Photo by Amy Hirschi on Unsplash
Nonprofits have been feeling the heat this summer, and by “heat” I mean federal program and funding cuts, uncertainties about state and local budgets, and economic predictions affecting donors.
Nonprofits have generally understood (especially in human services) that government contracts offered the long-term stability nonprofits need to operate and planfully increase reach. Sure, the contracts sometimes didn’t cover the full operational costs and maybe they paid late, but they provided a pretty good base.
Depending on lawsuit rulings, legislative advocacy, and election results, government contracts may continue or return, despite threats of their demise. The state or local government may cover some or all of the federal funding that’s being cut. Donors watching the market might decide things are stable enough to keep giving. And everyone is advising nonprofits to “diversify funding sources.”
While you’re watching and waiting for things to cool down so you can reassess the government funding environment, take the time to examine what you’re providing current and prospective NON-government funders – donors, foundations, and donor-advised funds (DAFs). Are you giving them what they want to see when they’re deciding what they want to fund?
Savvy donors, foundations, and DAFs in 2025 want to see less about outputs and more about outcomes. Also known as outcome-based or results-driven philanthropy, this approach emphasizes measurable impact over traditional activity-based reporting. Interest in impact giving is on the rise, and to catch this wave you need to ensure your nonprofit has clear, outcome-based reporting easy for them to find.
Remember those logic models you made for your accrediting body? The outcomes measures required by your government contract? Do what you need to do for donors, foundations, and DAFs to understand them. Donors want to know what was achieved, not just what was done (e.g., “reduced homelessness by 22%” vs. “served 5,000 meals”).
Think long-term systems change: Many impact-minded funders are shifting away from short-term charity toward root-cause solutions, policy reform, or capacity building. To engage them, clearly draw the path that shows how your actions and outputs are positively affecting related larger and long-term social issues.
This doesn’t mean to take the humans out of human services reporting – storytelling is still an important tool. Combine a compelling story with related data to show qualitative and quantitative progress.
The other hot topic this summer is transparency. Donors and funders expect to see and know more about how nonprofits are living into their missions and visions. Be transparent and put your outcomes out there where your board, staff, funders, and other stakeholders can see them. Show them current data. Don’t wait for the annual report, let them see the impact of their dollars throughout the year. Think data-driven decision-making, because philanthropists use metrics, dashboards, and third-party evaluations to assess effectiveness.
Donors also expect to see your 990s, audited reports, and even program budgets. Provide operational clarity, explaining how much goes to administration vs. programs, and justify your overhead. (A plus: as funders and donors are diving deeper into how nonprofits work, the “overhead myth” is increasingly being seen as just that, a myth.)
One last thought: if your nonprofit isn’t spending much time courting DAFs, allocate a little more time to them. DAFs are increasingly popular as donors use them for tax and charitable purposes while retaining significant control over where the dollars go. Right now DAFs are sitting on a lot of money, and if DAF critics get their way, DAFs may need to distribute significantly more per year in the coming years. Better to get on their radar now than later.
As always, if you want to talk more about these or other issues, use the Contact Me form to set up time to talk. And if you think your nonprofit’s logic models and outcomes measurement could use some work, ask for a consultation. Outcomes measurement group training, elbow-to-elbow work with your team, and other solutions are available.
More reading:
The government was once a steady partner for nonprofits. That’s changing. – AP
General Giving Trends – Wegner CPAs
How impact data changes the way donors give – SSIR
Why transparency matters now more than ever – Philanthropy.org
