With all the talk of stimulus money these days, you might expect the nonprofit sector, with its easy access to on-the-ground projects that are “shovel ready,” would be rolling in it. But until recently I had not heard of a single case of stimulus cash reaching a nonprofit.

Then, just recently, I heard from a client that in the space of two short weeks he had applied for and received $300,000 in CDBG money (a notoriously bureaucratic and slow process in normal times) to renovate a food bank warehouse.

This money is real, folks. This may have been the first instance of which I have heard, but it won’t be the last. Billions of dollars are headed for community clinics, both for construction and for service expansion; Congress just authorized dramatic growth in the number of national service slots, and any nonprofit with a facility in need of renovation should be looking for a piece of the stimulus cash.

Whether all this money, much of it highly targeted (and restricted) for construction, will offset the overall decrease in operating cash the sector is experiencing from foundations and local government, remains to be seen.

The last few months of 2008 were a period of increasing anxiety for many nonprofit leaders, as the economic news continually worsened. Still, most people I talked with had not yet experienced much direct impact from the financial crisis. Early 2009 shaped up differently. Outstanding proposals to foundations are being denied, and those awards that are still made are often being trimmed. At the same time, as state governments begin their annual budget cycles, the next fiscal year is beginning to look especially grim.

Everyone hates budget cuts, which in our world usually equate to layoffs, since people expenses are the bulk of nonprofit budgets. If you are facing a revenue shortfall I cannot tell you how soon or how deeply to cut but I can say that beginning a pattern of deficit spending, unless you have very substantial reserves, is the path to ruin. Find a way to get your budget in balance, reduce your service levels if you cannot afford to sustain them. Remember, this is a marathon, not a sprint, and your organization needs to survive in order to stay in the fight.