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ASU Lodestar Center Blog

How to be on solid ground financially as a nonprofit

Financial sustainability

The health of the social sector is dependent on the trust instilled by its clients and community members that their existence will continue to serve the relative needs of the community. The immediate and sustained economic and social impact the nonprofit sector contributes to the communities it serves relies on the organizations within to be financially savvy and well-equipped to sustain its institutions for many years to come. Below are strategies that can be implemented into an organization’s strategic plan or as a full financial sustainability plan.

Develop a financial sustainability plan

Start by painting a picture of your organization’s full operational costs, all your revenue sources and their level of reliability, and of your assets and cash reserves. Next, identify areas where you may be financially vulnerable. Do you have less than a month’s worth of cash reserves? Have you never heard of proper policies and procedures? Or maybe 99% of your funding is sourced from a single entity. Whatever it may be, realize those areas where opportunity lives and build a plan from there.

Develop financial policies and procedures

Financial policies and procedures can help guide your organization’s financial decision-making and showcase you as a reputable organization who has the ability and knowledge to steward funds appropriately. Developing policies and procedures is smart management and reduces risk of financial mishaps and errors.

Discuss organizational financial state and need for funding flexibility with funders

Funder discussions are likely to be found in multiple areas of a financial sustainability plan. These conversations should be transparent and in-depth about the organization’s current financial state and plans towards sustainability. Discuss challenges and barriers the organization faces in regard to grant applications and evaluations, the importance of capacity-building support, and the need for less restrictions and more flexibility with funds. The two-way dialogue between nonprofit leaders and their stakeholders reduces silos and gives leaders and managers the autonomy to make decisions that best suit the organization’s needs in real time.

Build cash reserves for emergencies and opportunities

To be financially sustainable, organizations need the cushion to support their overhead and operational costs in the case that revenue is no longer available, whether temporarily or permanently. Cash reserves can support operational needs during difficult periods, but can also be available for unforescasted opportunities of exploration or growth to further the mission and vision of the organization. However, it is important that the appropriate policies and procedures are in place to help guide decisions to access cash reserves and how to replenish the pot.

Diversify funding sources

A diverse composition of funding sources allows an organization to be nimble when certain revenue sources become unreliable beyond the organization’s control. A diverse composition of funding sources can include private philanthropy, government grants, private sector partnerships, earned revenue, and interest from investments. Having one to two primary sources of revenue with high levels of reliability, and one to two secondary sources with varying degrees of reliability and consistency to supplement the bottom line is ideal.

Implement a legacy giving program

Explore the implementation of a legacy or planned giving program as part of the development plan. It can be advertised, promoted, and developed in tandem with other existing fundraising efforts such as newsletters or website landing pages. The reconnaissance of legacy gift prospects can begin with existing deeply engaged donors by deepening conversations about the donor’s ultimate desires around the legacy they wish to leave behind. A legacy giving program helps secure future funding for the organization, can increase annual gifts with planned giving donors during their lifetime, and has the highest ROI compared to other fundraising efforts like major gifts, corporate partnerships, grants, or events.

Financial practices and strategies can be implemented incrementally and should be reviewed and adjusted throughout the process to ensure policies and procedures align well with the organization. When nonprofit leaders are thoughtful about financial strategies and their long-term goals around sustainability, their service to the public can evolve into more than just immediate needs and programs, it can transform into deeper engagement and co-production with its members to shape society to fit their needs.

Trish Bautista is a 2023 graduate of the Master of Nonprofit Leadership and Management program at Arizona State University and a member of the Association of Fundraising Professionals. She is a Client and Partner Manager with ZeroMils, helping bridge the gap between the civilian sector, military community, and nonprofits to find their “perfect fit” while doing the most impactful work ( She has worked in the nonprofit sector for over seven years and has a passion for philanthropy, impact storytelling, and international relations. Trish is a military spouse, dog mom, and certified yoga instructor.

Image by Lillian Finley


Find out more with our Nonprofit Fundraising and Sustainable Financial Management Certificate

The Nonprofit Fundraising and Sustainable Financial Management Certificate is for those who wish to gain additional knowledge and skills in fundraising, strategic planning, board governance, financial management, and more. At the end of this program, you'll be able to plan for financially lean times while looking for ways to increase funding, as well as integrating the leadership within the financial sustainability goals the organization has.

Trish Bautista


ASU Lodestar Center Blog