What This Covers
This page is for directors and finance or program leads at nonprofits whose funding has just been cut, suspended or terminated. It starts with the first days: reading the notice, protecting staff, telling partners. It moves on to closing out the award properly, and ends with the slower work of reducing your dependence on any single funder.
Start Here
Do these first, roughly in this order.
- Read the notice. Work out whether you have a termination notice ending the award before its scheduled completion or a stop-work order suspending all or part of the project. Stop-work orders and terminations explains both.
- Decide what happens to affected staff. Downsizing responsibly covers the steps. Redirect people to other work where you can. If not, choose between furlough and layoff based on whether an end to the disruption is in sight; with no end in sight, a layoff is generally the better option.
- Tell partners directly. Partners and subgrantees should hear it from you, not a third party, and promptly. Bridge funding, planning advice or referrals to other funders can soften the landing.
- Start close-out. Reconcile records, settle obligations, collect final invoices and draft final reports, using the close-out and early termination checklist.
- Track every cost during a suspension. Record the steps you took to hold costs down and what you still incurred, including idle labor and facilities.
- Begin the diversification conversation. Check how many sources your income rests on, since an organization with few sources is more vulnerable to a shock, then list which new sources could realistically fill the gap. Diversifying funding after aid cuts shows how to start.
Key Concepts
- Termination notice: a formal message from a funder ending an award before its scheduled completion.
- Stop-work order: a formal directive to suspend all or part of a project immediately, typically used under contracts.
- Close-out: the final step of an award, confirming that activities are complete, funds accounted for and reports submitted.
- Furlough: a temporary cut in hours or unpaid break, with staff expected back soon.
- Layoff: an end to the employment relationship, generally the better choice when no end to the disruption is in sight.
- Redundancy (the term in some countries): a form of dismissal used when you can no longer afford roles or have restructured them away.
- Reserves: unrestricted funds that management and the board may use as they choose, unlike restricted program money.
- Financial diversification: widening your sources so a shock is less likely to hit all of them.
Templates
- Close-out and early termination checklist. Use it to confirm final reports are filed, unobligated funds refunded and property accounted for.
- Cash flow forecast template. Use it to build optimistic and pessimistic scenarios on conservative income estimates.
AI for This Topic
An assistant can produce a first draft of a final progress report from your project notes (the funder report playbook shows how), prepare a questions and answers sheet for managers running consultation meetings, or brainstorm earned income ideas from the role you play in your community.
Check every line of the output against your real results before using it.