Report Uplifts New and Old Challenges Facing Nonprofits

The Center for Effective Philanthropy (CEP) recently released its third annual report on the state of nonprofits. The report, aptly titled, State of Nonprofits 2025: What Funders Need to Know, builds on the findings of its two previous reports.

The report is based on the responses from 585 leaders participating in CEP’s Nonprofit Voice Project, which consists of nearly 900 US-based nonprofits receiving funding from at least one foundation.

The report uplifts three main findings:

1. It is difficult for many nonprofit leaders to effectively pursue their missions while navigating a political environment that actively challenges their ability to operate.
2. In the last fiscal year, most nonprofits were able to achieve a balanced budget or surplus, and many anticipate the same for this fiscal year. But leaders also expressed concern about future funding and increased costs.
3. Nearly all nonprofit leaders express concern about their own burnout and acknowledge that it is also affecting their staff.

Navigating the Current Political Environment

As NPQ reported last year, nonprofit groups were already dealing with burnout and staffing shortages exacerbated by the lingering impact of the COVID-19 pandemic. Now, the aftermath of the 2024 election and the actions taken by the second Trump administration presents a new challenge for many leaders.

“The loss of pandemic-related funding and challenges in the funding landscape has made it difficult to provide opportunities for growth and additional resources for staff.” 

The report notes that the challenges most frequently cited by nonprofit leaders are the impact of the political climate and staffing issues. Leaders said that actions by the federal government are impacting their work, “either through the outcomes of the 2024 US federal elections or through changes in federal government funding” (8).

One surveyed nonprofit leader noted, “As the pandemic waned, we anticipated returning to some form of ‘new normal,’ but the current political climate, inflation, decrease in individual giving, and societal changes leave us with little choice but to be reactive rather than proactive” (8).

Another surveyed nonprofit leader noted that the individuals that nonprofit organizations serve are also among the same marginalized communities that executive orders issued by Trump are impacting. This leader raised concerns about the safety and livelihood of the groups that the organization serves (10).

Worries About Future Funding

Uncertainty around government funding under the Trump administration has made it harder for organizations to fill vacancies—and even to retain current staff. Nearly half of nonprofit leaders acknowledge issues with staff recruitment or retention, while 66 percent indicated at least some difficulty with filling staff vacancies. Although this was an existing problem, new challenges have amplified the issue. As one leader pointed out, “The loss of pandemic-related funding and challenges in the funding landscape has made it difficult to provide opportunities for growth and additional resources for staff” (11).

More than half of nonprofit leaders indicate that their organization has at least six months of operating expenses, which is drastically different terrain than the past fiscal year, when revenue from foundations exceeded many organizations’ projections.

“A big challenge is not having enough time for staff and board members to reflect, assess, plan, dream, and celebrate victories.”

Moreover, 70 percent of organizations do not expect their foundation revenue to increase, while 61 percent do not expect an increase in individual giving. Although leaders reported actively working to untangle themselves from public funding, they also raised concerns about whether private foundations will be able to keep up.

As NPQ previously reported, many foundations are working to help close the gap left by the massive decrease in federal funding over the past few months, but foundation leaders are vocal about the fact that philanthropy cannot fully close this gap.

Navigating Burnout

As nonprofit leaders navigate these challenges, nearly 90 percent of those surveyed raised concerns about their own burnout. It is worth noting that this percentage remains virtually unchanged from last year, though this year they expressed a particular concern for the wellbeing of their staff members who belong to historically marginalized communities.

Leaders of color, for example, are more likely to indicate that they and their staff are experiencing burnout. As one surveyed nonprofit leader noted, “Prior to November election results, our biggest challenge was just the day-to-day operations of running our organization; the day after the election, even though we are a nonpartisan organization, the greatest challenge became staff trauma” (20).

Larger, less restricted grants can help [organizations] navigate pressing challenges and plan for the future.

Others are still dealing with residual burnout from Trump’s first presidency from 2016 to 2020, and COVID-19 has created an internal strain, making it harder to address the rapid response needs that have arisen during this current presidential administration.

Another surveyed nonprofit leader reflected, “A big challenge is not having enough time for staff and board members to reflect, assess, plan, dream, and celebrate victories. This constant daily grind and inability to come up for air and contribute to the organization’s vision and mission creates burnout and a revolving door environment” (21).

Potential Solutions

In response to the myriad challenges facing nonprofits, many leaders are recommending flexible funding from their funders to support their work. They note that flexible funding for core operations—like staff salaries and organizational infrastructure—is necessary for organizations to operate effectively. They believe that larger, less restricted grants can help them navigate pressing challenges and plan for the future.

As one leader said, “Flexible funding allows organizations to sustain critical programs, respond to policy changes, and invest in infrastructure without constant financial uncertainty” (11).

Additionally, the report highlights proactive communication and support for wellbeing as measures that funders can implement to better support the groups they serve.

Overall, the authors noted that they “hope the insights in this report contribute to a deeper understanding of the realities nonprofit leaders are facing and help inform conversations and decisions that shape the future of the sector” (22).