January 2026

Mohammad Anas Wahaj | 31 jan 2026

Federal spending cuts have created challenging financial situation for nonprofits. To continue to deliver their social mandate nonprofits have to find innovative ways to ensure financial resilience. Aaron Seybert, Managing Director of Social Investment Practice at The Kresge Foundation, says, 'We must acknowledge that these are unprecedented times for the nonprofit sector and taking steps to strengthen financial resilience is crucial but not a guarantee of financial stability. The road ahead will undoubtedly remain uncertain, and many nonprofits will continue to face significant obstacles. Yet by uniting as a sector, we can support one another and fortify the essential work we do. Strengthening our financial footing is key to ensuring we continue serving the most vulnerable communities in our country, even in the face of adversity.' He provides following ways nonprofits can work to overcome financial uncertainties - (1) Review your directors and officers (D&O) insurance policy. (2) Diversify banking relationships. (3) Open lines of credit for liquidity. (4) Review cost allocations on current grants. (5) Speak with funders about converting project support to general operating support. (6) Assess different budget scenarios: Planning for uncertainty. Read on...

The Kresge Foundation: Improving financial resilience: How nonprofits can navigate the impact of federal spending cuts
Author: Aaron Seybert

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Mohammad Anas Wahaj | 21 jan 2026

Over the years the clear distinction between nonprofit and for-profit start-ups has diminished and now both types work in each other's arena. Rise of social entrepreneurship and social enterprises is one of the reasons that blurred the difference between the two. Providing solutions that solve social issues can be considered the aim of both, whether they do it to make money or not. All mission driven entrepreneurs while pursuing their goals reach a stage during their start-up journey where they have to make a decision whether to structure it for profit or go the nonprofit route. Cait Brumme (CEO of MassChallenge) and Brian Trelstad (Faculty Fellow at Harvard Business School and a partner at Bridges Fund Management), provide guidance to entrepreneurs to choose the right structure at the right time for the success of their start-up venture. They explain, 'Despite the vanishing distinction, all mission-driven start-ups will eventually face a stark choice about which legal structure to adopt, and the crucial decision point often arrives before the founders are ready to deal with it. There are, of course, options in the middle-so-called hybrid organizations that use elaborate legal structures (involving, say, a parent and a subsidiary) to combine for-profit and nonprofit entities. But in our experience the best start-ups make an explicit, early choice. The decision is a difficult one made under a high degree of uncertainty and is very hard to reverse...In recent years the options for entrepreneurs have increased in the United States, with legislation allowing "benefit corporations" in many states and the introduction of B-Corp certification, which a for-profit company can use to signal to shareholders that it will try to act in the best interests of society, the environment, and all stakeholders. Venture philanthropists and impact investors emerged to fund social entrepreneurs who sought both financial and social returns—that is, to do well by doing good.' Authors suggest that entrepreneurs should consider 4 factors to avoid issues and make a successful decision to pursue a nonprofit or for-profit direction to their enterprises - FOR PROFIT - Market Readiness (Large, growing, and competitive); Customer Willingness (Profitable to reach and serve at scale); Capital Availability (Ample private capital and business banking services, liquid capital markets for exits; lack of interested donors); Talent & Other Resources (No privileged resources). NONPROFIT - Market Readiness (Small, young, and fragmented); Customer Willingness (Not profitable to reach and serve at scale, require subsidies); Capital Availability (No venture capital but sufficient philanthropic capital to get started, few to no exit options); Talent & Other Resources (Access to privileged intellectual property, professional services, or customers). Read on...

Harvard Business Review: Should Your Start-up Be For-Profit or Nonprofit?
Authors: Cait Brumme, Brian Trelstad

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