Nonprofit Funding Crisis and What Survivors Do

69% of Nonprofits Lost Funding This Year. Here's What the Survivors Are Doing Differently.

I need you to sit with a number for a minute.

69% of nonprofits lost funding from at least one source in 2025.

That's not a guess. That's data from the Center for Effective Philanthropy's new report, "A Sector in Crisis." They surveyed over 400 nonprofit leaders. And what they found should make every ED in America pay attention.

Federal funding cuts hit 34% of organizations. State and local cuts hit 29%. Foundation funding dropped for 35%. Individual giving declined for 30%.

Meanwhile, demand for services went through the roof. Nearly two-thirds of nonprofits reported increased demand. That's worse than during COVID.

Read that again. Worse than COVID.

So you've got more people showing up at your door needing help, and less money to serve them with. If that sounds like your Tuesday, you're not alone.

Here's what caught my eye in the data

81% of organizations struggled to raise enough funds to cover all costs. 36% ended their fiscal year with a deficit. 32% have less than three months of cash on hand.

One executive director in the study said it plainly: "The stakes are that we might not make it as an organization."

I've heard versions of that sentence from EDs for years. The difference now is that the math backs up the fear.

But here's the thing nobody's saying out loud

The organizations getting hit hardest are the ones that were already vulnerable. The ones with one or two major funders carrying 50%, 60%, sometimes 80% of the budget.

When that federal contract got cut, there was no Plan B. When that foundation shifted priorities, the whole budget collapsed.

That's not a funding strategy. That's a prayer.

I know that sounds harsh. But I grew up depending on nonprofits that ran exactly this way. Food stamps and Section 8 housing. When the organizations serving my community lost funding, we felt it at our kitchen table. So I don't say this as someone analyzing the problem from the outside. I say it as someone who lived the consequences.

What the survivors are doing differently

In every crisis, some organizations don't just survive. They come out stronger. And the pattern is consistent.

They didn't wait for the crisis to diversify their funding.

The organizations weathering this moment have something the others don't: a portfolio. Not one big funder. Not two. A real, diversified funding portfolio where no single source represents more than 30-40% of the budget.

That means when federal funding gets cut, they adjust. They don't collapse.

That means when a foundation changes strategy, they pivot. They don't panic.

That means when individual giving dips, they have other streams catching the difference.

Three things you can do this week

1. Run the math on your funding concentration. Pull up your revenue sources. What percentage comes from your biggest funder? If it's over 40%, you're not sustainable yet. You're vulnerable. That's the starting point, not the end of the world.

2. Have the board conversation you've been avoiding. Your board needs to see these numbers. Not to scare them. To wake them up. Board members who understand the risk are more likely to step up with their own giving, their connections, and their time. (If that conversation feels impossible right now, that's a sign you might need the Board Giving Diagnostic to help you frame it.)

3. Stop treating sustainability as a someday problem. The CEP data shows this crisis is accelerating, not improving. 50% of nonprofit leaders are more burned out this year than last year. The time to build a diversified portfolio was five years ago. The second best time is now.

The real cost of waiting

When nonprofits can't fundraise sustainably, programs close. Services shrink. Communities lose the social infrastructure they depend on.

And the people who pay the highest price? They're never the ones sitting in foundation board rooms. They're the families who suddenly can't access the food pantry. The youth who lose their after-school program. The neighborhoods that lose their only health clinic.

Your mission is too important for a funding structure that depends on luck.

If you're reading this at 11pm because you're worried about next quarter's budget, I get it. I've been on both sides of this work. And I want you to know: there is a path forward. It starts with an honest look at where you are and a plan to build something stronger.

Let's close your funding gap together. Download the Board Giving Self-Assessment to see where your board stands, or reach out to learn about the Board Giving Diagnostic. Because good intentions don't pay the bills. Your mission deserves both.