At a recent Environmental Roundtable meeting of CFOs, chief development officers and chief people officers, I was privileged to moderate an important discussion on the current granting environment. The group consisted of large and mid-sized nonprofits along with Lee Klumpp, national assurance director—Nonprofit and Education Practice, BDO USA LLP, who offered his expertise.

Not surprisingly, one of the topics was what some of the organizations’ responses were to the recent pauses in federal funding. For those who receive 15% or more of their funding from federal sources, some solutions that were offered were:

• Furlough employees relying on federal funding.
• Seek advice as to whether the current receivables from federal agencies are collectible.
• Move employees to other functions within the organization.
• Use reserves to meet funding needs during this period.
• Improve the diversity of revenue streams.

For those organizations that were more financially prepared, there was a common theme: They have historically had a limited reliance on grant money to fund their program spending, and they maintain a healthy and robust balance sheet that has been built over time through strong board leadership.

As a former nonprofit CFO myself, there are some universal truths I learned in my 25 years of experience:

• Philanthropy is the engine that drives all programs.
• Grants should fortify but not take the place of fundraising.
• Donor philanthropy is subject to economic ups and downs.

The most strategic solution to economic uncertainty is for the leadership to look 30 years ahead and pay thoughtful attention to starting, continuing or investing in a planned giving program. Your planned giving pipeline can build your reserves and endowments so that your nonprofit can be more immune to the day-to-day and year-to-year struggles that are inevitable. 

Having your donors consider your organization to be a part of “their” family is the legacy you want to create. If philanthropy is your engine, then planned giving is the gas (or battery) that can make a nonprofit more sustainable in changing environments.