2025 is already shaping up to be an interesting year for the nonprofit community. With recent Executive Orders from the White House’s Office of Management and Budget attempting to suspend federal funding for many nonprofits and halting parts of the U.S. refugee program, organizations that rely on these funds are scrambling.

In a recent move, President Donald Trump issued an executive order suspending the U.S. Refugee Admissions Program (USRAP) effective Jan. 27, 2025. This suspension, detailed in the executive order titled "Realigning the United States Refugee Admissions Program," halts the entry of refugees into the United States until further notice. The order cites concerns over national interests and mandates periodic reviews every 90 days to assess the program's status.

Concurrently, the administration has paused nearly all U.S. foreign aid for 90 days, affecting a wide range of international assistance programs. This freeze has led to sudden interruptions in critical services, including counterterrorism training, HIV treatment, and narcotics interdiction efforts worldwide. Notably, only aid to Israel, Egypt, and emergency food assistance cases are exempt from this suspension.

The ripple effects are immediate: vital services disrupted, staff positions uncertain, and missions suddenly in jeopardy. It’s a stark reminder of why financial reserves aren’t just a good idea—they’re a necessity.

At Infinite Giving, one of our nonprofit clients had to make the difficult decision practically overnight to withdraw their entire reserve fund of more than $2 million. Why? Because of sudden policy changes at the federal level that put their funding and their work at risk.

Think about it: What would happen if your nonprofit lost a major source of funding tomorrow? Could you continue serving your community next week? Next month?

This is exactly why cash reserve funds exist. They are the financial safety net that allows nonprofits to weather unexpected crises and keep their missions moving forward.

For this particular nonprofit, the decision to maintain a well-managed reserve fund meant they could take swift action. Within 24 hours, their well stewarded funds were liquidated and in their bank account, giving them the runway to pivot, adapt, and continue their critical work despite the policy shifts. Without that reserve, they would be facing an existential crisis instead of a financial strategy.

Unfortunately, too many nonprofits operate on razor-thin margins, relying on consistent cash flow from grants, donations, or government funding. But as this situation highlights, even well-established funding sources can disappear in an instant. Having a dedicated reserve fund gives organizations breathing room to make thoughtful decisions instead of reacting out of desperation.

Building a strong reserve fund doesn’t happen overnight, but it’s one of the smartest financial moves a nonprofit can make. Here are a few key steps to get started:

1. Determine Your Target – Most nonprofit experts recommend having at least six months to a year of operating expenses in reserves. But, every organization’s needs are different. Decide what is best for you.
   
2. Make a Plan – Intentionally build a plan to set aside a portion of income every year. Even small contributions add up over time.
   
3. Create a Policy – Define when and how reserves can be used, so the funds are there when truly needed. This is typically a cash management or Investment Policy Statement.
   
4. Manage Reserves Wisely – Keeping reserves liquid is key. A mix of cash and conservative investments such as mutual funds and Treasuries can help ensure accessibility while still generating some growth.

The reality is, emergencies don’t wait for the perfect time. Whether it’s a sudden policy shift, an economic downturn, or an unexpected crisis, having reserves allows nonprofits to stay focused on their mission instead of scrambling for immediate funding.

The recent funding freezes are a wake-up call for many of us in the nonprofit sector. If your organization doesn’t have a reserve strategy in place, now is the time to start. Because when the unexpected happens—and it will—it’s not just about protecting the finances. It’s about ensuring your mission survives.

If you’re unsure where to begin, let’s talk. Nonprofit finances don’t have to be overwhelming, and we’re here to help you build a resilient future.