CAMBRIDGE, Mass., May 12 – A new study released today by The Center for Effective Philanthropy (CEP) reveals that nonprofit leaders report unprecedented challenges since January 2025, when the Trump administration began a series of actions targeting nonprofits. Those actions include the federal funding freeze in early 2025, DOGE’s review and termination of grants, executive orders targeting specific causes, federal investigations of nonprofits, congressional hearings, and threats to revoke their tax-exempt status, among others.
The study found a dramatic increase in burnout, an atmosphere of fear, stress, and low morale, increasing signs of financial distress, more difficulty raising funds from both government and foundations, and, in some cases, difficult decisions to make cutbacks to programs and staff in order to keep their doors open. Most leaders indicate that the current context poses a significant threat to their organization’s continued existence and ability to provide essential programs and services.
The pressures are mounting at a time when 73% of nonprofits surveyed report increased demand for their services, creating an existential crisis for nonprofits with massive implications for communities that depend on them.
“One year into the Trump administration’s campaign against nonprofits, these organizations are facing enormous and unprecedented pressures. This data aligns with what we’re hearing in cities across the country, where nonprofits are pausing operations, closing, or merging,” said CEP Vice President-Research and report co-author Elisha Smith Arrillaga, PhD. “This isn’t happening at the margins — it’s happening in cities and towns across the country, to the organizations people rely on most when they have nowhere else to turn.”
The study, “State of Nonprofits 2026: What Funders Need To Know,” is based on survey responses from 380 nonprofit leaders participating in CEP’s Nonprofit Voice Project, a nationally representative panel of U.S.-based nonprofits that receive at least some foundation funding. In this fourth annual survey, the authors took the pulse of nonprofit leaders to understand the pressures they are facing, and how those have changed since January 2025, when the Trump administration began taking actions targeting the nonprofit sector. The data reveals:
- INCREASED DEMAND FOR NONPROFIT SERVICES. 73% report that their organizations are experiencing increased demand for services. Nonprofits surveyed provide services in sectors such as housing, food, childcare and education, elder care, workforce training, healthcare, and more. 65% report their organization is concerned about the well-being and safety of those they seek to help.
- BURNOUT IS GETTING WORSE. Nearly 90% of leaders report some level of concern about their own burnout, with 46% reporting their own burnout has very much been a concern (this is up from under 30% in 2025). One quarter of CEOs now believe burnout is significantly impacting their staff, as opposed to the 17% who rated burnout as significantly impacting their staff in 2025.
- ATMOSPHERE OF FEAR, STRESS, AND LOW MORALE. More than half (56%) say the current context has contributed to lower staff morale and heightened levels of stress and fear.
- STAFF SIZES ARE SHRINKING. 30% of nonprofits have experienced a reduction in their staff size, most of these by more than 10% of their previous staff size. Almost half cite staffing as their organization’s biggest challenge.
- GOVERNMENT FUNDING CUTS LED TO REDUCED SERVICES. Organizations that experienced funding cuts from any government funding source since January 2025 are more likely to have reduced the services they provide. Nonprofits that lost state or local funding are also more likely to have reduced both their services and staffing.
- HARDER TO OBTAIN FUNDING FROM FOUNDATIONS. Almost 60% report that since January 2025, it has been harder to secure foundation grants relative to the past. Over 40% report they have seen reduced funding from their existing foundation funders. Some say that the behavior and/or practices of their foundation funders have actively contributed to instability in their organization’s funding streams.
- INCREASED FINANCIAL DIFFICULTY. 66% say they have concerns about their organization’s financial stability. In the four years since CEP began the annual survey of nonprofits, the proportion of respondents reporting a deficit rose from 22% to 39%.
- CUTTING BACK TO SURVIVE. Nonprofit leaders are considering the following actions: refraining from staff cost increases (postponing raises, freezing hiring – 46%); drawing from their reserve funds (44%); and reducing their programming or services (34%). Many leaders described laying off staff, capping wages, skipping cost of living raises, and cutting expenses “to the bone” in order to keep providing programs and services.
- ADAPTING FOR AN UNCERTAIN FUTURE. Alongside cutbacks, 88% are considering pursuing funding from new funders, and some are either making or considering larger changes, such as changing the composition of their board (61%), starting a joint collaborative fundraising effort with other nonprofits (49%), sharing operations (36%) and even merging with other organizations (17%).
“Some have called this a ‘war against nonprofits,’ and the data bears that out — it’s working,” said Smith Arrillaga. “The sector cut nearly 29,000 jobs in 2025 alone, more than five times the prior year. But that’s not the number that keeps me up at night. Candid estimates 2.8 million nonprofit jobs are now at risk if government funding continues to erode. That’s not a workforce statistic — that’s the infrastructure of American communities. These are the organizations that catch people when every other system has failed them. When they close, there is no backup. Foundations and communities cannot wait for this to stabilize on its own.”
While nonprofits have certainly faced challenges in the past, this moment is unique in American history.
The last time nonprofits experienced a similar increase in demand for services was in 2020 during the pandemic. At that time, they received increased funding from both government (via forgivable PPP loans, among other programs) and foundations. Today, nonprofits report difficulty obtaining funding from both sources, even as a greater proportion report a rise in demand. While there have been public calls for increased foundation giving in the face of government cuts, CEP’s recent Sector in Crisis report found that only 30% of foundations stepped up their payout from budgeted levels in 2025.
“The current crisis facing nonprofits is unlike anything I have seen in my 25 years working in philanthropy,” said Phil Buchanan, president of CEP and author of Giving Done Right. “Nonprofits are reeling, and I hope more foundation leaders and individual donors at all levels seriously consider giving at a significantly higher than typical rate. The time to act is now.”
“There are two things about the current moment that, in combination, seem unprecedented, at least with respect to this period, over the last half century, of deep entanglement between nonprofits and the state,” said Benjamin Soskis, a historian focused on the nonprofit and philanthropic sectors and a senior research associate in the Center on Nonprofits and Philanthropy at the Urban Institute. “Today’s open, unabashed, and normalized discrimination against political opponents in the nonprofit sector is distinct. Previously, when it happened, it happened behind closed doors. We are also seeing indiscriminate attacks on the entire nonprofit sector, not just certain disfavored groups. While this is a deeply familiar dynamic in many authoritarian countries, it is relatively new in the U.S., where public, ceremonial celebration of civil society has long been the norm.”
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