Voices of the sector: What nonprofits need right now

Across the United States, about one-third of service-providing nonprofits have felt the impact of cuts in government funding (opens in new tab or window). According to a survey of more than 2,500 nonprofits (opens in new tab or window) conducted by the Urban Institute, 21% lost a grant or contract, 27% have experienced funding delays or freezes, and 6% were directed to stop services altogether.

To get a better understanding of how nonprofits are faring and what they need now from donors, we reached out to leaders at seven nonprofit organizations.* In conversations with these leaders, they described programs and services in the areas of public health and nutrition, emergency food supplies, and behavioral health care that are at risk. As community needs continue to increase, these nonprofit leaders point to unrestricted, multiyear commitments from donors old and new as the key to future sustainability.

“We want donors to know that we are doing our part. We have done the efficiencies, we are streamlining, we are looking at our financial management systems,” one executive director said. “We are doing all that we can that is within our power; we just need more individuals and more institutions to link arms with us to do this work.”

In total, the nonprofit leaders we spoke with reported an impact of more than $5 million on their current budgets, largely due to the cancellation or nonrenewal of multiyear federal grants. Even for those that do not receive any direct federal funding, recent cuts have had a ripple effect in this highly connected sector.

Reevaluating collaborations and partnerships

One nonprofit, despite its prior planning for economic uncertainty, had to act quickly this year to seek new funding for an ongoing program after a partner organization was no longer receiving federal support. Another nonprofit is struggling with the potential loss of vital technical support and data collection services that were previously funded in part by federal dollars. Some organizations report they have chosen to forgo new contracts with other nonprofits or foundations whose work, or the language used on their websites, could inadvertently put their own funding at risk.

All the nonprofit leaders we spoke with said they are laser-focusing on mission as they plan for the months and years ahead.

Leaning into creativity

These unexpected challenges have in some cases resulted in staff layoffs; reduced or suspended programs that provide food, housing, and medical services; and a race to adapt to the “new normal.” Nonprofits are nothing if not resilient, and as one CEO noted, “There’s nothing like necessity as the mother of invention.”

In addition to typical contingency and resiliency planning, leaders of the organizations we surveyed are stretching the funds from current grants with the understanding that they may not be renewed and testing new ways of raising funds. Some are considering earned-income strategies, beginning to charge for some services that were previously provided at no cost. Others are focused on identifying new partners, donors, and foundations. In at least one case, this includes conversations with venture capital and private equity funders about strategic support.

“We have seen hard times before, and we have made it through,” said one leader. “I have faith that the nonprofit sector is strong—we’ve got creative, smart people and we’re serving creative, smart people.”

How donors can help

Nonprofit leaders we spoke with likened this time to the COVID-19 pandemic, when individuals stepped in to help. Just as during the pandemic, donors now hold immense power to help organizations sustain themselves as they adapt to recent federal funding cuts and prepare for continued uncertainty. Nonprofits need donors to “give now and give more.”

• Unrestricted funds. Organizations say they need help maintaining a financial runway to preserve current services and programs. They say the best way to help with this is with grants earmarked to be used “where needed most” or for general operating support.
• Multiyear commitments. Considering the many uncertainties facing nonprofits, they emphasize the need for multiyear gift commitments.
  
  “When there are these moments of huge foundational shifts, it’s really meaningful for people to step up, whether they’re giving $10 or $10 million,” said one director. “And knowing we’ve got you for multiple years right now and that you really believe in what we’re doing gives us more staying power as well as the ability to plan.”

In addition to financial support, nonprofit organizations say they need support in the form of advocacy, program engagement, and relationship-building. Many are also seeking connections to new networks, individuals, businesses, and foundations.

Conclusion

Though not all nonprofits receive federal funding, cuts are being felt throughout the sector (opens in new tab or window). Nonprofits are adapting and preparing for more change. Their leaders say the best way to help is to give quickly, generously, and with a long-term commitment.

“What nonprofits need—especially those that can demonstrate a successful track record of being good stewards of philanthropy—is a little bit of trust that grants and donations can be used and applied in ways that will ensure the nonprofit’s sustainability,” one leader said.

*We are thankful to the seven nonprofits and their leaders who generously gave their time to share their experiences for this article. These organizations are 3rd Street Youth Center & Clinic, Breakthrough, Deborah’s Place, Institute for Educational Leadership, Partners In Health, Trinity Boston Connects, and YMCA of Greater Boston.