finance
Nonprofits Report Rising Demand, Staff Reductions and Budget Pressures After Federal Funding Changes
A Center for Effective Philanthropy survey of 380 nonprofit leaders found nearly three-quarters reported increased demand for services due to program cuts. The report details widespread financial strain, with 39% of organizations reporting budget deficits in fiscal 2025. Philanthropic gifts from MacKenzie Scott and others have helped some groups strengthen sustainability.
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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%.
