North American NGOs turn to scenario budgets as costs diverge

North American NGOs are entering the second half of 2026 with a more complicated budgeting problem: the cost of people, goods, money and reliable revenue is changing at different speeds. A new nonprofit compensation study covering the United States and Canada found modest average salary growth in the U.S. but substantially faster gains in Canada, alongside rising health-insurance costs on both sides of the border. The pressure is not confined to payroll. The Bank of Canada’s July outlook put the Canadian dollar at about 71 U.S. cents and said inflation expectations remained elevated, while a regional nonprofit survey found many organizations operating with limited financial runway. The result is a budget environment in which last year’s spending patterns offer less protection against the next shock.

The AFP Foundation’s study, released July 9 and based on responses from nearly 2,700 members, found that average fundraising salaries increased 0.9% in the United States, from $96,449 in 2024 to $97,280 in 2025. In Canada, average compensation rose 6.2% to $104,442. The figures cover fundraising professionals rather than the entire nonprofit workforce, but they illustrate why organizations can experience very different payroll pressures depending on where they operate and how competitive their labor market is.

Benefits are adding a second layer of cost. Among organizations offering health insurance, 43% of U.S. respondents and 28% of Canadian respondents reported higher premiums over the previous year. The study also points to additional retention benefits, including professional development, disability insurance and technology allowances—costs that may not appear in a basic salary forecast but increasingly affect the total cost of employment.

The Bank of Canada’s July 15 outlook said Canadian firms expected inflation of about 3% to 3.5% over the next year and two years, with one-fifth saying it was too difficult to predict when inflation would return to 2%. For NGOs, that uncertainty can affect food, transport, rent, technology, insurance and contracted services, particularly in programs with fixed budgets or multi-year commitments.

Currency adds another variable for Canadian organizations purchasing U.S.-dollar software, equipment, travel or professional services, and for cross-border groups managing grants in one currency and expenses in another. The Bank of Canada said the Canadian dollar had depreciated to around 71 U.S. cents, partly reflecting a widening gap between Canadian and U.S. government bond yields. Even a stable program plan can therefore require more Canadian dollars when exchange rates move against the organization.

A July 13 survey by the Community Foundation of Greater Des Moines found that 43% of 148 responding nonprofits had fewer than six months of reserves, while 24% had more than a year. The foundation cautioned that the survey is not statistically representative of all U.S. nonprofits, but the results show how quickly cost volatility can become an operational issue when organizations lack financial runway.

Funding conditions are also uneven rather than uniformly collapsing. Candid’s July survey of 542 U.S. foundations found that 44.3% expected to increase giving in fiscal 2026 and 46.9% expected it to remain about the same. Yet Candid reported that aggregate giving among 466 foundations was flat at $19.4 billion in both fiscal 2024 and 2025, while the median increase after inflation was 3.1%. For NGOs, that distinction matters: nominal stability may not keep pace with wages, benefits or program demand.

The immediate implication is less about producing one precise annual number than about identifying which assumptions can break. Finance teams may need separate cases for payroll and benefits, inflation-sensitive purchases, currency exposure, delayed or restricted revenue, and the cost of maintaining minimum reserves. Program managers will also need clearer triggers for changing delivery schedules, staffing plans or procurement choices.

The challenge is accountability as much as arithmetic. Organizations must preserve the rationale behind cuts, reallocations and contingency decisions, especially when donor restrictions or service commitments limit flexibility. In a climate of uncertain revenue and rising operating costs, boards and senior teams will need timely variance analysis and a shared view of which risks are tolerable—and which threaten mission continuity.