Episode 46: Funding Loss & Leadership: Five Steps to Navigate Financial Crisis

"I know you weren’t expecting this. You couldn’t have predicted it, and had you known, maybe you would have done things differently. But for some reason, God allowed it. And this may be the reason leaders are created—for moments like these." Kim Williams

If you’re a nonprofit leader, chances are you’ve faced unexpected funding loss—or you will at some point. Major grants get denied, long-time donors shift priorities, and economic downturns shrink philanthropic giving. No matter how well you plan, financial uncertainty is part of leading a mission-driven organization.

I’ve been in this exact situation more times than I can count. And after 25 years in this sector—both as a CEO and a consultant—I’ve seen leaders react in every possible way. Some ignore the issue until it's too late. Others make desperate moves that end up costing more than they bring in. And some leave the problem to their successor, hoping they won’t have to deal with the fallout. But great leaders? They see opportunity in obstacles. They remain calm, strategic, and proactive.

That’s why, in this episode of Life & Leadership with Kim Williams, I’m sharing five essential steps every nonprofit leader should take when faced with sudden funding loss. These strategies can help minimize the damage, recalibrate your plans, and set your organization up for long-term stability.

Step 1: Remain Calm and Lead with Confidence

Your team will take their cues from you. If you panic, they’ll panic. Fear and anxiety cloud judgment and prevent strategic decision-making. Instead, take a deep breath, lean into your leadership, and remind yourself: you were made for this moment.

Step 2: Redraft Your Budget Immediately

Work with your finance team to update your budget and cash flow projections right away. You need to see the exact impact of the funding loss, both with and without using reserves. This isn’t the time for guesswork—it’s time for clear financial planning.

Step 3: Restrict Hiring to Preserve Resources

If you have vacancies, pause hiring unless absolutely necessary. If you’re planning to expand staff, reconsider. Holding off on new hires can reduce the need for painful layoffs down the road.

Step 4: Reduce Expenses with a Strategic Approach

This isn’t just about slashing costs—it’s about optimizing resources. Send each department their budget and ask them to identify expenses that can be reduced or eliminated. Then, conduct a return on investment analysis for all programs: How many clients does it serve?What outcomes are being achieved? How much does it cost annually? How much of the cost is covered by grants or fees? With this data, you can make informed decisions about what to preserve, cut, or restructure.

Step 5: Recalibrate Goals & Craft a Clear Message

Once you’ve adjusted your budget and programs, update your program goals to reflect your new reality. Then, create a transparent and strategic message explaining: What happened with funding? The decisions made to keep the organization sustainable? How services or impact may be affected? How donors can help bridge the gap?

Turning Crisis into a Catalyst for Growth

No leader wants to face financial crisis, but nearly every nonprofit leader will at some point. The key is to approach it with faith instead of fear. I truly believe that obstacles can become opportunities—and this challenge might just be the turning point that leads to your organization’s next level of impact. If you’re facing a financial crisis, take a deep breath and remember: You were made for this moment.

For a deeper dive into these strategies, listen to Episode 46 of Life & Leadership with Kim Williams on Apple Podcasts or Spotify.