Many nonprofits like mine are facing an existential crisis in our chaotic national environment. The rippling effects from economic uncertainty and federal grant reductions have been especially devastating in the nonprofit world.
It’s nice to believe that important and meaningful work will continue to happen regardless of economic or political turbulence. But this simply isn’t true. There’s no guarantee that the good work of so many organizations can be sustained once the delicate and indispensable funding ecosystem is fundamentally disrupted.
In 2009, I began Fight the New Drug, which reached over 59 million people online last year alone in raising awareness about the harms of pornography. Recently, I joined Elizabeth Smart and Sam and Kacie Malouf to start the PHASE Alliance (“Prevention and Healing Against Sexual Exploitation”)—with an aim to radically reduce victimization from sexual exploitation by creating an ecosystem of support for those escaping these real-life horrors.
Through the end of last year, the future was looking bright as we had our eyes on a collective impact exceeding what any individual organization alone could do. But everything in our outlook has changed in a matter of weeks—and we’re not alone.
From Oklahoma to Maryland, nonprofits are sharing stories of the hardships they are facing and many are not survival stories. The Urban Institute reports that 60 to 80 percent of nonprofits receiving government grants in every state could fail to cover their expenses with federal funding cuts and freezes taking place.
Organizations that have served communities for decades are closing their doors, unable to weather the current financial storm. The instability ripples beyond individual organizations to affect entire communities that depend on these services.
Of course, these dominoes impact international nonprofit relief efforts as well. As reported by Nicholas Kristof in the New York Times, the impact of reduced funding internationally could be cataclysmic in the developing world.
The mounting challenges in the U.S. are also real, as we know from our own experience navigating the rippling effects of sweeping federal budget cuts initiated by this current administration and its Department of Government Efficiency (DOGE). Resulting economic uncertainty has led donors to pull back on willingness to fund. And once federal dollars were pulled from major grants, there was a feeding frenzy for the remaining available funding sources. We’ve witnessed first-hand the chaotic scramble as thousands of organizations nationwide compete for an increasingly limited pool of resources.
This funding crisis represents what the National Council of Nonprofits has called “a potential 5-alarm fire for nonprofits and the people and communities they serve.” Many organizations that previously relied on consistent federal support now find themselves desperately seeking alternative funding just to keep their doors open.
Just this week, Strategic Application International (SAI), an initiative working in organizational development and grant writing for nonprofits, was informed that one of their clients was notified that it must immediately halt work on nearly $6 million in grants and contracts. This represents almost 50% of their total budget and has left researchers and field staff in a difficult and uncertain position. The organization is now undertaking immediate layoffs.
Over 300 organizations received similar notifications from the Department of Justice alone, and more than 800 additional letters were sent to Health and Human Services grantees. At the same time, the philanthropic sector, which holds over $1 trillion in assets, is being impacted by a volatile stock market that appears to be in free fall.
In my nearly 2 decades in the nonprofit sector, I’ve never seen anything like this. It really is a “perfect storm” of funding challenges that threatens the ability of organizations like mine to do anything—combining:
- Increasing costs coupled with inflation have already stretched resources thin in nonprofits across the nation.
- Federal grant uncertainty has disrupted crucial funding streams that support services such as our prevention education and survivor interventions. Recent policy changes have delayed application processes and created instability in traditionally reliable funding sources.
- The threat of additional removal of existing federal funding to organizations like ours—is coupled with reductions in government program funding for anti-trafficking and sexual violence prevention initiatives that have decreased by 15-20% from previous years, even while the need for these services continues to rise. At a state level, there are also funding shortfalls for sexual violence prevention and intervention. During recent legislative sessions, several funding requests for critical programs were denied or severely reduced despite demonstrated need.
These disruptions create significant risks to the ability of our nonprofit and so many others to maintain services—services that numerous individuals and families rely on for education, prevention, and healing. This is a systemic issue impacting an estimated thousands of organizations nationwide. Like many other nonprofits, we have been placed in a long queue behind established grantees.
Despite these challenges, nonprofits will continue to stay committed to their missions—actively seeking new funding partnerships, streamlining operations, and making reductions where possible. The funding community is working to adapt to these changes and will likely provide clearer guidance and solutions in the coming months. In the meantime, leaders of nonprofits across the state and nation ask for your continued support—whether through donations, volunteering, or simply raising awareness about the crucial work being done by nonprofits in your community.
The services we provide are too important to let disappear. Together, the hope is that we can weather this storm and emerge stronger, more resilient, and even more committed to the communities we serve.