Urban Institute: 35% of nonprofits had a government funding disruption in 2025

About 35% of U.S. nonprofits had at least one government funding disruption in 2025, the Urban Institute reported in a study dated October 14. The smallest charities were the least likely to be hit, but those that lost money lost the largest share of their revenue.

How common disruptions were

The report, by Lewis Faulk, Hannah Martin, Mirae Kim and Laura Tomasko, found that 49% of organizations that received any government funding, equal to 35% of all nonprofits, had at least one disruption. Disruptions include lost funding, delays, pauses, freezes and stop-work orders. Overall, 23% of nonprofits lost some government funding, 26% had a delay, pause or freeze, and 8% received a stop-work order.

Between 40% and 46% of nonprofits with programs mainly serving people below the poverty line, Medicaid recipients, families receiving food assistance, foreign-born people and some communities of color had a disruption, compared with 35% overall.

Who lost the most

Larger groups were hit more often. Twenty percent of the smallest organizations (annual expenses of $50,000 to $99,999) had a disruption, compared with 49% of those with $1 million to $9.9 million and 55% of those with $10 million or more. The authors attribute much of that gap to larger groups' greater exposure to government grants and contracts.

Among organizations that lost government funding, the money lost was a median 28% of total revenue for the smallest group, compared with 5% for those with $1 million to $9.9 million and 9% for the largest. Nearly a third of the smallest groups that lost funding lost 50% or more of their revenue. Nearly half of nonprofits with delays had at least one that lasted 12 weeks or longer.

In direct response, leaders of disrupted nonprofits most often reported cutting expenses, drawing on reserves, raising more from charitable sources and borrowing or expanding lines of credit, the report says. The authors wrote that the disruptions "were operating shocks that introduced significant uncertainty and affected nonprofits' financial stability."

How the data were gathered

The findings come from the 2025 and 2026 National Surveys of Nonprofit Trends and Impacts, which covered 2,737 organizations in 2025 and 2,328 in 2026. Respondents were chief executives or equivalent leaders of 501(c)(3) public charities with at least $50,000 in annual expenses and revenue. The surveys exclude foundations, hospitals, universities, schools, day cares and houses of worship, and the results are weighted to be nationally representative of the groups covered.

What boards and donors can check

The Chronicle of Philanthropy, covering this report and a companion Urban study on October 19, reported that more than half of disrupted charities shrank their headcount, and that some charities that were not cut raised less from foundations as grantmakers shifted toward groups that were. In our view, reserves bought time, but they are a one-time resource. Boards can ask how much of next year's budget depends on a single public contract, and what the plan is if a payment is paused for 12 weeks. Nonprofits with federal awards can also check whether theirs were affected by this fall's pocket rescissions.