent pandemic downturn, nonprofits with a mix of government, private, and individual support fared better financially than those relying on one source. Make it a permanent goal to broaden your base.

• Communicate and Fundraise Proactively: Don’t underestimate the goodwill of your community. If you anticipate a budget shortfall due to government cuts, prepare a campaign to communicate this to donors and supporters. Often, individual donors will step up their contributions when they learn an organization they care about is at risk of losing vital government funds. Frame the need clearly (“We’re facing a $100,000 gap because of XYZ change, and we need our community’s help to sustain services for 300 families next year”). People give to causes they believe in, and that doesn’t stop in election season – in fact, philanthropic giving can increase in response to government retreat. Leverage that by rallying your supporters. Engaging volunteers in peer-to-peer fundraising can also amplify resources when you need them most.

• Maintain Transparency and Accountability: Through all the turmoil, continue to uphold high standards of transparency. This means communicating with stakeholders (clients, supporters, funders) about how you’re navigating challenges, and continuing to meet reporting deadlines and compliance requirements even if it’s tough. Nonprofits that weather storms best tend to be those that keep their funders’ trust. Show that you are adapting responsibly – cutting costs where you can, utilizing reserves prudently, and hustling to secure new support. When funders see this, they are more likely to stick with you or even provide extra help. For example, during the 2025 funding pause, nonprofits that quickly provided information to justify their expenditures and communicated their mitigation plans were better positioned to appeal for exceptions or replacement funding .

By implementing these practices, nonprofits can significantly improve their financial resilience during political transitions. It’s about being prepared, staying agile, and not going it alone. Elections and government changes will always introduce some uncertainty – but with a solid reserve, a diverse funding base, tight financial controls, and strong relationships, your organization can ride out the storm. Remember that many nonprofits have survived and even thrived through transitions by being proactive.

Finally, keep the big picture in mind: political cycles are cyclical. Challenges will come, but so will new opportunities. A transition might close one funding door but open two others (a new grant program, a wave of private donations, etc.). By staying informed and adaptable, you’ll be ready to seize those opportunities. The road to stability is an ongoing journey, but each step – from advocacy to diversification to prudent planning – strengthens your mission’s foundation. With careful stewardship, your nonprofit can continue to serve your community consistently, no matter which way the political winds blow.