Nonprofits across the country are paying closer attention to funding diversity—and not because it’s a trend. They’re doing so because funding decisions that once felt stable are now showing cracks. Many federal opportunities have narrowed or shifted. Foundation grant competition has increased. Individual giving feels less predictable. For many organizations, these realities are no longer theoretical; they’re affecting programs in real time.
At Fundraising for the Future, we work alongside nonprofit leaders as these shifts unfold. This article reflects what we are seeing across the current fundraising landscape, why healthy funding diversity has become a core leadership issue, and what organizations should be preparing for as they move toward 2026.
The Current Grant Outlook
The U.S. funding environment is not disappearing, but it is becoming more constrained and more demanding. Federal funding priorities have shifted and many of the processes to access it have grown slower and more complex. Timelines between application and award are stretching. Compliance expectations are increasing. Funders are asking for clearer evidence of outcomes and stronger administrative systems to support them.
Foundations are also adjusting how they give. Many are becoming more explicit about their priorities, placing greater emphasis on mission alignment, geographic focus, demonstrated impact, and long-term strategy. At the same time, competition for foundation funding has increased as more organizations pursue a relatively stable pool of dollars. This shift does not suggest that foundations are retreating from philanthropy—overall giving remains strong—but it does mean that clarity, positioning, and relationship-building matter far more than the sheer volume of applications.
Individual giving continues to play a critical role, but patterns are uneven. Some organizations are seeing strong support from major donors and donor‑advised funds, while others are experiencing steady declines in small‑dollar giving. Donors are paying closer attention to impact, leadership, and financial stewardship, particularly in uncertain economic moments.
Taken together, these changes are reshaping not just how nonprofits apply for funding, but how they plan for it.
Why Funding Diversity Matters More Now
Funding diversity has long been described as a best practice. In the current environment, it is better understood as a form of organizational risk management. When a nonprofit relies too heavily on a single source of revenue, even a temporary disruption can have outsized consequences.
A diversified funding structure gives organizations room to breathe. It allows leaders to manage delays, navigate transitions, and make thoughtful decisions rather than reactive cuts. It also signals stability to funders, donors, and staff alike.
A commonly accepted benchmark across the sector is that no single funding source accounts for more than 25 to 30 percent of total annual revenue. When that threshold is exceeded, the organization’s financial health becomes closely tied to decisions outside its control—regardless of how strong the relationship may feel.
Funding diversity is no longer a best practice—it’s a form of organizational risk management.
What Healthy Funding Diversity Actually Looks Like
Healthy funding diversity is not about chasing every available dollar—it’s about building a funding mix that supports the mission while reducing vulnerability. In practice, this usually means drawing revenue from multiple categories rather than relying solely on grants.
Strong organizations tend to balance different types of support: individual contributions that provide flexibility, foundation funding aligned with specific programs, government grants pursued only when administrative capacity supports them, and—when appropriate—corporate partnerships or earned revenue that reinforce the mission.
Just as important as variety is balance. An organization can have many funders and still be financially fragile if most funding is tightly restricted or tied to short‑term projects. Healthy diversity includes enough unrestricted or lightly restricted revenue to sustain core operations and adapt when conditions change.
Fundraising in 2026
As we move into the next year, funders are placing greater emphasis on organizational capacity. Financial systems, staffing stability, and evaluation processes are no longer viewed as secondary to program work; they are part of how funders assess risk and readiness.
Questions about sustainability are becoming more direct. Nonprofit leaders should expect to explain how programs will continue after a grant ends, how diversified their revenue truly is, and how leadership plans for uncertainty. Organizations that can answer these questions clearly are positioning themselves ahead of the curve.
High-volume, unfocused fundraising strategies—applying broadly without clear alignment—are losing effectiveness. Strategic prospecting, strong alignment, and clear storytelling are proving far more successful than casting a wide net without intention.
Healthy funding diversity is rarely built in a single budget cycle. Like all good habits, it is the result of informed decisions, realistic expectations, and consistent execution over time.
Our Perspective
Fundraising for the Future works with nonprofits at many stages of growth. Some are heavily dependent on one or two major funding sources. Others are adjusting to discontinued funding or refining portfolios that are already diverse but need better structure or long‑term planning.
By grounding fundraising decisions in leadership-level funding mix goals, we help organizations make deliberate choices about which revenue streams to pursue and which to decline. We position organizations to treat fundraising as an integrated organizational function, not a response to crisis.
Healthy funding diversity is rarely built in a single budget cycle. Like all good habits, it is the result of informed decisions, realistic expectations, and consistent execution over time.
If your organization is reassessing its funding strategy in response to the current landscape, you are not behind. You are responding to the same pressures many nonprofit leaders are facing—and asking the right questions.
Interested in working together? We look forward to learning more about your organization and helping you build a stronger, more sustainable funding future. Contact Us
