Do foundation leaders know what nonprofits need right now? 

This has been an unparalleled year of crisis for the nonprofit sector. Since January 2025, organizations have faced challenges from the current administration, including executive orders and legislation targeting diversity, equity, and inclusion (DEI) initiatives, federal funding for services, and the people and issues they support, including immigrants, the LGBTQ+ community, climate mitigation, and civic engagement.  

During this time, the Center for Effective Philanthropy (CEP) has been collecting and publishing timely data on the impact of the current moment on both nonprofits and their foundation funders. Our most recent data, gathered from over 400 nonprofit leaders and nearly 230 foundation leaders in August and September, provides a striking look into the experiences and response of individuals and organizations across the sector. First shared at the CEP2025 conference in November, the data will be published in a more extensive report in early 2026—but here are three major takeaways:  

1. Nonprofit leaders have experienced or anticipate negative impacts

Our data highlights the impact of cuts to government grants and increased scrutiny on the sector. Key data points include:  

• Over 80% of nonprofits have experienced or anticipate increased demand for services.  
• Nearly 70% of nonprofit leaders say the current context has had a negative impact on their ability to carry out their work. 
• Sixty-one percent of nonprofit leaders have experienced or anticipate pressure to reframe public descriptions of their work. 
• More than half of nonprofit leaders have experienced or anticipate legal challenges related to their issue area or community. 

As one nonprofit leader stated, “There is no viable win condition—the win is to tread water. Costs are increasing simultaneous to a much more difficult funding environment… The well is running dry, our operating runway is shrinking, and though staff want to move in a proactive direction, I am most worried about base-level subsistence.”  

This increase in stress and concern was reported widely by nonprofit leaders. As one shared, “The continuous uncertainty is incredibly hard to shoulder every day. Community members, board members, staff, donors, and elected officials all count/rely on me to handle this like a champ and I’m at a point that I don’t know how or if I can keep doing this. I know many people in leadership roles feeling the same way.” 

2. Nonprofits have strengthened collaborations and diversified revenue 

The data shows nonprofits have responded to the current context through partnerships and diversified revenue. A significant number of organizations have initiated collaborations or partnerships with other nonprofits (60%) or with community members (56%), while nearly half have diversified their revenue streams. 

With a third of nonprofits experiencing cuts to their funding from the federal government and over a quarter to funding from state and local government, many in the sector have sought more support from foundation funders to address the gap. Nearly 90% of foundation leaders have seen increased demand for funding, with 30% responding by increasing their payout rate in 2025. This new revenue for nonprofits has come in many forms, as many funders have reported an increase in making emergency, unrestricted, or multiyear grants.  

3. Funder and nonprofit perceptions of the effectiveness of foundations’ response are misaligned 

Our September survey found that while over 90% of foundation leaders rated their own foundations as effective at understanding and responding to their grantees’ challenges, fewer than 60% of nonprofit leaders said the same of their foundation funders. Areas of significant disparities included perceptions of foundations’ effectiveness in communication (82% vs. 53%) and willingness to take risks (69% vs. 29%).  

Notably, 78% of foundation leaders rated their own foundations’ provision of unrestricted support as effective, compared with 45% of nonprofit leaders. Similarly, 65% of foundation leaders believed their foundations had been effective in providing multiyear support, yet only a third of nonprofit leaders saw their funders this way. 

These gaps between how funders view their work and the experiences of grantees will likely not come as a surprise to most in the sector. As CEP research has shown, funders’ priorities aren’t always aligned with community and nonprofit needs. The survey confirms what nonprofit leaders are seeking from their funders: stronger communication, better understanding of the challenges they’re navigating, and more willingness to take risks. With the sector likely to face continued pressure in 2026, these latest findings make clear the need for funders to listen more closely to what their grantees need to survive and thrive for the communities they both exist to support. 

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