How Government Funding Disruptions Affected Nonprofits in Early 2025

In late January 2025, nonprofits nationwide began receiving notices of federal government funding cancellations and freezes. Organizations delivering job training, mental health services, independent living assistance, disaster relief, and emergency shelter, among other services, were forced to suspend programs and lay off staff. Legal challenges, some successful and others not, sought to release already awarded funds for their intended recipients. At the same time, federal agencies initiated reductions in force and offered buyouts to career staff, including program officers overseeing nonprofit grants and other awards. This report from the Urban Institute offers an initial assessment of the scope and implications of these disruptions for nonprofits that deliver services or conduct programs.

Key Findings:

A third of nonprofits reported experiencing at least one type of government funding disruption (loss of at least some government funding; a delay, pause, or freeze in government funding; and/or a stop work order). More specifically,

• 21 percent reported losing at least some government funding
• 27 percent reported experiencing a delay, pause, or freeze in government funding, and
• 6 percent reported receiving a stop work order.