The broader nonprofit sector is struggling to make ends meet financially due to inflation costs, shifts in government support, and other pressures, according to a new report.

The National State of the Nonprofit Sector Survey, released last week by the National Nonprofit Fund, is based on a survey for more than 2,000 U.S. nonprofits, mostly charitable and philanthropic groups. Though most such groups operate under a model distinct from nonprofit membership and trade associations, the shifts reveal implications for the association sector and its affiliated charitable foundations.

According to the report, in the past year the nonprofits surveyed have been facing three acute challenges. One is ongoing inflation: 86 percent of respondents said they are facing rising costs. Second is government funding: 84 percent of respondents said they expected to have to make cuts due to shifts in federal grants and other financial support. Third is an increased demand for services, with 85 percent of respondents saying they expect to need to serve more people in the coming year.

Those shifts have eroded the sustainability of many of the nonprofits surveyed. According to the report, 36 percent of the groups surveyed ended 2024 with an operating deficit, the highest percentage in the past ten years of the survey. Only 36 percent of nonprofits have six months or more of operating expenses available as reserves, and 75 percent of them say managing expenses presents a challenge. 

Managing expenses in this high-inflation environment was one of the most widely reported financial challenges, cited by 75 percent of respondents. 81 percent of organizations reported that raising funds that cover full costs is a challenge.

“What we see in the 2025 data is that many nonprofits are living one unexpected cost away from catastrophe, and many lack the cash to manage delays or emergencies, or to make strategic investments,” the report says. “Everything is getting more expensive. But nonprofit funding isn’t keeping up.”

Those shifts have also had an impact on nonprofits’ ability to attract and retain staff: More than 30 percent of those surveyed said it was a “major challenge” to employ enough staff and find staff with the right skill sets. Twenty-four percent said staff and leadership burnout are also major challenges. 

To address those shifts, the NFF report recommends increasing focus on planning ahead, with a realistic understanding of how the financial dynamic has changed. “Nonprofits are often experts in real-time planning on the frontlines,” the report says. “You do it all the time, whether responding to climate emergencies or deep community trauma. Identify how you can meet current community needs, considering your strengths, the risks, and challenges. Balance planning – both short and longer-term – with quickness, knowing there is no perfect information and iteration should be expected.”

The report also exhorted nonprofits to be more vocal with the public and their stakeholders about the value they provide and their need for support. “Now is not the time to be shy. Be really clear and upfront with your board and funders – and yourselves – about the monetary and non-monetary support (network introductions, advocacy, etc.) you need,” the report says.