Nonprofits Report Rising Demand, Staff Reductions and Budget Pressures After Federal Funding Changes

Nearly three-quarters of nonprofit CEOs surveyed by the Center for Effective Philanthropy said their organizations experienced increased demand for services due to cuts to major programs. The findings come from a new report by the organization based on responses from 380 nonprofit leaders working in food, housing, childcare, education, health care, elder care, workforce training and other services.

The pressures follow a series of Trump administration actions that began in late January 2025 when the Office of Management and Budget ordered a freeze on federal grants and contracts.

The OMB funding freeze was blocked in court. The Trump administration canceled $30 million in Fair Housing Enforcement Grants to 66 nonprofits in March 2025. 4 billion in COVID-era mental health and addiction grants, dissolved the Substance Abuse and Mental Health Services Administration and later reinstated it, and sent late-night emails terminating National Endowment for the Arts grants to hundreds of arts organizations.

Trump’s proposed FY 2026 budget calls for a 23% cut to domestic discretionary spending. Sixty-six percent of nonprofit CEOs said they are concerned about their organization’s financial stability. Thirty-nine percent of nonprofits reported a budget deficit in fiscal 2025, up from 22% in 2022.

Thirty-six percent of nonprofits had seen reduced federal funding since January 2025 while 34% reported reduced state or local government funding. About 30% of nonprofits surveyed said they had reduced staff size since January 2025. For most organizations that reduced staff since January 2025, staff had been reduced by more than 10%.

Nearly 90% of nonprofit CEOs reported some level of concern about their own burnout, with 46% saying their own burnout was "very much" a concern. That share stood at just under 30% in CEP’s 2025 survey. One quarter of CEOs said burnout is affecting their staff, compared with 17% in the 2025 CEP survey.

"One year into the Trump administration’s campaign against nonprofits, these organizations are facing enormous and unprecedented pressures," Elisha Smith Arrillaga, Vice President and report co-author at the Center for Effective Philanthropy, said. 2 billion in 2025.

Nearly 90% of nonprofit leaders who received MacKenzie Scott grants said the money moderately or strengthened their organization’s long-term financial sustainability while 93% said it strengthened their ability to achieve their mission.

"There is much to learn from the experiences of nonprofits who received grants using Scott’s approach," Elisha Smith Arrillaga said. Thirty-five wealthy families committed $1 billion to more than a dozen nonprofits through the Audacious Project. Rich and Nancy Kinder plan to give away 95% of their estimated $11 billion fortune to local charities.

Com reported that the surveyed nonprofit leaders are considering measures such as pursuing new donors, building reserves, freezing hiring, reducing services and in some cases merging with other organizations. " The Fortune Workplace Innovation Summit is scheduled for May 19–20 in Atlanta.