Recently, the Stanford Social Innovation Review reported that more U.S.-based nonprofit organizations are relying on philanthropy — gifts of $10,000 or more — as their dominant funding category. From less than 2 percent of the 297 nonprofits studied in 2007 to 12 percent today, gifts from foundations and individuals are quickly becoming a prominent revenue stream for nonprofits.
With the three most prevalent funding categories — government, program services (earned revenue), and corporate — becoming less reliable, nonprofits need to stay agile. Part of staying agile means implementing a sustainable growth strategy that can adapt to the ever-changing economic climate.
So, how do you plan for sustainable nonprofit growth in 2026 and beyond? There are 6 keys to strategic growth for long-term nonprofit sustainability:
- Identify current strengths, risks, and opportunities.
- Implement a diverse and stable funding strategy.
- Put the right staff and processes in place.
- Ensure governance structures support your long-term strategy.
- Mitigate risk by planning for possible scenarios.
- Track and respond to your strategy’s performance.
1. Identify current strengths, risks, and opportunities.
Developing an up-to-date view of your organization’s strengths, risks, and opportunities is critical to future success. You can start by conducting an in-depth financial assessment of:
- Past, present, and projected cash flow
- Current grant and funding dependencies
- Cost structures
- Operational efficiencies
In addition to financial components, you can also identify strengths, risks, and opportunities by looking at the following:
- Community trust
- Unique partnerships
- Staff tenure and expertise
- Leadership turnover
- Fluctuating regulations
- Advancements in relevant technology
- Changes in community needs
Once you have a comprehensive understanding of where your organization stands, you will be able to set informed goals for your mission. What impact do you want to have on the individuals you serve? How quickly do you wish to meet your goals? What needs to be in place to achieve your goals? How much funding will you need? What will your costs look like?
2. Implement a diverse and stable funding strategy.
Diversity allows for agility, and agility allows for sustainability. As we’re seeing in the broader social sector, depending mostly on one funding category puts your nonprofit at risk. That’s why our expert advisors at NCheng recommend identifying different funding sources, creating donor engagement workflows, and ensuring grant compliance.
To create financial resiliency, your organization will also want to develop long-term budgets to support your goals. However, keep in mind that external circumstances may be cause for adjustments. Risks to your budget can be mitigated through rolling forecasts and optimization of expense management.
3. Build nonprofit staff capacity and operational efficiency
In order to scale sustainably, your organization must have efficient processes in place and a plan to keep necessary positions filled with capable personnel.
Increasing process efficiency starts with assessing your current processes and technology. Improvements might look like implementing automation tools or hiring someone to own a process. To ensure effectiveness among your staff, conduct a capacity assessment to identify any gaps in skills, knowledge, goal alignment, or bandwidth. Then, your team can work to fill those gaps, and you can make an informed plan for future hires and/or outsourcing.
4. Ensure governance structures support your long-term strategy.
Does your current governance structure properly support your organization’s mission? Strong leadership is crucial to nonprofit sustainability and growth. That’s why our experts recommend implementing the following strategies:
- Regular board evaluations and training
- Consistent financial reporting structures for governance oversight
- Thorough decision-making frameworks that support sustainable growth
5. Mitigate risk by planning for possible scenarios.
The economic and regulatory landscape is always shifting. A robust growth strategy involves preparing for and mitigating the risks that come with change.
One of the best ways to mitigate potential risk is scenario planning. How will your organization and its strategy adapt to the loss of a major funder? An economic downturn? A sudden change in regulation? A PR crisis? Leadership turnover?
It’s also wise to regularly review your organization’s insurance coverage, update your crisis communication plan, and maintain hygienic cybersecurity practices.
6. Measure nonprofit growth with performance metrics (KPIs).
Roger Martin, former dean of the Rotman School of Management at the University of Toronto, once told Harvard Business Review that “strategy is a journey. What you want to have is a mechanism for tweaking it, honing it, and refining it so it gets better and better as you go along.”
To track whether or not your strategy is performing in line with your goals, key performance indicators (KPIs) should be set. When important metrics like donor engagement or funds raised reach set thresholds, it will be clear that your strategy is working. If KPIs are not being met, your team should determine what’s preventing progress and adapt your strategy accordingly.
Growing Your Nonprofit Sustainably
You have a mission to serve your community, but everything that goes on behind the scenes can become overwhelming. Plus, with a constantly fluctuating economic and regulatory landscape, you may not be able to depend on what used to be your dominant funding source.
You don’t have to do it alone. With over three decades of supporting nonprofits through high-quality financial services, the professionals at NCheng can help you develop and implement a strategic growth plan for long-term sustainability. Reach out today for a free consultation.
