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“A Sector in Crisis,” CEP’s recent research report, spotlights the nationwide effects of the current moment on nonprofits across the country — and, importantly, how foundations are (or, in some cases, are not) meeting the moment to support nonprofits. Effective support begins, in part, with a clear and nuanced understanding of nonprofits’ challenges.
The data reveals a striking disconnect in perceptions: funders believe they comprehend nonprofits’ challenges far better than nonprofits themselves believe that funders do. As the report states, “While 93 percent 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.”
This is concerning, but not surprising. After all, how can grantmakers know the extent of their partners’ challenges if they don’t seek out this information? And how comfortable can nonprofits really feel sharing their challenges candidly in an increasingly competitive and uncertain funding environment? When funding is uncertain, nonprofits may feel they cannot openly share how precarious things truly are.
Asking Nonprofits: Experiences and Challenges
That’s why, since early 2025, CEP’s Grantee and Applicant Perception Reports have included a set of optional, confidential questions asking nonprofits about their experiences with the policy and funding climate. These include, among other topics, the scale of federal, state/local, and private funding cuts and existing or anticipated organizational hardships.
Last spring, with insights from grantee responses to these questions, we wrote about nonprofits’ top-of-mind concerns related to the political climate. As effects were felt through 2025, we asked nonprofits to describe how challenges related to the political and policy environment have affected their organization, their staff, or the people and communities they serve.
Nearly 2,000 grantees responded to this question in CEP’s fall 2025 Grantee Perception Report surveys. CEP’s assessments team shared their anonymized responses with funders, often within just a few weeks of their survey’s close, to ensure that grantmakers could rapidly understand and act on this information.
Three themes emerged most consistently across these responses, as reported below.
(Note: some grantee comments have been lightly edited for clarity and to ensure confidentiality.)
Nonprofit Challenge No. 1: Financial Instability
Named as a top concern for many nonprofits early last year, anticipated cash flow challenges due to loss of federal funds have now manifested as existential crises. Many organizations report a widespread loss of funding from both federal agencies and state programs. Concurrently, nonprofits also face dramatically increased competition for private philanthropic dollars.
Grantees write of how the increased uncertainty has affected their work:
“We used to plan three to five years out, and now we just hope to get through the coming year. We went from thoughtful, planned delivery and growth of our mission to survival mode. That shift is not beneficial to the people we serve.”
“One of our biggest challenges is the uncertainty of government funding streams. Shifts in federal and local priorities, along with delays in disbursement, create instability for both our organization and the people we serve … These funding gaps force us to stretch private dollars to cover essential services and place additional stress on both staff and community members.”
“Federal funding cuts across the nonprofit sector are placing tremendous pressure on private philanthropy [and] increasing competition for foundation funding. We have already received one rejection from a prospective funder who said that they are focusing only on current grantees who are affected by federal funding cuts.”
Nonprofit Challenge No. 2: Responding to Threats to Their Communities
Nonprofits’ concerns for the safety and well-being of the communities they support have continued to compound in the face of increased targeting.
Many nonprofits describe the impact of immigrant and refugee communities being unable to safely access services:
“The current political environment has significantly impacted the individuals we serve, instilling fear and apprehension about gathering in person, especially among those from similar ethnic backgrounds. Racial profiling has heightened these fears, making individuals wary of being targeted based on their race or ethnicity. We used to tell them that we provided a safe space, but unfortunately, we can no longer make such guarantees.”
“Families using our services have quietly asked us what happens if ICE enters our facilities. Families are scared and filled with anxiety. There is an undercurrent of deep fear in our community.”
“ICE agents have been circling our [organization] lately. As a result, we served less than half the number of meals that we served last year, because parents are too afraid to send their children out. We have also seen a major drop in our childcare program enrollment, for this same reason.”
Those who work with the LGBTQ+ community describe intense scrutiny and uncertainty:
“We support the 2SLGBTQIA+ youth community, which has been experiencing severe political attacks for the past few years, but especially since this administration began in January … Our staff is also 90% 2SLGBTQIA+, so these challenges not only impact us at work, but also in our own personal lives.”
“We are an LGBT service provider that has experienced national attention given the different executive orders unleashed against our community. Safety concerns have arisen; our staff are at constant risk to be doxed and harassed.”
Grantees also shared how ongoing attacks on diversity, equity, and inclusion-related work means nonprofits are forced to decide between staying true to their mission and values and adopting language that is less likely to incur political or financial backlash:
“We have had to change the way we frame our work and remove inclusivity statements. Having no written stance allows us to continue to operate whereas having a stated platform of inclusion was viewed as controversial in some circles placing programming at risk.”
Nonprofit Challenge No. 3: Organizations are Stretched to the Limit
Layoffs, furloughs, and hiring freezes have placed an enormous amount of strain upon the nonprofit workforce. Staff who remain at organizations report increased workload and burnout.
It’s a troubling paradox: cuts in federal programs have led to increased community needs during a time when nonprofits have reduced capacity to respond. Against a backdrop of organizational instability, nonprofit staff find themselves in the middle of balancing their own personal fears, the challenges of those they serve, and the reality of limited resources.
“The pressure of doing more with less has created layers of stress for our team, who are carrying heavier administrative loads while also trying to meet the urgent needs of communities. The mental health toll is real — staff are stretched thin, and the constant uncertainty has made it harder to sustain morale and well-being.”
“Our organization has already been doxxed and received harassing phone calls. Demand for our services has skyrocketed over fivefold for the most marginalized communities with which we work.”
“It has been a long year, and we’ve become accustomed to living and working in this chaotic and unpredictable new world, but it is never easy and it takes a toll on our staff and volunteers and well as on the vulnerable people we serve.”
What Can Funders Do to Support Nonprofits?
As “A Sector in Crisis” shows us, many grantmakers are taking meaningful action to respond to the moment and support nonprofits: providing emergency/rapid-response grants, beyond-the-grant support, operating support, and multiyear grants. Some others are increasing (or considering increasing) their payout rate.
But nonprofits need more. As one organization wrote in the Grantee Perception survey: “We are overwhelmed, attacked, afraid, and working 24/7… What’s going on? Where are the three-year general operating support grants that can help us know we will survive this administration?”
Funders, it’s clear you want to support your grantees during these challenging times. If you’re unsure where to start, begin by listening to the organizations and communities you serve.
We believe that independent philanthropy can make a crucial difference. And we’re heartened to see more funders sounding the call to action. As Glen Galaich, CEO of the Stupski Foundation, recently implored his colleagues, “Nonprofit leaders have told us exactly what they need to survive and fight … Grantees have outlined the game plan. In 2026, we must finally have the courage to execute it.”
Pranathi Posa is a senior analyst on the Assessment and Advisory Services team at CEP. Mena Boyadzhiev is a senior director on the Assessment and Advisory Services team. Georgia Kazemi is an analyst on the Assessment and Advisory Services team.
Editor’s Note: CEP publishes a range of perspectives. The views expressed here are those of the authors, not necessarily those of CEP.
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