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2023–2025’s giving dip, inflation, policy whiplash, and burnout are locking teams in reactive mode—starving long-term capacity
This post is the second installment in our series reassessing the 50 nonprofit challenges from Managing Your Nonprofit for Resilience (2022). Today, we examine Challenge #2: the tendency of nonprofits to prioritize immediate needs over long-term sustainability.
In the book, Challenge 2 is identified as the nonprofit habit of focusing on urgent, immediate needs at the expense of long-term sustainability. In practice, many nonprofit leaders spend their days putting out fires – meeting pressing client demands, scraping together this month’s funding, handling the latest crisis – while sidelining strategic planning, infrastructure, and capacity-building. It’s an understandable trap: with limited time and resources, the “urgent” overshadows the “important.” As I argue in the book, this reactive mode leaves organizations fragile. By constantly racing to fulfill immediate needs, nonprofits neglect investments in their future resilience, whether it’s setting aside reserves, upgrading systems, training staff, or planning for risks and opportunities.
Prioritizing the short term undermines long-term resilience in several ways. Without strategic planning and risk management, organizations can be blindsided by threats they could have anticipated. Without sustainable funding plans or reserves, a nonprofit has no cushion when donations dip or costs spike. Neglecting staff development and self-care seeds burnout and turnover, eroding capacity. In short, constantly reacting rather than proactively strategizing creates a vicious cycle: urgent problems keep arising, and the organization never gains the breathing room to chart a stronger course for tomorrow. The result is a nonprofit that may appear busy and productive, yet it is one shock away from major trouble – the opposite of resilience.
MNFR was published at the end of 2022. Since then, the landscape nonprofits operate in has continued to evolve. Let’s look at key developments from 2023 to mid-2025 and how they affect this short-term vs. long-term dilemma:
Any discussion of financial challenges must start with the federal government. Since January, billions of dollars have been removed from the nonprofit sector. Even organizations that receive no federal funds are impacted: when federal funds dry up, those dependent on that source turn to feed from the same donor pool as other nonprofits. There is simply less to go around. Additionally, nonprofit leaders are now scrambling to understand and comply with executive orders and defend their organizations' missions. These public policy threats demand immediate attention, pushing organizations further into reactive, short-term mode.
The philanthropic climate has been challenging. After the pandemic-era highs, charitable giving plateaued or even declined. Total U.S. giving fell about 2.1% in 2023 on the heels of a rare drop in 2022. Nonprofits are essentially raising no more money (and often less) than a few years ago, even as needs grow. At the same time, costs have increased due to inflation – raising salaries and supply prices are squeezing budgets. This financial pinch makes it even harder to invest in long-term priorities when day-to-day bills must be paid.
Demand for nonprofit services has soared in many fields due to economic uncertainty and social needs. In one study, 71% of nonprofits reported an increased demand for their programs in 2023, often leading to waitlists and delays. At the same time, organizations are struggling to meet that demand because of workforce shortages. Nearly three-quarters of nonprofits surveyed in early 2023 had unfilled staff positions, and about 28% said they now have longer waiting lists for services as a result. Fewer staff handling more work inevitably means everyone is stuck in “urgent mode,” with little bandwidth for planning or innovation. Research confirms that along with increased service needs, nonprofits are having to cut or limit services, and the public is feeling the effects of nonprofits stretched thin. In short, many teams are in perpetual triage, which reinforces the focus on immediate needs.
Hand in hand with the above, nonprofit employees have been burning out at high rates. High turnover and difficulty hiring add another pressure to stay in survival mode. In a 2023 national survey by the Center for Effective Philanthropy, nonprofit leaders identified staffing issues as their top challenge, highlighting widespread burnout and problems with retention. When your team is overextended or constantly changing, it’s incredibly hard to break out of day-to-day firefighting. Important tasks like strategy retreats or risk assessments get deferred indefinitely.
One promising development since 2020 has been the growth of trust-based philanthropy and more flexible funding. Over half of nonprofit leaders in 2023 reported an increase in trust from their funders, including changes like more unrestricted grants and streamlined reporting. This trend can help nonprofits focus beyond the next grant deadline. By receiving funds that aren’t tied to immediate program deliverables, organizations have a chance to shore up infrastructure or pursue longer-term initiatives.
The core challenge of balancing short- and long-term needs is more pronounced than ever before. Nonprofits and funders have become more aware of the issue. But the federal government’s wholesale attack on the sector, coupled with hesitant private giving, increasing demand, inflation, and burn-out, are decreasing the capacity of nonprofits to think, plan, and act proactively.
In our next post, we will talk about effective countermeasures for your nonprofit if you face this challenge.