Regulatory uncertainty is no longer a side issue for not-for-profits

When NFP leaders discuss regulatory risk, tax rules or reporting requirements often come to mind first. In practice, however, funding volatility is where uncertainty is felt most acutely.

“The largest risk for this space, in my mind, continues to be funding,” said  Charles Cooper, founder and managing partner of the Brumidi Group. “Processes in D.C. are somewhat broken, which drives uncertainty in timing. Partisanship drives uncertainty around what ultimately gets funded.”

Beyond future appropriations, organizations must also consider the stability of existing funding. Cooper noted that uncertainty now extends to whether federal programs will be reauthorized, reduced or halted midstream. For NFP organizations that rely directly or indirectly on federal funding, that ambiguity complicates everything from hiring decisions to long-term commitments.

In this environment, consistent engagement matters. “If you’re not engaging on a regular basis, your risk profile goes up significantly,” Cooper said. Relationships built before a crisis are often the ones that help organizations navigate uncertainty when it arrives.

Bipartisanship and message discipline reduce exposure

One common misstep, Cooper said, is NFP leadership aligning too closely with one side of the aisle. “If you’re not operating on a bipartisan basis, you’re taking two steps backwards,” he said. Oversight authority and funding decisions rarely rest with a single group. Flexibility depends on credibility across audiences.

Message discipline is equally important. “This is a messaging town,” Cooper said. “Message often leads policy.” Organizations that improvise messaging during a crisis risk inconsistency and confusion. Leaders emphasize the value of clear, pre-defined narratives that speak to mission impact and stewardship, not politics.

Experienced partners also play an important role. Navigating policy risk without a deep understanding of how Washington operates often leads to miscalculation. The system is driven by policy, politics and shifting priorities, Cooper said, not business norms.

Compliance blind spots are often structural

From a governance and audit perspective, many compliance failures stem from structure rather than intent.

Boards are asking more questions, but rigor varies

AI is already embedded, governance often is not

Technology is shaping compliance and communications whether leaders plan for it or not. Many NFPs are already using AI to draft content, analyze data or streamline workflows.

Used thoughtfully, AI can reduce risk. Used casually, it can introduce new exposure. In that regard, Cook cautioned that people are becoming more savvy about when messages appear AI-generated. “That creates a huge disconnect from your audience.” She said AI should support, not replace, an organization’s voice.

Morrone added that boards are increasingly focused on how technology might help surface anomalies or misuse of funds. The challenge is that many NFPs are still in the formative stages of understanding what these technology tools can and cannot do.

Resilience does not require sweeping transformation. For NFP leaders who consistently emphasize practicality,  the first step is clarity. Ask: 

• Who owns regulatory monitoring?
• Who is accountable when compliance cuts across fundraising, technology and finance?

From there, a targeted use of automation can deliver early value by monitoring deadlines, scanning for policy changes or flagging financial anomalies, which reduces friction without overburdening teams.

Over time, governance can mature. Morrone said consideration of automation may also be an opportunity for an NFP to conduct a governance review, examining whether policies, processes and oversight have kept pace with regulatory and technological change.