Dawn Price signs rent checks worth about $160,000 every month for 79 people that her nonprofit helps house in Laguna Beach, California.
Usually, she logs into an online portal to withdraw enough from an account funded by a grant from the federal housing agency. But in February, she couldn’t. Access had been temporarily cut off for many housing organizations as part of the Trump administration’s cuts and funding freezes.
“That was just a sea change for us for those dollars to be so immediately at risk,” said Price, the executive director of Friendship Shelter, which started in 1987 as a community organization. Access was eventually restored but the episode took a toll.
“Government moves slowly usually, and I think what was so disorienting early on was government was moving really fast,” she said.
In the early days of his second term, President Donald Trump froze, cut or threatened to cut a huge range of social services programs from public safety to early childhood education to food assistance and services for refugee resettlement. Staffing cuts to federal agencies have also contributed to delays and uncertainty around future grant funds. Altogether, his policies are poised to upend decades of partnerships the federal government has built with nonprofits to help people in their communities.
This vast and interconnected set of programs funded by taxpayers has been significantly dismantled in just months, nonprofit leaders, researchers and funders say. And even deeper, permanent cuts are still possible. That uncertainty is also taking a toll on their staff and communities, the leaders said.
In response to questions about the cuts to grant funding, White House spokesperson Kush Desai said, “Instead of government largesse that’s often riddled with corruption, waste, fraud, and abuse, the Trump administration is focused on unleashing America’s economic resurgence to fuel Americans’ individual generosity.”
He pointed to a new deduction for charitable giving included in the recently passed tax and spending law that he said encourages Americans’ “innate altruism.”
But experts say private donations will not be enough to meet the needs.
In 2021, $267 billion was granted to nonprofits from all levels of government, according to an analysis by the Urban Institute published in February. While the data includes tax-exempt organizations like local food pantries as well as universities and nonprofit hospitals, it underestimates the total funding that nonprofits receive from the government. It includes grants, but not contracts for services nor reimbursements from programs like Medicare. It also excludes the smallest nonprofits, which file a different, abbreviated tax form.
However, the figure does give a sense of the scale of the historic — and, until now, solid — relationship between the public sector and nonprofits over the last 50 years. Now, this system is at risk and leaders like Price say the cost of undoing it will be “catastrophic.”
Government funding to nonprofits reaches far and wide
The Urban Institute’s analysis shows more than half of nonprofits in every state received government grants in 2021.
In the vast majority of the country, the typical nonprofit would run a deficit without government funding. Only in two Congressional districts — one including parts of Orange County, California, and another in the suburbs west of Atlanta — would a typical nonprofit not be in the red if they lost all of their public grant funding, the analysis found.
But in Orange County, famous for its stunning beaches, mansions and extraordinary wealth, funders, nonprofits and researchers said that finding surprised them. In part, that’s because of major economic inequalities in the county and its high cost of living.
Taryn Palumbo, executive director of Orange County Grantmakers, said nonprofits are not as optimistic about their resiliency.
“They are seeing their budgets getting slashed by 50% or 40%,” she said. “Or they’re having to look to restructure programs that they are running or how they’re serving or the number of people that they’re serving.”
