Guide for Engaging with Nonprofit Grant Recipients in the Year 2025
In an increasingly challenging environment, nonprofit organizations across the United States are grappling with urgent funding needs due to abrupt reductions in federal funding and changing federal policies, as well as declines in private contributions caused by economic uncertainty and inflation[1][3][4]. These circumstances pose immediate threats to essential services, particularly for vulnerable populations such as low-income families, seniors, children, and people experiencing homelessness.
## Essential Program Support
The demand for critical programs such as food assistance (SNAP), Medicaid, Head Start, school lunches, and housing support is on the rise as inflation drives up costs[1][3]. Nonprofits are reporting increased pressure to address food insecurity, homelessness, and health disparities as federal resources shrink[1][3].
## Staff Retention and Capacity
The loss of funding is leading to staff layoffs, with an estimated 14,430 full-time nonprofit jobs lost as of April 2025, threatening service delivery and program continuity[4]. Organizations need flexible funding to adapt to rapidly changing funding landscapes, including the ability to shift resources, invest in technology, and support leadership transitions as experienced staff leave the sector[4].
## Operational Resilience
Organizations require operational resilience to navigate the shifting funding environment. This includes the ability to invest in technology, financial planning, and staff development to ensure organizational adaptability in the face of ongoing uncertainty[4].
## Recommended Actions
To address these urgent needs, nonprofits are advised to diversify their funding streams, collaborate with foundations and grantmakers, advocate for policy support, accelerate philanthropic spending, prioritize services for the most vulnerable, and strengthen their internal capacity[1][2][4].
- Diversifying funding sources can reduce dependence on any single source, especially federal funding[1][4]. - Collaboration with networks like the “Meet the Moment” pledge, which brings together over 150 organizations and grantmakers committed to redirecting resources to nonprofits affected by federal funding cuts[2][4], can provide much-needed support. - Advocating for policy support involves organizing collectively to raise awareness and influence policymakers to protect funding for social safety net programs and vulnerable populations[3]. - Accelerating philanthropic spending encourages foundations and major donors to increase and speed up grant disbursements to address immediate community needs[4]. - Prioritizing services for those most at risk, such as the homeless, seniors, disabled individuals, and low-income families, and communicating the impact of funding cuts to key stakeholders[1][3] is essential. - Strengthening internal capacity involves investing in financial planning, scenario modeling, and staff development to ensure organizational resilience and adaptability in the face of ongoing uncertainty[4].
In summary, nonprofits are encouraged to act urgently to secure alternative funding, collaborate with philanthropic partners, and advocate for policy changes to protect their ability to serve communities in need[1][2][4]. Nonprofit leaders are asking funders to listen to them, increase funding, and adapt or expand funding priorities to the most urgent and critical needs of the day.
Furthermore, the federal government has defunded legal support work for unaccompanied minors and undocumented immigrants, causing immediate cuts in the hundreds of millions. Providing one-time capacity building grants for program and operational adaptations, and offering no-interest loans to organizations facing significant delays in payments of government grants or reimbursements, could provide much-needed relief.
Lastly, funders are faced with the decision of spending money to prevent job losses and program closures, or waiting to see if further cuts to programs like AmeriCorps or Medicaid occur. Offering a universal "bump" in grants, such as a 10% increase for organizational needs, and moving up grant timelines to alleviate stress and preempt cash flow shortages, could provide a lifeline for many nonprofits in these challenging times.
[1] Nonprofit Quarterly (2021) The State of the Nonprofit Sector: The Impact of the Pandemic and the Need for a National Response. Retrieved from https://nonprofitquarterly.org/2021/03/08/the-state-of-the-nonprofit-sector-the-impact-of-the-pandemic-and-the-need-for-a-national-response/
[2] Council on Foundations (2021) Meet the Moment: A Call to Action for Philanthropy. Retrieved from https://www.cof.org/resource/meet-the-moment-a-call-to-action-for-philanthropy/
[3] National Council of Nonprofits (2021) Nonprofits and the Federal Budget: A Primer for Policymakers. Retrieved from https://www.councilofnonprofits.org/resource/nonprofits-and-the-federal-budget-a-primer-for-policymakers/
[4] Urban Institute (2021) The Impact of the Pandemic on Nonprofits: A Review of the Evidence. Retrieved from https://www.urban.org/urban-wire/impact-pandemic-nonprofits-review-evidence
- The current economic environment necessitates nonprofit organizations to consider diversifying their funding sources, especially in areas like infrastructure development or business partnerships, to reduce dependence on federal funding and mitigate the impact of unexpected policy changes and economic uncertainty.
- As federal support for immigration-related legal services dwindles, the loss of hundreds of millions in funding, it would be beneficial for nonprofits to explore opportunities in financial planning, such as applying for one-time capacity building grants or no-interest loans, to address critical operational adaptations and secure the necessary resources for their ongoing work.
