The Well Must Not Run Dry: National Trends in Giving and the Growing Nonprofit Crisis

The Well Must Not Run Dry: National Trends in Giving and the Growing Nonprofit Crisis

Nonprofits are the fabric of American community life—delivering meals, sheltering the unhoused, protecting the environment, connecting neighbors across differences. They are, as the Center for Effective Philanthropy’s president Phil Buchanan put it at the Community Foundation of Greater Memphis Annual Meeting this May, “like the air we breathe, the water we drink.”

But that water is running low.

New data from CEP’s annual State of Nonprofits research—collected in February 2025—paints a sobering picture of what the nonprofit sector is navigating right now. Five findings stand out.

• Demand is up. Revenue is down. Nearly three-quarters of nonprofit CEOs say that federal policy shifts since January 2025 have increased demand for their services. Yet funding is moving in the opposite direction. Thirty-six percent have lost federal dollars. Forty-four percent report reduced foundation support. Thirty-four percent are seeing less from individual donors. The proportion of nonprofits running a deficit has nearly doubled—from 22 percent in 2022 to 39 percent today.
• Staffing and services are being cut. Almost 30 percent of nonprofits have reduced staff since early last year. Twenty-six percent have scaled back the services they provide. For grantees of the Community Foundation of Greater Memphis specifically, that figure rises to 42 percent.
• Nonprofits are being targeted for pursuing their missions. Nationally, half of nonprofit CEOs report pressure to reframe how they publicly describe their work. Two-thirds express concern about the safety of the people they serve—a figure that climbs closer to three-quarters among Memphis-area grantees.
• The sector itself is under attack. Federal rhetoric has characterized nonprofits as threats to public safety. Congressional hearings have mocked the sector. This is, by historical standards, without precedent.
• Leaders are burning out. The share of nonprofit CEOs who say burnout is “very much a concern” jumped from 29 to 46 percent in a single year. The weight is heaviest on leaders of color and those who identify as LGBTQ+.

What does this mean for the people nonprofits serve? According to Buchanan: more unmet need. More suffering. More gaps in the safety net that no government agency or market force has stepped in to fill.

This is precisely the moment community foundations exist for—bridging donors who want to make a difference with organizations doing essential, irreplaceable work. The well must not run dry. Now is the time to give—and to give more.

What we’re hearing

We know that our region’s nonprofits are on the frontlines of change—meeting urgent needs, strengthening communities, and sustaining hope through particularly uncertain times. 

Recent data collected by the Community Foundation and the Center for Effective Philanthropy, published in the 2026 Grantee Perception Report, demonstrates that some local nonprofits are acutely feeling the strain of funding cuts, freezes, and policy shifts that force reductions in services. Others are bracing for what’s ahead—anticipating more funding reductions from both government and philanthropy.

Flexible, general operating support remains many nonprofits’ most critical need, helping organizations sustain services, retain staff, and adapt to shifting conditions.

How we are responding

Through the FOREVER Funds, the Community Foundation awarded $982,000 in Responsive Grants in December 2025 to 46 nonprofit organizations working at the forefront of community need across our region.

Responsive Grants represent a new approach to meeting the moment. Unlike traditional capacity-building grants, these awards provide unrestricted general operating support—giving nonprofit leaders the flexibility to use funds where they’re needed most to serve their communities.

We remain committed to prioritizing flexible, responsive funding that allows nonprofits to meet evolving community needs. Our FY 2027 discretionary grant budget includes another, significant allocation for general operating support grants.

How you can respond

Especially in challenging times like our neighbors and the nonprofit sector are experiencing, individual donors can embody trust-based philanthropy by offering unrestricted gifts—placing confidence in nonprofits’ expertise to respond where needs are greatest, not just where they’re easiest to measure. This kind of trust fuels resilience, empowering organizations to adapt, sustain their teams, and meet their communities with flexibility, dignity, and lasting impact.

Fundholders at the Community Foundation are welcome to talk with members of our Philanthropic Services team on how to most meaningfully connect your values with nonprofits in need.