In late January 2025, nonprofits nationwide began receiving notices of federal government funding cancellations and freezes. Organizations delivering job training, mental health services, independent living assistance, disaster relief, and emergency shelter, among other services, were forced to suspend programs and lay off staff. Legal challenges, some successful and others not, sought to release already awarded funds for their intended recipients. At the same time, federal agencies initiated reductions in force and offered buyouts to career staff, including program officers overseeing nonprofit grants and other awards. This report offers an initial assessment of the scope and implications of these disruptions for nonprofits that deliver services or conduct programs.

Using data from the 2025 National Survey of Nonprofit Trends and Impacts, a nationally representative survey of 501(c)(3) public charities that operate across a wide range of service areas, the report finds that a third of nonprofits reported experiencing federal, state, or local government funding disruptions, and these nonprofits were more likely to report reductions to staff, programming, and future hiring. Even nonprofits that do not receive government funding reported that these disruptions have altered the philanthropic funding landscape, presenting fundraising challenges. Taken together, these findings point to the cascading effects across the US of federal, state, and local funding disruptions and a widening gap between increasing demand for nonprofit services and organizations’ ability to meet it.

The report examines the prevalence of three types of government funding disruptions: (1) loss of at least some government funding (i.e., funding agreements canceled or committed funds pulled back); (2) delays, pauses, or freezes of government funding; and (3) stop work orders. Survey questions did not specify disruptions to federal, state, or local government funds, because changes at the federal level could have impacts on the availability of funding at the state and local levels and the survey sought to capture the effects of the totality of government funding disruptions in early 2025. 

Overall, nonprofits that reported experiencing government funding disruptions had a less positive staffing outlook in the first four to six months of 2025 compared with 2024 and were more likely to report decreasing their total number of programs, program locations, and people served. Moreover, our analyses demonstrate that government funding disruptions likely had greater impacts on nonprofits that faced at least three types of disruption. And two in three nonprofits anticipated that demand for their programs would increase in the next 12 months. These government funding disruptions are already having profound effects on nonprofits—extending to those that did not even report experiencing them—and the coming months and years will reveal the long-term impacts on nonprofits, their employees, and their communities.

How Prevalent Were Government Funding Disruptions for Nonprofits in the First Four To Six Months of 2025?

A third of nonprofits reported experiencing at least one type of government funding disruption (loss of at least some government funding; a delay, pause, or freeze in government funding; and/or a stop work order). More specifically,

• 21 percent reported losing at least some government funding,
• 27 percent reported experiencing a delay, pause, or freeze in government funding, and
• 6 percent reported receiving a stop work order.

This report details the shares of nonprofits that experienced these types of disruptions by subsector and size (measured by annual expenses).

The reported impacts of these disruptions extend beyond federal funding. For some nonprofits, changes in the federal funding landscape appear to have affected the availability of state and local funding. And even nonprofits that did not directly experience government funding disruptions reported that changes in the entire fundraising and funding landscape for nonprofits affected their funding prospects.

What Are the Likely Impacts of Government Funding Disruptions on Nonprofits?

Funding. On average, nonprofits receive 50 percent of their revenue from private funding from individual donors and philanthropic institutions, 28 percent from government funding, 18 percent from earned income, and 4 percent from other revenue sources. Although nonprofits reported receiving less than a third of their overall revenue from government, disrupted nonprofits reported that government funding made up 42 percent of their revenue.

Staffing. Almost twice as many nonprofits that experienced government funding disruptions reported decreasing their total number of employees (29 percent) compared with all nonprofits (15 percent).

At the end of 2024, 52 percent of nonprofits planned to hire new staff in the coming year. But in the first four to six months of 2025, that share had fallen to just 38 percent. And whereas at the end of 2024, only 6 percent of nonprofits planned to slow down hiring in the coming year, in the first four to six months of 2025, that share had more than doubled to 13 percent.

Layoff plans also shifted sharply, with the percentage of nonprofits planning to lay off staff more than doubling from 3 to 7 percent. The increase was even more pronounced for disrupted nonprofits (15 percent).

Programming. About a quarter (23 percent) of nonprofits that reported experiencing any government funding disruption reported decreasing their programs, compared with 12 percent of all nonprofits.

Twenty-one percent of disrupted nonprofits reported decreasing their total number of people served, compared with 12 percent of all nonprofits. In addition, 13 percent reported decreasing their total number of programs, compared with 7 percent of all nonprofits.

Lastly, in the first four to six months of 2025, the share of nonprofits that reported decreasing their total number of programs, people served, and program locations was already similar to the share that reported doing so in all of 2024.