A SECTOR IN CRISIS

How U.S. Nonprofits and Foundations Are Responding to Threats

Overview

Nonprofits and philanthropies in the United States are facing historic challenges. As nonprofits experience a surge in demand, foundations are trying to help by providing grants, resources, and a platform for grantees. Nonprofits are engaging in creative collaboration and using strategies such as litigation to build and exercise collective power to protect both the sector and the people and communities they seek to serve. Even so, this research from fall 2025 shows that most nonprofit leaders say the "current context" — the series of events led by the U.S. federal government’s actions beginning in early 2025, including budget decisions, legislation, and executive orders — is hurting their organizations, and they need more support from their foundation funders. Given this, the Center for Effective Philanthropy sought to learn more about what nonprofits and foundations are experiencing and how they are responding to the current context.

Foundation leaders, if you're interested in sharing a two page summary of this research with your board, please see the accompanying Board Book Insert.

Surveys and interviews conducted in August and September of 2025 sought to answer the following questions:

How are nonprofit and foundation leaders affected by the current context?

What challenges are funders facing in this environment?

What do nonprofits seek from their foundation funders during this time?

How can foundation funders most effectively support nonprofits?

This study includes data from:

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nonprofit leader survey responses

0

foundation leader survey responses

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nonprofit and foundation leader interviews

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Finding 1

Extraordinary Threats to the Nonprofit Sector

Nonprofit leaders see this as a time of existential threat to their organizations and the communities they serve as they face both increased demand for their services and significant cuts to their funding.

81%

of nonprofit leaders report or anticipate increased demand for their services as a result of the current context

The majority of nonprofits report experiencing reduced funding from at least one source — whether it be the government, foundations, or individual donors.

Nonprofit Funding Cuts by Funding Source as Result of Current Context (N=404-406)

30%

of nonprofit leaders report their organizations had to reduce the services they provide due to the current context

"We received an unexpected 40% cut to prevention services that we already had a waitlist for. We had to let a staff member go. Big reductions to prevention services are going to put a lot of families in crisis over the edge. We will see the effects of this in six months to a year when there are more children in foster care. That will weigh on the system, the economy, individual communities, and, most importantly, on families."

– Nonprofit Leader

71%

of nonprofit leaders are concerned about their organization's financial stability

Most nonprofits interviewed indicate that the current context poses a significant threat to their organization’s continued existence and ability to provide essential programs and services.

"If a nonprofit comes to me and says they have some sort of unusual or unexpected funding need, I will take that information, and I will email it out to a list of all the donors I know in the community … And so I’ve done that more this year, because more nonprofits have come to me saying, ‘Oh my god, we just lost this grant. What can we do?’"

– Community Foundation Leader

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Finding 2

Foundations' Initial Response

Many foundation leaders recognize the high stakes of the current context for nonprofits and have made changes to their grantmaking and processes in response.

55%

of foundation leaders surveyed indicate the current context has had a negative effect on their foundation's ability to make progress towards their goals

Only 9% of foundation leaders believe the current context presents significant risk to their foundation being able to operate freely.

While foundation leaders believe risk to their own foundations is low, they recognize pressures are quite different for the nonprofits they fund.

Foundations’ Awareness of Effects of Current Context on Grantees in 2025 (N=222-223)

Foundations have responded to the crises that nonprofits are facing in a variety of ways.

64%

of foundations report providing emergency or rapid response grants to nonprofits

30%

of foundation leaders report increasing their organization's payout beyond what was originally planned for 2025

Changes to Foundation Practice in Response to Current Context (N=216-222)

More than 40% of foundation leaders surveyed indicate their foundation started providing new forms of assistance beyond the grant to grantees in response to the current context.

"There is a call for unrestricted grants, but a lot of nuance gets lost on the way ... and the problem with that is, when that’s all you talk about, folks are like, ‘Well, I can’t do that, so I can’t do anything.’ And the answer is, no, no, no, there’s a lot of things you can do in terms of reducing strings or paying higher overhead or whatever it is."

– Foundation Leader

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Finding 3

Foundations' Role in Supporting the Nonprofit Sector

Many foundation and nonprofit leaders believe that foundations have an even larger role to play in supporting nonprofits during this time, and many suggest that foundations could and should be doing more.

81%

of foundation leaders interviewed believe foundations have a significant role to play in supporting the nonprofit sector

84%

of foundation leaders interviewed believe supporting communities is the primary role of foundations

Over 40% of foundation leaders interviewed are dissatisfied with the overall response from foundations and believe their peer funders could be doing more to help nonprofits and communities weather the current moment.

Foundation leaders have expressed doubt around their role in helping nonprofits navigate the current context and share concerns that foundation funding cannot fill gaps left by changes in government funding.

35%

of funders are skeptical they even have the power to affect much change

Proportion of Leaders Rating Foundation Response to Current Context as Moderately/Very Effective (N=221-401)

While 93% of foundation leaders believe their foundation has been effective in understanding the challenges their grantees are facing, only half of nonprofits report their funders have been effective in this way.

"Many of our fundholders are removed from the lived experience of those who are suffering the greatest from these federal cuts that have happened. And so the pain that some fundholders feel is very different than the pain being felt by those who are the target of these changes. And until someone sees something affecting their 403(b), life is good: ‘What do you mean there’s something happening?’"

– Community Foundation Leader

93%

of nonprofit leaders interviewed express dissatisfaction with foundations' responses to the current context

37%

of nonprofit leaders interviewed report funders have shifted their priorities or requirements in ways that are less supportive of or helpful to nonprofits

56%

of nonprofit leaders interviewed indicate desire for foundations to be bolder and more outspoken in advocating for the nonprofit sector

"We [foundations] are part of civil society. That is incredibly unique when we think about other countries. Private philanthropy, in particular, has enough independence and freedom to use our resources in ways that others cannot. We have a responsibility to fight back and push back in this moment, and to be strategic."

– Foundation Leader

Conclusion

The work of nonprofit organizations is vital. Nonprofits’ unique value — long recognized by both Democratic and Republican presidential administrations — is only underscored in the current context of government cuts to critical services and programs that exist to meet basic needs of the most vulnerable among us. Many foundations report changing their grantmaking, application, and reporting practices to better support nonprofits at this time. Some report they have had serious reflection within their organizations and their boards on the role of philanthropy in supporting the nonprofit sector in the face of unprecedented challenges. However, many foundations and nonprofits are looking for more when it comes to foundations’ responses and efforts in the year ahead, as nonprofits continue to adapt to a new and unpredictable reality.

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February 19, 2026 | 9-10:15 am PT / 12-1:15 pm ET

A Sector in Crisis: How Nonprofits and Foundations Are Navigating Challenge

Research Funded By

Authors: Ellie Buteau, Ph.D.; Elisha Smith Arrillaga, Ph.D.; Seara Grundhoefer; and Christina Im

CEP is a nonpartisan, tax-exempt organization under section 501(c)(3) of the Internal Revenue Code. We do not endorse, support, or oppose any political party or candidate for public office. Our research, programs, and public communications are designed to advance our mission and serve the public interest without regard to partisan considerations.

Copies of the survey instrument can be found here.

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