In late January 2025, nonprofits nationwide began receiving notices of federal government funding cancellations and freezes, and the impacts of government funding disruptions were quickly apparent. Organizations delivering job training, mental health services, independent living assistance, disaster relief, and emergency shelter, among other services, were forced to suspend programs and lay off staff. Legal challenges, some successful and others not, sought to release already awarded funds for their intended recipients. At the same time, federal agencies initiated reductions in force and offered buyouts to career staff, including program officers overseeing nonprofit grants and other awards. This report offers an initial assessment of the scope and implications of these disruptions for nonprofits that deliver services or conduct programs.

Using data from the 2025 National Survey of Nonprofit Trends and Impacts, a nationally representative survey of 501(c)(3) public charities that operate across a wide range of service areas, the report finds that a third of nonprofits reported experiencing federal, state, or local government funding disruptions, and these nonprofits were more likely to report reductions to staff, programming, and future hiring. Even nonprofits that do not receive government funding reported that these disruptions have altered the philanthropic funding landscape, presenting fundraising challenges. Taken together, these findings point to the cascading effects across the US of federal, state, and local funding disruptions and a widening gap between increasing demand for nonprofit services and organizations’ ability to meet it.

The report examines the prevalence of three types of government funding disruptions: (1) loss of at least some government funding (i.e., funding agreements canceled or committed funds pulled back); (2) delays, pauses, or freezes of government funding; and (3) stop work orders. Survey questions did not specify disruptions to federal, state, or local government funds, because changes at the federal level could have impacts on the availability of funding at the state and local levels and the survey sought to capture the effects of the totality of government funding disruptions in early 2025.

Read the full article about government funding disruptions' impact on nonprofits by Laura Tomasko, Hannah Martin, Katie Fallon, Mirae Kim, Lewis Faulk, and Elizabeth T. Boris at Urban Institute.