What if the Well Runs Dry? The Impact of the 2025 Political Landscape on Nonprofits
By Ben Delaney © 2025 ImmersivEdge Advisors
AI Illustration by NightCafe.Studio
Having spent several decades in the nonprofit world, I thought I had seen it all. But the current political and social climate presents unforeseen and unexpected situations, many of which create existential issues for our organizations.
The nonprofit sector finds itself at a critical juncture, facing unprecedented challenges stemming from the current U.S. political climate, significant funding cuts, and shifting public attitudes.
As leaders in the nonprofit world, it's crucial to understand these dynamics and their potential impact on our organizations, particularly in the realm of fundraising.
The Political Landscape and Its Implications
Upon taking office in January 2025, and continuing with no end in sight, the current regime implemented a series of executive orders that have profoundly affected the nonprofit sector. These actions have targeted areas such as diversity, equity, and inclusion (DEI) initiatives, social services, reproductive healthcare access, international aid, environmental programs, consumer protection, and immigration, creating a compliance and operational environment that many organizations are struggling to navigate.
The impacts are not merely financial; they represent real-world consequences for vulnerable communities that rely on nonprofit services for essential support like food assistance, healthcare, and education.
The affects of these policies has been swift and far-reaching. According to a report by the Center for Effective Philanthropy, 85% of nonprofit leaders cited ways in which the political climate is already negatively affecting their organization's work, with 94% believing it is very likely to negatively affect their work in the future. The outcome of the 2024 U.S. federal elections and changes in federal government funding are cited as the primary drivers of this negative impact.
Shifting Public Attitudes and Trust
The current political climate also has had a significant impact on public attitudes towards institutions, including nonprofits. As Christian Paz noted in a recent Vox article:
"Derek Thompson [of Atlantic magazine] points to political science research that has tracked a negative effect on trust in scientific authorities and political leaders as a result of pandemics and epidemics, particularly with those people between the ages of 18 and 25. Declining trust in American institutions — such as the Supreme Court, news media, the presidency, Congress, and big business — all make sense under this view.
The economics writer Kyla Scanlon argues something similar: that the youngest cohort of Gen Z faces a world of AI-driven disruption and institutional distrust and instability. They're surrounded by echo chambers that feed their anxiety, and feel looser social connections. In response, they're embracing more extreme, polarized identities and approaches to the economy and politics."
https://www.vox.com/politics/402055/democrats-young-man-problem-gen-z-republican-shift-vote-trump
This trend of declining trust is particularly concerning for nonprofits, which rely heavily on public confidence and support. However, it's worth noting that the 2024 Edelman Trust Barometer revealed a five-point increase in trust in nonprofit organizations, positioning them as the most ethical institutions. This presents both an opportunity and a responsibility for nonprofits to maintain and build upon this trust. That is done through frequent, clear communications, based on irrefutable data and relatable story-telling.
Contributing to the erosion of trust is the failure of US educational institutions, especially public K-12 schools, to effectively teach history, civics, STEM, and ethics. Without this knowledge, US citizens are handicapped in their ability to evaluate ever-more-outrageous claims in the political marketplace.
The ineffectiveness of U.S. educational institutions in fostering essential critical thinking skills based on these subjects is also under scrutiny. Research suggests that mass education systems often prioritize conformity over critical inquiry, which can leave young people less equipped to critically evaluate political arguments. School curricula are increasingly designed to indoctrinate rather than educate. This is particularly concerning in the context of right-wing politicians like Trump, whose messages often resonate with younger audiences who may lack the critical thinking skills to fully assess the implications of such policies.
https://today.ucsd.edu/story/mass-education-was-designed-to-quash-critical-thinking
The Impact on Fundraising
All of these factors add new challenges for nonprofit communicators and fundraisers. One of the most immediate and pressing concerns is the threat of significant funding cuts, which are being pushed forward rapidly. In late January 2025, Trump issued a memorandum that attempted to halt all federal funding to certain nonprofits. While this order has been temporarily blocked by the courts, many organizations are still unable to access their funding and face considerable financial uncertainty.
