Managing a Deficit Budget

For many movement groups, facing budget pressure is a reality in today’s environment of instability and attacks.

First off, take a deep breath & know you aren’t alone.

It’s important to take stock of where you really are. We hope that these tips help you & your org manage with transparency, multi-year planning, timely monitoring – while supporting as much of your mission as possible.

Start With Clarity

The word “deficit” can trigger fear. Boards may immediately push for cuts. Staff may worry about layoffs. Funders may become cautious.

Leadership teams should work to answer a few key questions:

• Is the deficit temporary or longer term?
• What factors created it?
• Is funding delayed, restricted, or declining?
• Are there expenses directly affected by the change in funding?
• Are there expenses that are increasing faster than expected in the budget?
• Are reserves available? If so, do portions of your reserves policy kick in?
• What happens if no action is taken in 6–12 months?

A financial assessment including projections creates room for making the right decisions for your mission & org.

Understand the Difference Between Cash Flow Problems and Structural Deficits

Not every deficit means the organization is unsustainable.

Some groups experience short-term cash flow gaps because:

• Grant payments arrive late
• Government reimbursements are delayed
• Key areas of work need up-front or rapid response investment

Others face structural deficits, where recurring expenses consistently exceed recurring revenue. There also may be a combination or evolution of a deficit situation.

Temporary cash flow problems may require:

• Reserve usage
• Adjusted payment schedules
• Accelerated fundraising

Structural deficits may require:

• Expense reductions
• Program restructuring
• Revenue diversification
• Longer-term operational shifts

Other Tips & Questions to Ask

Communication with staff is key.

It’s important to be up front about the current financial realities, organizational priorities, decision timelines, leadership’s plan, and how the situation is being monitored.

Think about your board as strategic partners.

They can support in a variety of ways around funding, donor relationships, pressure testing scenario planning, evaluation of risk and public advocacy.

Are there ways to diversify revenue streams in this moment?

Mutual aid, individual donor campaigns, monthly donors, fee-for-service areas that align with your mission, etc.

Are there other orgs that you can partner with?

It may help share the workload, lessons learned, and streamline outcomes (and maybe funding?) collectively.

A key part of your response needs to be long-term monitoring and dedication to keeping that up.

That includes understanding your current financial picture along with projections on an on-going basis.

A Deficit Budget Does Not Define Your Work

Our movement is constantly being tested as we’re fighting for our collective liberation, and part of our opponents’ strategy is to limit our resources. With that being our reality, we hope that these tips help you think through your strategy in this incredibly difficult moment. Please do reach out if we can help.