Staying the Course

 In Grant Funding, Policy, Regulations, Policy & Plans

As Fire Adapted Colorado looks to the future, its commitment to building stronger, fire-adapted communities remains unwavering.

As we’ve seen in just a few short weeks in 2025, changes in funding priorities can negatively impact place-based network participants such as county and local governments, fire departments, and our NGO partners working towards wildfire resilience in their communities. Our state and national agency and organization partners may also be pivoting (or holding in place) while determining next steps. If nothing else, it’s a frustrating exercise in patience that tests our resolve and can increase stress and anxiety.

As nonprofits and grantees in Colorado navigate a complex funding landscape, staying on top of best practices is essential to ensuring long-term sustainability, operational effectiveness, and financial health. Whether you are securing new grants or managing ongoing projects, strong financial practices, a clear understanding of legal obligations, and strategic planning for diversified funding sources are all crucial elements of a successful operation.

In this blog post, we will explore several best practices for Colorado Nonprofits and Grantees that will help strengthen operations, ensure compliance, and increase your chances of sustained program growth.

 

Best Practices:

  1. Conduct a Risk Assessment

The first step in building a strong contingency plan is identifying potential risks. Work with your board, staff, and stakeholders to map out potential threats to your operations. This could include:

  • Financial instability or fluctuations in funding
  • Key staff departures
  • Natural disasters such as wildfires, floods, or snowstorms
  • Changes in government regulations or policy shifts
  • Public health emergencies, such as pandemics

Once risks are identified, prioritize them based on their likelihood and impact. This will help you focus on the most critical threats first.

  1. Develop Clear Communication Channels

In times of crisis, effective communication is key to maintaining trust and transparency. Make sure your nonprofit has an established communication plan that includes:

  • Clear internal communication strategies with staff and board members
  • Protocols for communicating with grantees, partners, funders, and donors
  • Regular updates for stakeholders and the community on how the organization is responding to the crisis

Ensuring that these communication strategies are easy to activate will help minimize confusion and keep operations running smoothly.

  1. Diversify Funding Sources

For many nonprofits, reliance on a single funding source—whether grants, donations, or events—can be risky. Diversifying your funding sources will make your organization more resilient to disruptions in one area. Consider developing multiple revenue streams, including:

  • Individual donations, major gifts, and corporate sponsorships
  • Government grants and contracts
  • Foundation funding
  • Earned income through programs or services
  • Crowdfunding and online campaigns

By spreading risk across different funding avenues, your nonprofit can weather financial storms more effectively.

  1. Create an Emergency Fund

An emergency fund serves as a financial cushion that can help cover unexpected costs or lost revenue. Ideally, this fund should cover at least 3 to 6 months of operating expenses. Having ready access to cash in times of crisis will prevent your organization from needing to cut vital programs or lay off staff during difficult times.

  1. Review Technology and Data Security

In a digital age, nonprofits must ensure that their data, donor information, and internal systems are secure and accessible in emergencies. Make sure to:

  • Back up all critical data regularly and store it in a secure, off-site location
  • Use cloud-based tools that allow for remote work, especially in the event of physical office closures
  • Implement cybersecurity measures to protect against data breaches

Making these investments will ensure that your organization can operate smoothly, even if you need to pivot quickly due to unforeseen circumstances.

  1. Plan for Remote Work and Digital Engagement

Whether due to health concerns, weather disruptions, or other emergencies, the ability to pivot to remote work is a must for many nonprofits. Establish remote work policies and invest in the technology to make remote operations feasible. Consider:

  • Video conferencing tools for meetings and engagement
  • Collaboration platforms for document sharing and project management
  • Virtual event solutions to continue outreach or fundraising during restrictions

This flexibility allows your nonprofit to continue essential services while also keeping staff and volunteers safe.

 

Principles and Practices  Priorities

  1. Reviewing and Understanding Grant Agreements

One of the first steps in managing a grant successfully is thoroughly reviewing the grant agreement. This document outlines the terms and conditions of the funding, the expectations of the funder, and your nonprofit’s responsibilities. Here are some critical areas to focus on when reviewing grant agreements:

    • Funding Amount and Timeline: Confirm the total amount of funding awarded and any deadlines related to the disbursement of payments, progress reports, or final deliverables. A clear timeline can help you structure your programs effectively.
    • Grant Deliverables and Reporting Requirements: Ensure you understand the reporting expectations and the deliverables you are required to submit. Failure to meet these obligations could result in a delay or forfeiture of future payments.
    • Use of Funds: Be clear on any restrictions or limitations imposed on how grant funds should be used. Some grants may be earmarked for specific purposes or activities. Mismanagement of funds can harm your relationship with funders and damage your reputation.
    • Compliance with Laws: Understand the legal obligations tied to the grant. This includes adhering to state and federal laws, regulations, and best practices, such as maintaining accurate records for audits.
    • Amendment and Termination Clauses: Review provisions related to modifying or terminating the agreement. Some funders may allow for flexibility in case of unforeseen circumstances, while others may have stringent rules about changes or cancellations.

Having your team or board members review grant agreements in detail, or even consulting with legal counsel when necessary, can save you from costly mistakes down the road.

  1. Accurate Accounting and Financial Transparency

Accurate accounting is essential for all nonprofits, not only to comply with financial regulations but also to ensure financial transparency and accountability. Here are some best practices to follow:

    • Use a Dedicated Accounting System: Invest in an accounting software system tailored for nonprofits. These platforms are designed to track revenue, expenses, and restricted versus unrestricted funds, which is crucial for grant management.
    • Track Revenue and Expenses Separately: Differentiate between the types of income you receive, whether it’s general donations, grants, or program fees. Similarly, ensure that your expenses are categorized properly (e.g., program expenses, administrative costs, and fundraising costs) to ensure clarity in your financial reporting.
    • Conduct Regular Financial Reviews: Set up a routine for monthly or quarterly reviews of your financial statements. This will help identify discrepancies early, ensuring you’re always in a good position to meet compliance and reporting requirements.
    • Prepare for Audits: Even if your organization isn’t required to undergo an official audit, preparing for one is still a good practice. Having thorough documentation and up-to-date financial records will make your organization more trustworthy and transparent.
  1. Drawing Down Payments and Managing Cash Flow

Cash flow can be tight for nonprofits, especially when relying on grants as a primary funding source. A best practice is to closely monitor drawdown schedules and ensure payments are requested in a timely manner.

    • Know When and How to Request Payments: Grant agreements will often specify how and when you can draw down funds. Some payments may be made upfront, while others may be reimbursed after the completion of milestones or activities. Familiarize yourself with the requirements so that you can submit payment requests as soon as you meet the necessary conditions.
    • Ensure Documentation is Complete: When requesting payments from funders, ensure that all necessary documentation is included (such as invoices, receipts, and progress reports). This will prevent delays and ensure that payments are processed without issues.
    • Plan for Gaps in Funding: Depending on your grant schedule, there may be times when your nonprofit faces a gap between funding disbursements. To mitigate this, build a buffer into your cash flow planning. This might involve maintaining a reserve or line of credit to cover expenses until you receive the next payment.
  1. Seeking Legal and Financial Advice

Nonprofits face a complex landscape of legal and financial requirements. As your organization grows, it’s essential to have trusted advisors to help you navigate these challenges.

    • Legal Counsel: Nonprofit legal requirements, including governance, contracts, intellectual property, and employment laws, can be tricky to navigate. It is wise to consult with a nonprofit attorney to ensure your organization is compliant with local, state, and federal laws

 

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