Federal cuts and chaos threaten the nonprofit sector — and with it, America's resilience
As we mark the end of the first 100 days of the Trump Administration, this week continued the same pattern we’ve come to dread since Inauguration Day. Nonprofits are feeling the impact of federal cuts and disruption, and it is hard to envision how the massive changes might be undone.
Time Magazine, calling Donald Trump’s first 100 days “among the most destabilizing in American history,” noted that “[a] resistance—if not one that resembles the first-term Resistance—is stirring to life.” Why? It’s worth quoting Time at length:
Trump has launched a battery of orders and memoranda that have hobbled entire government agencies and departments. He has threatened to take Greenland by force, seize control of the Panama Canal, and annex Canada. Weaponizing his control of the Justice Department, he has ordered investigations of political enemies. He has gutted much of the civil service, removing more than a hundred thousand federal workers. He has gone to war with institutions across American life: universities, media outlets, law firms, museums. He pardoned or gave a commutation to every single defendant charged in connection with the Jan. 6 attacks, including those convicted of violent acts and seditious conspiracy. Seeking to remake the global economy, he triggered a trade war by unleashing a sweeping array of tariffs that sent markets plummeting. Embarking on his promised program of mass deportation, he has mobilized agencies across government, from the IRS to the Postal Service, as part of the effort to find, detain, and expel immigrants. He has shipped some of them to foreign countries without due process, citing a wartime provision from the 18th century. His Administration has snatched foreign students off the streets and stripped their visas for engaging in speech he dislikes. He has threatened to send Americans to a notorious prison in El Salvador. Says one senior Administration official: “Our success depends on his ability to shock you.”
Note something important about this long article: the word “nonprofit” occurs only once, referring to DOGE’s takeover of the U.S. Institute of Peace. If one of the nation’s leading magazines fails to note the dramatic effect of the last 100 days on nonprofits and those they serve, we have our advocacy work cut out for us. Nonprofits must emphasize just how different our communities will be if nonprofits and their beneficiaries continue to be squeezed on multiple fronts.
Contraception and reproductive health clinics around the United States are running out of funds. “Some impacted health providers are considering legal action. Others are pleading with their state legislatures and private donors to backfill the missing federal dollars. And some, having exhausted their emergency funds, are shutting their doors.”
The federal government has taken steps to refer student loans in default to collections according to the Education Department. Even if you don’t have student loans, this issue is likely weighing on your team, since nearly half of nonprofit employees carry student loans. Carrying debt had long caused anxiety for workers in the sector, and as of 2020, almost half of U.S. nonprofit workers carried student debt.
Thousands of nonprofit leaders got their start in AmeriCorps, the federal government’s national service and volunteering agency. Thousands of nonprofits also depend on Americorps participants to perform essential services. The Trump Administration aims to end all of that, and the future of this agency is uncertain. At least 75% of Americorps staff have been put on administrative leave, leaving only a few senior officials active, disrupting the agency’s ability to operate. This week DOGE took further action, directing the cancellation of approximately $400 million in grants distributed by AmeriCorps, representing 41% of the agency's annual 2025 budget. The cuts threaten essential community services such as education, disaster preparedness, and environmental conservation. Many national legislators are demanding that the Administration reverse the dismissal of all student volunteers working with the National Civilian Community Corps (NCCC) and mass layoffs at AmeriCorps by DOGE. So are many states and local governments, which have sued in response to these cuts.
The U.S. Department of Justice has abruptly canceled over 365 grants totaling approximately $811 million, affecting programs for gun-violence prevention, addiction treatment, and victim advocacy. Major organizations like Community Resources for Justice and Cure Violence Global lost significant funding, raising concerns about the impact on marginalized communities.
Nonprofits that don't rely on federal funding report increased pressure as private foundations are swamped with requests to fill funding gaps caused by federal cuts. This situation is leading to heightened competition for limited philanthropic resources.
Finding that plaintiffs were likely to prevail on the merits of their case, a federal judge in Washington D.C. preliminarily ordered Voice of America's parent agency to restore VOA until further order. Left unstated here as in so many temporary halt orders is how the bell can be unrung and why fired workers would return to service under the Administration that has signaled its disdain for what they do. I plan to write more about this question in the very near future.