Nonprofits say they are in a crisis

The country's nonprofit sector — organizations from food banks and homeless shelters to immigrant aid groups — is facing a crisis in the wake of federal funding cuts, advocates say.

Why it matters: The nation's most vulnerable people rely on these groups for help — and demand for services has increased over the past year amid higher inflation and cuts to federal programs like SNAP, or food stamps.

Driving the news: Data on the sector as a whole is hard to come by, but a new survey out Tuesday offers a look at the situation.

By the numbers: 66% of the nonprofits surveyed in February by the Center for Effective Philanthropy said they have concerns about their organization's financial stability.

• The share of respondents reporting a deficit — more money going out than coming in — rose to 39%, from 22% in 2022.
• Almost three-quarters of CEOs report that their organizations have experienced increased demand for services.

Zoom in: The survey covers just a slice of the sector. The organization polled leaders of 380 nonprofits that receive at least some foundation funding a year — and didn't include universities or hospitals.

Zoom out: Government grants to nonprofits total at least $240 billion a year — more than double all foundation giving combined, according to a report from the Urban Institute out earlier this year.

• In 2023, there was no congressional district in the country where the typical grant-receiving nonprofit could have covered its expenses without government funding, according to the report.

Between the lines: People don't think of the nonprofit sector as a market, per se, but right now it's looking like one in crisis.

• As the federal government has pulled back, groups are increasingly seeking support from other sources — meaning there's more competition for donations.
• Even groups that don't rely on government funding are feeling the pinch.

What they're saying: Nonprofits and programs affected include those that weren't viewed as particularly partisan, says Phil Buchanan. president of the center.

• He points to the Department of Justice pulling funding, originally passed with bipartisan support, for a gang intervention program in Massachusetts that reduced prison recidivism rates, as an example.
• The Trump administration's treatment of nonprofits is "a complete departure in modern American history from other Republican or Democratic presidential administrations," he says.

The other side: "While federal funding for left-wing ideological pet projects has been cut, federal funding that went to non-profits for other purposes such as caring for unaccompanied minors who illegally crossed the border is no longer needed due to the President securing our border," White House Spokesman Kush Desai said in a statement to Axios.

• "Non-profit charities can continue to solicit and receive funding from private donors."

Zoom out: At our Axios event on Giving Tuesday last year, the funding crisis was top of mind for attendees from the philanthropy space.

Editor's note: This story has been corrected to say that the nonprofits surveyed received some foundation funding (not $5 million in funding).