A proposed federal grant audit for nonprofits receiving over $750,000 in federal funding has added another layer of complexity, cost, and concern. This stumbling block aims to review how funds are being used in regard to the administration's policy priorities. The potential disruption to services and the uncertainty surrounding future funding have left many nonprofits scrambling to find alternative sources of support.
The political and social climate poses other challenges for nonprofit fundraising. With increasing competition and increasingly limited resources, organizations are scrambling to find innovative ways to differentiate themselves and demonstrate their impact effectively. These changes are affecting all funder categories, from small individual donors, to major supporters and through to institutional and state and local governmental funders.
In addition, the polarization of public opinion and the embrace of more extreme identities by younger generations seems to be leading to a decrease in broad-based support for nonprofits. Organizations need to reassess their messaging and engagement strategies to resonate with a more diverse and potentially skeptical donor base. What worked well last year may flop this year. These issues also affect donors of all types.
These items are especially important in this fundraising climate:
Government Funding Cuts: The Trump regime’s policies have reduced federal grants for nonprofits, especially those involved in sectors like immigration, environmental justice, and DEI initiatives. Organizations working in these areas must pivot their funding efforts quickly to avoid sustainability crises.
Foundation Funding Shifts: Foundations are adopting a wait-and-see approach, potentially shifting priorities to causes most affected by federal cuts. Nonprofits must demonstrate their impact and align with emerging foundation priorities to secure funding.
Competition for Grants: With a shrinking pool of grants, organizations must differentiate themselves by showcasing robust data on their effectiveness and impact. The importance of innovative and effective communication has never been greater.
Donor Behavior and Polarization: Political shifts influence donor behavior, with some donors supporting causes perceived as underserved by federal policies, while others align with administration priorities. Nonprofits must segment their outreach strategies based on donor values and perceptions.
Tax Policy Changes: Proposed adjustments to charitable deductions may affect individual giving, making it crucial for nonprofits to emphasize the personal connection and impact of donations beyond tax benefits.
Engagement Strategies: With a decline in low-dollar donors, nonprofits must focus on building strong relationships with existing donors and acquiring new ones through personalized engagement strategies.
https://clairification.com/2025/02/13/people-want-to-know-if-they-can-trust-your-nonprofit-and-you/
Strategies for Success
In light of these challenges, nonprofit leaders must adopt proactive strategies to ensure their organizations' resilience and sustainability. Our old standby tools need to be reevaluated in regard to the changing environment. In many cases, we will need to replace old tools and techniques with new one designed specifically for the changing situations and demographics we are facing.
Diversify funding sources by seeking out a mix of grants from private foundations, corporate sponsorships, and individual donors at all levels.
Invest in capacity building by enhancing staff training, improving technology systems, and streamlining operations. Focus on operational efficiencies and cost savings.
Employ data analytics and predictive modeling to better understand donor behavior and preferences, allowing for targeted outreach efforts.
Evaluate and update all communications strategies and the tools that support them. Be ready to talk about impact, backed up with unassailable data, at every opportunity.
Build strong relationships with stakeholders, including community members, local businesses, government leaders, and other nonprofits.
Maintain high nonprofit ratings with well-known organizations, such as GuideStar, and communicate clear fundraising goals.
Implement robust fraud prevention strategies and utilize secure fundraising platforms.
Focus on demonstrating transparency, impact, and accountability to build and maintain trust with donors.
Today, nonprofits face unprecedented challenges, from funding cuts to a polarized political climate and declining institutional trust. However, by adapting to the current political and social landscape and looking for ways to create innovative strategies, diversify funding sources, and leverage digital tools, nonprofits can not only survive but thrive. It is essential for nonprofit leaders to stay informed about political developments and societal trends while focusing on building strong, resilient organizations that can quickly pivot as needed with the evolving situation.
These are difficult times, but our organization were not formed to solve easy problems. By facing the current challenges with open eyes and minds, your nonprofit can continue to serve your community effectively, even in the face of adversity, and ensure that your mission remains at the forefront of societal change.