Responding to the State of Nonprofits in 2026: What Funders Can Do

Reading CEP’s latest report on the current state of nonprofits took me back to the Great Recession and the challenges brought on by COVID-19. The combination of CEO and staff burnout along with increased demand for services is — unfortunately — all too familiar. Add to this mix a loss of public funds and it’s not surprising to hear nonprofit leaders discuss “ongoing uncertainty and strain” and “higher demand with fewer supports” in their organizations.  

Faced with reduced staff size and their inability to promise those who remain any clear signs of quick recovery, staff morale is also significantly diminished. Leadership in some charitable organizations express concern with potential legal problems and all are worried that increased pressure on donors will result in an overall decline in both money and relationships, as well as the loss of cultural institutions deemed “less than” by donors shifting their focus to basic necessities.

To their credit, many of these leaders have recognized the need to diversify their revenue sources and are already seeking new individual and corporate funders and updating their marketing and communications programs. Others are exploring collaboration opportunities and possible mergers. Such tactics may, however, require “the delay of planned cost increases related to staff” including postponing compensation increases, freezing hiring, and/or the use of reserve funds, per the CEP report. It’s a risky strategy, particularly with volatility in the markets and rising consumer costs.  

What can individual donors and foundations do in these circumstances?

• Open two-way lines of communication with current grantees and applicants and encourage them to share their concerns and needs. No one likes sharing what may be considered a “failure,” so your encouragement is important.
• Consider multiyear, general operating support grants for nonprofits aligned with    your values and with whom you have a relationship of mutual trust. Such grants can help retain staff, allow necessary hiring, and support both compensation and benefits.
• Consider capacity-building grants to improve efficiency and effectiveness in operations. These grants may support new equipment and software as well as training for staff in the use of new devices and programs.
• Consider support for prospective collaborations and mergers.
• Consider convening nonprofits in your communities or issue areas to discuss and learn from each other how best to move forward despite current challenges.
• Consider support for nonprofit service providers offering consulting services and programs/information for charities regarding legal and advocacy issues, human resources, fundraising, strategic planning, and other important topics.

Donors who make timely and carefully targeted grants, especially ones based on first-hand knowledge of an organization’s needs, offer nonprofits promising possibilities for a way forward despite current challenges.   

Joanne Florino has worked with philanthropic donors since 1984 at The Atlantic Philanthropies, the Park Foundation, and the Triad Foundation. She is currently the Adam Meyerson Distinguished Fellow in Philanthropic Excellence at Philanthropy Roundtable.