Many nonprofits are facing a funding cliff. Recent executive orders and actions cutting federal funding have created a state of uncertainty for nonprofit organizations nationwide. Some are already seeing federal grants and contracts paused or canceled, and others have been left in the dark about current grants and future prospects given pending legal challenges.

In this uncertain environment, some nonprofit leaders are deciding whether to close their doors; adjust staff size, services, and programs; or identify additional sources of revenue. Many of these options would diminish nonprofits’ ability to carry out their missions.

Nonprofits are the cornerstone of vibrant, resilient communities, providing day-to-day services and critical supports when disasters strike. In communities nationwide, nonprofits provide groceries, meals, and shelter to people experiencing housing and food insecurity. They take care of the young and the elderly, run suicide prevention hotlines and intervention services, and provide job training. Nonprofits organize after-school tutoring programs and manage free and low-cost medical clinics in rural, suburban, and urban communities. They help people gather, share stories, and organize community groups.

They also make important contributions to the economy. As the third-largest employer of the private sector, they employ more than 12.7 million people, representing about 10 percent of private-sector employees. Nonprofits also spend on goods and services, with a combined gross value added (PDF) in 2023 of 5.2 percent of the country’s gross domestic product, equal to $1.4 trillion.

To show how a potential loss of government grants would put 501(c)(3) public charities at risk of financial harm, we created a first-of-its-kind interactive data tool allowing anyone to search by state, county, and congressional district and find granular insights on how much government grant funding a wide range of nonprofits receive. With our tool, leaders can determine the share of nonprofits in their community at risk of not being able to cover their expenses without government grants, potentially imperiling people in their communities who rely on nonprofit programs and services.

Our tool shows data on all electronically filing public charities that report receiving government grants from any level of government on their Internal Revenue Service Forms 990, complementing new survey data from the Nonprofit Trends and Impacts panel study that breaks down nonprofits’ government grants and contracts at the federal, state, and local levels and shows what percentage of nonprofit revenue comes from government funding. The survey draws from a nationally representative sample of public charities that engage in activities ranging from direct service provision to community building and advocacy, excluding foundations, hospitals, higher-education institutions, schools, and other specialized types of nonprofits, such as religious organizations.

From these data, we see:

• Government grants support nonprofits in every state, every congressional district, and more than 95 percent of counties in the US have at least one 501(c)(3) public charity receiving government grants. The survey data show 2 out of 3 nonprofits report receiving at least one government grant or contract, and more nonprofits receive government grants than contracts.
• Government funding is especially consequential for larger nonprofits. Nonprofits of all sizes receive government funding, but larger nonprofits are more likely to depend on these funds. Survey data showed almost 9 of every 10 nonprofits with $10 million or more in annual expenses reported receiving government funding, and 54 percent of their revenue came from government sources. In comparison, more than half of nonprofits with less than $100,000 in annual expenses reported receiving government funding in 2023, making up 13 percent of their revenue on average.
• Nonprofits in every state would be at risk of financial harm if they lost their government grants. Analysis of Form 990 data shows that in every state, 60 to 80 percent of nonprofits that receive government grants could fail to cover their expenses if government funding remains frozen or disappears. The typical nonprofit with annual revenue above $200,000 would have a negative operating surplus without government grants in 435 of the 437 congressional districts.
• Alaska, Louisiana, West Virginia, Delaware, and Mississippi nonprofits would face the biggest revenue shocks. Nonprofits that receive government grants in these states would face the most-severe budget shortfalls compared with other states. With government grants, the typical nonprofit in these states has an operating surplus between 6 and 10 percent, allowing it to cover yearly expenses and have funds available to reinvest in its mission the next year. Losing government grants would put their operating surplus between –26.5 percent and –28.5 percent, the lowest in the country. The typical nonprofit in these states would have to consider cuts to services, depletion of their reserves, and in some cases, closure.

Our analysis shows that most nonprofits that receive government grants don’t have a large enough operating surplus to weather the removal of these funds. A prolonged pause or loss of government funding to nonprofits could lead to major disruptions, including a reduction in essential programs and services and fewer nonprofit jobs.