What do government grant-funded nonprofits look like?

With growing attention to nonprofits that receive government grant funding, policy makers are increasingly debating the role of this segment of the nonprofit sector. Yet, there’s been a lack of detailed information about the nonprofits that rely most heavily on government grants. What do they do? How do they fit into the broader social sector landscape? What’s at stake as federal funding decisions are made?

Government grantees represent just a small portion of the nonprofit sector

There are roughly 1.9 million registered tax-exempt organizations in the United States, nearly 1.6 million of which are 501(c)(3) public charities—what most people think of as “nonprofits.” However, we can only track government grant funding for the 359,000 larger organizations that file IRS Form 990.¹ Among those, about 103,000 reported receiving at least one grant from local, state, or federal government agencies, according to recent tax filings. In other words, about 30% of nonprofits for which we have data report receiving government grants, but this is a smaller fraction of the entire sector.

Most government grantees receive less than half their revenue from those grants

Among the approximately 103,000 government grantees, there’s considerable variation in how much each nonprofit depends on that funding. Nearly a third—over 30,000 organizations—receive less than 10% of their revenue from government grants, suggesting these funds play a supplementary rather than central role in their operations.

Another third of nonprofits receiving government grants report 50% or more of their revenue from those grants. For these roughly 36,000 “government grant-majority nonprofits,” government funding isn’t just helpful but essential.

Shelter and residential care is the largest focus area among government grant-majority nonprofits

So, which focus areas have the most nonprofits that rely on government grants for at least half their revenue—and would be most affected by federal funding decisions? Using Candid’s taxonomy to look beyond broad categories like health, education, and human services to see the specific work these organizations do², we find almost 11%—about 3,800—of government grant-majority nonprofits provide shelter or residential care for various groups like the unhoused, people with disabilities, or the elderly. These include nonprofits providing temporary emergency shelter for homeless families in the Bronx in New York City and home repair services for low-income people in rural Texas.

Other focus areas with a large share of government grant-majority nonprofits include special population support (services for people with disabilities, seniors, and other groups with specialized needs)³, family services, mental health care, and elementary/secondary education. These nonprofits may provide senior services to help maintain independent living in rural Ohio; health and human services for children of low-income families via Head Start programs in Jackson, Mississippi; trauma recovery and resilience building for young victims in northwest Idaho; and Tribal schools across South Dakota. Notably, more than half the elementary/secondary education government grant-majority nonprofits are charter school systems.

These focus areas are overrepresented among government grant-majority nonprofits

Beyond identifying what services government grant-majority nonprofits provide, we examined whether they’re overrepresented in certain areas compared with nonprofits that receive no government grants. We found that government grant-majority nonprofits were statistically more likely to work in all 10 of the most common focus areas shown in the chart (comparing the orange and yellow bars).⁴ For example, 11% of government grant-majority nonprofits provide shelter services, compared with less than 4% of nonprofits that don’t receive government grants—making shelter providers three times more common among government grantees.

Taken together, the heavy reliance on government grants of nonprofits in certain focus areas suggests individuals who rely on them could lose access to those services if federal funding is withheld. And while we’ve focused on the areas with the most government grant-majority nonprofits, every focus area includes organizations receiving local, state, or federal grants. This means cuts to government grantmaking wouldn’t just impact a narrow group of nonprofits but would cause ripple effects across the country for the wide range of people they serve. As policy makers consider changes to government grantmaking, these analyses show the breadth of work—and the direct and indirect benefits these nonprofits provide—that’s at stake.

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1. Here, “larger nonprofits” are U.S.-based non-foundation 501(c)(3) public charities that appeared on a 2024 IRS Business Master File and filed a Form 990, based on the most recent tax filing available (from fiscal year 2020 or later) as of February 2025. Most of this data is from the fiscal year ending in 2023. It should be noted that most U.S. nonprofits are small and file Forms 990-EZ or 990-N, which do not include information on government grants. Additionally, Form 990 data on government grantmaking does not differentiate between local, state, and federal funding. ↩︎
2. Based on an examination of the most common Philanthropy Classification System (PCS) second-level subject codes (codes nested under the 18 broad parent categories such as Arts, Education, and Health). Unlike the IRS’s application of the National Taxonomy of Exempt Entities (NTEE), Candid may assign more than one relevant PCS code to each organization, so they may be counted in more than one group. ↩︎
3. “Special population support” is a subcategory of the PCS Human services category, used to identify organizations that act as multipurpose centers or provide services that meet the needs and interests of a particular target population, often vulnerable or traditionally underserved. This aligns with the NTEE P80 codes. ↩︎
4. We tested this hypothesis by using Pearson Chi Square values on the observed number of organizations in the listed categories which received a majority of their revenue from government sources against non-government grantees and found statistically significant differences among the 10 most common PCS subject codes listed above  (p < 0.01). ↩︎