Running a nonprofit has never been easy, but in today’s financial landscape, it’s becoming increasingly difficult to balance mission and money. Costs are rising across the board—salaries, rent, technology, supplies—while funding remains uncertain and, in many cases, harder to secure. And all of this is happening while demand for nonprofit services continues to skyrocket.
A 2024 survey found that nearly 71% of nonprofits have experienced an increase in the demand for their programs and services, often without a corresponding increase in funding. Inflation is driving up the price of everything from office supplies to essential program materials, and labor costs are higher than ever as nonprofits compete for skilled professionals. At the same time, many funders are tightening their requirements or shifting priorities, leaving organizations in a constant state of financial anxiety. The math simply doesn’t add up—expenses keep growing, but revenue isn’t keeping pace.
The reality is that nonprofits can no longer afford to operate as they always have. The old ways of cutting costs—trimming programs, freezing salaries, or reducing services—aren’t sustainable. Instead, organizations need to take a hard look at how they operate, where their resources are going, and what changes they can make to not just survive but continue delivering impact efficiently and effectively.
I’ve worked with many nonprofits that have struggled under the weight of rising costs, and the good news is that there are solutions. One of the most effective shifts I’ve helped organizations make is moving away from traditional, office-based operations to fully or partially remote structures. While remote work may not be the right fit for every nonprofit, the savings can be significant for those who can embrace it. One organization I worked with was spending over $120,000 a year on office rent, utilities, and related expenses. By transitioning to a fully remote model and leveraging coworking spaces as needed, they not only eliminated most of those costs but also increased staff satisfaction and retention. Employees no longer had long commutes, and the organization could expand its hiring pool beyond the local talent market, bringing in skilled professionals from across the country and beyond.
Technology is another area where many nonprofits unknowingly overspend. There’s an unfortunate tendency for organizations to patch together systems over time, often paying for redundant or underutilized software. I recently worked with a nonprofit that was using five different platforms for project management, donor tracking, and internal communication—many of which had overlapping features. By streamlining their technology stack and taking advantage of free and discounted nonprofit programs through TechSoup and Microsoft, they reduced their annual software expenses by 60%, freeing up funds for direct program support.
Energy costs, too, are a sneaky but major drain on operating budgets. One nonprofit I worked with ran a community arts space in a historic building—beautiful but a nightmare for heating, cooling, and general energy efficiency. After conducting an energy audit, we helped them secure funding for LED lighting, smart thermostats, and upgraded insulation. The result? A 30% reduction in annual utility costs meant more money could go toward arts programming instead of keeping the lights on—literally.
Of course, cost-cutting alone isn’t enough. Nonprofits also need to be thinking about long-term financial resilience. One of the biggest risks I see is organizations that don’t have an operating reserve. Research shows that nearly 40% of nonprofits have no reserves at all, meaning they’re one funding shortfall away from crisis. This is especially concerning given the current economic uncertainty—grants that seemed reliable may disappear, and donors may shift priorities in response to broader economic pressures. The smartest nonprofits I’ve worked with are actively building reserves, diversifying revenue streams, and embracing strategic partnerships to ensure they have a financial buffer.
There’s no single solution to rising operating costs, but there are ways to work smarter. Nonprofits that take a proactive approach—reevaluating their expenses, embracing technology, leveraging free and discounted resources, and thinking strategically about their financial future—will be in the best position to weather these challenges. While the sector is facing undeniable financial pressure, those who innovate, adapt, and prioritize efficiency will continue to serve their communities and drive impact long into the future.
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