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How nonprofits can move beyond “guarded communications” and build lasting resilience through candid updates, proactive problem-solving, and a no-surprises culture.
Following up our last post about guarded communications, let's discuss how to promote better information flow between nonprofits and funders. By taking intentional steps, nonprofits can build trust with funders while remaining transparent about their organization’s realities. Here are some actionable strategies to consider:
Treat your donors and grant makers as allies who deserve the truth, not as distant benefactors who only hear good news. Start by communicating early and proactively about challenges before they become crises. For example, if you anticipate a budget shortfall or program delay, inform key funders in advance. Explain the issue clearly and attach a solution or request, such as: “We’re facing X problem and here’s our plan to address it, and here’s how you can help." Many donors will respond with support, advice, or bridge funding, rather than jumping ship, if you’ve earned their confidence through candor.
Transparency doesn’t mean dumping every raw fear on the table. It means sharing the context around your challenges and keeping funders updated on your progress. When you disclose an issue, also communicate the steps you’re taking to manage it and what progress is being made. Then follow up regularly. For instance, if you told a grantmaker that costs are rising and you’re tightening the budget, later you might report, “Thanks to cost-saving measures and two new donors, we’ve reduced the deficit by 50%.” This closes the loop and shows competence. Donors want to see that their support is leading to improvement or impact despite hurdles.
Bake transparent communication into your management routines. For example, consider implementing a lean risk management framework like our Foundations for Growth (FFG) program. FFG guides your team to collaboratively identify and prioritize risks through a risk inventory and regular check-ins. This process decentralizes information and fosters open communication at all levels, creating a culture where staff and board are comfortable and raising concerns early. With an internal early warning system in place, you are far less likely to be caught off guard, and you can confidently keep funders informed about potential issues before they spiral.
Similarly, you could adopt our Lean Strategic Planning principles to make your strategic plan a living, breathing tool rather than a static document. A lean strategic plan integrates an agile “early warning system” for threats and opportunities. It engages your board, staff, and stakeholders continuously, so everyone knows the organization’s current challenges and priorities. By aligning your long-term goals with real-time risk monitoring, you’ll be better prepared to communicate with funders about how short-term bumps fit into your long-term strategy. These approaches not only improve resilience but also signal to funders that your organization is well-run and forthright. When a nonprofit can openly discuss its risk register and how it is managing issues, funders see a mature organization worthy of investment.
Don’t wait for donors to dig for information. Proactively share your financials and results in accessible ways. This means embracing a higher standard of public transparency. Publish your audited financial statements, Form 990, and annual report on your website. Provide clear breakdowns of how funds are used and highlight key impact metrics and stories. Doing so builds trust not just with existing funders but with the broader community.
You can also leverage third-party accountability standards as a trust signal. For example, by adopting the Standards for Excellence® code (a nationally recognized best-practice framework for nonprofits), you demonstrate your commitment to integrity and transparency in governance.
Make “no surprises” your motto when dealing with funders. This means you tell them important news, good or bad, before they hear it elsewhere. Develop a habit of picking up the phone or sending a personal email to major funders when something significant happens that affects your work. Even if you don’t have all the answers yet, a brief heads-up goes a long way. For example, if a key staff member resigns or a grant falls through, let your funders know promptly and reassure them that plans are in motion to handle the change.
Internally, train your team that bad news must travel faster than good news. By normalizing open communication in-house, you ensure it will extend outward to stakeholders. Over time, funders will come to realize that if there’s something important happening at your nonprofit, you will tell them. This reputation is incredibly valuable. It translates to funders sticking with you in a crisis rather than feeling duped and jumping ship. In the long run, transparency is far less risky than silence.
Resilience is built on reality. You can only manage risks you’re willing to acknowledge, and you can only secure long-term improvement in relationships by being genuine. Transparency is the new normal, and nonprofit leaders who grasp this will navigate turbulent times far more effectively than those who try to find a sense of security behind a guarded wall.
Stay tuned for the next post in our series reexamining 50 reasons why it is so difficult to be a nonprofit leader. By addressing each of these longstanding issues with fresh insight and current data, we aim to equip you with practical wisdom to lead your organization to new heights of trust and impact.