By Contributor,The Conference Board,Timothy J. McClimon

Copyright forbes

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According to a recent study by Bonterra, a leading social impact technology company, two-thirds of nonprofit organizations are struggling to stay afloat amid federal government funding cuts, even as service demand has increased. The report also found that nearly 40 percent of nonprofits have reduced staff, and over 40 percent have cut programs, and either delayed or cancelled initiatives due to financial instability.

Based on a survey of over 2,600 nonprofit leaders and over 100 philanthropy executives and supplemented with platform data from Bonterra’s suite of tools and customer interviews, Meet the Moment: Navigating Funding Disruption paints a stark picture of the current climate for the nonprofit sector. Organizations are being forced to reduce headcount, cancel services, and delay initiatives as demand for housing, disaster recovery, food security, and immigration support surges.

(These results are consistent with a survey of corporate philanthropy leaders conducted by The Conference Board, which found that two-thirds of companies report that their nonprofit grant recipients have lost government funding in 2025, leading to layoffs and program cuts. See Majority of Companies Say Federal Pressure Impacts Their Philanthropy by this writer.)

While there are many cases of foundations and corporations stepping up to help fill the gaps left by federal budget cuts (foundations banding together to support rural public television and radio stations suffering from the loss of federal funding being one such example), over 50 percent of funders acknowledge the impact of federal cuts, but only 30 percent feel prepared to respond and many have not taken any action to adjust giving strategies in response to the changing landscape according to this report.

“The ripple effects of recent federal funding shifts on the nonprofit sector are far more significant than many realize. Today, two-thirds of mission-driven organizations are operating in survival mode, meaning they are working diligently to ensure that their nonprofit continues to exist without as much government support,” stated Scott Brighton, CEO of Bonterra, in an email message to this writer. “The Meet the Moment report is intended to provide nonprofits with insights on what’s working now, and it offers funders and nonprofits a roadmap, but they still need help filling funding gaps.”

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Large organizations are being hit the hardest with two-thirds of nonprofits with over $25 million in revenue experiencing negative impact from shifts in federal funding compared to less than 40 percent of those with revenues less than $100,000. This suggests that larger organizations may be more dependent on government support while smaller ones may have more diverse funding sources.

These findings show a sector that is clearly at a crossroads – stretched by rising demand for services, destabilized by federal government funding cuts, and waiting for many funders to act. But the report also acknowledges resilience and innovation in the sector. Over half of surveyed organizations are strengthening community partnerships, communicating directly with their donors about increased needs, and building more resilient funding portfolios.

“There’s long been a call for nonprofits to diversify revenue and reduce reliance on any single funding stream – with the spotlight now squarely on government grants,” said Kimberly O’Donnell, Chief Fundraising Officer at Bonterra, in the report. “I see this as an opportunity. It’s a chance for organizations to reflect on what’s working, experiment with new approaches, and leverage technology to build more resilient, sustainable futures.”

The report urges nonprofit leaders to strengthen relationships with monthly or recurring donors, broaden their individual donor base, prioritize foundation funding, attract corporate partnerships, and leverage technology to scale their operations while urging leaders of institutional philanthropy to assess the impact of their current grants portfolios, leverage grantmaking technology, streamline their grantmaking processes, and collaborate with one another for greater impact.

What gives the writers of the report hope is the emergence of what they call the Generosity Generation – a multi-age movement that understands that yesterday’s approaches won’t necessarily solve today’s problems. Donors who give with intention and urgency – and nonprofit leaders who show up with purpose and innovative approaches – will help our nation’s nonprofit sector weather the storm and emerge stronger and more resilient in the future.

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