What’s Keeping Nonprofit Leaders Up at Night in 2025

By Kalie VanDewater

The past several months have been challenging for nonprofits — any way you slice it. There’s a lot to keep track of on any given issue, so NonProfit PRO spoke with experts from different areas of the nonprofit sector to hear their insights on the current climate — and what nonprofits can do to set themselves up for success.

The Economic Impact on Philanthropy

One major issue on everyone’s mind is the economy. Volatility is a hallmark of the economy, Sutanto Widjaja, senior vice president and wealth adviser at Farther, said. We’ve experienced volatility during the COVID-19 pandemic, in 2022 when the stock market plunged, when the dot-com bubble burst in the ’90s and other periods throughout history.

Unlike those other times, this moment is marked by the loss of longstanding government support.

“In an environment where you literally get, like, a week's notification and the money is pulled out, many nonprofits just have to scramble,” Widjaja said.

Widjaja, who also sits on the investment committees of several nonprofits, explained that inflation is among the most prominent economic factors nonprofits are facing now.

“In one of the boards that I sit on, we just got a quote for insuring our assets and our buildings,” he said as an example. “The quote that we got is 100% to 200% above last year's quote. … So inflation is clearly an issue that is top of mind.”

Tying into inflation, the outlook on nonprofits’ endowments is uncertain. While Widjaja said these funds are intended to support organizations “in perpetuity,” the volatility of the market means some endowments might not be generating the standard return of 5% above the inflation rate, aka Consumer Price Index plus 5%.

“What that means is … those endowments mathematically will just deplete and decline in value over time because you're basically just taking out of the endowment more than the endowment can appreciate in value,” he said.

Most endowments are based on the Yale endowment method, which includes private assets — such as private equity, venture capital, infrastructure, real estate and more — that historically outperform public assets to build an investment portfolio. But because of the current period of volatility, Widjaja said nonprofits may start to change how they think about their endowments altogether.

Government Actions Targeting Nonprofits

The sudden instability where there was once funding certainty is causing anxiety among nonprofits, according to Bob Carter, CFRE, chairman at fundraising and governance consultancy Carter.

“Uncertainty drives so much fear,” Carter said. “For example, even with a job, once you know you're not going to have your job, you can do something about it. But when you don't know and you really like what you're doing, you have a tendency to hang on and try to make that work out, but you're not nearly as effective because you're uncertain about the future.”

Additionally, nonprofits fear a bill that would tax nonprofits billions of dollars and is currently working its way through Congress could become reality. And in light of President Donald Trump’s threats to revoke Harvard University’s tax-exempt status, nonprofits may be worried they’re next. Carter said the idea of taking away tax-exempt status is not new; nonprofit health systems and hospitals have faced this scrutiny in the past. However, he doesn’t believe that most nonprofits should be worried about this.

“We're not talking about [service-based organizations] here,” Carter said. “I don't think any of them are threatened in any way, because they're totally living on the edge — every nickel they get goes into services. … What they're coming for is what is perceived as the gross abuse of the 501(c)(3) to accumulate great wealth for the institution. And that's different.”

While there are a variety of ways nonprofits could lose their tax-exempt status, they all involve wrongdoing on the part of the organization. Testifying before the House of Representatives’ Delivering on Government Efficiency subcommittee, Diane Yentel, president and CEO of the National Council of Nonprofits, encouraged nonprofits to focus on their missions and avoid the distractions surrounding threats to revoke any nonprofit’s tax-exempt status.

“It is illegal for the president or any member of the executive office to direct the IRS to make any changes to the tax status of an individual or an organization,” she said in the June 4 hearing on nonprofit accountability. “And, in fact, the law makes clear that if the president threatens to revoke tax exempt status from an individual organization, they can be convicted [and serve] up to five years in prison.”

The State of Donor Behavior

Donors are reacting to volatility in different ways. Some high-net-worth individuals — who mostly hold their wealth in assets like the stock market — are hesitant to make large donations, Widjaja said. This isn’t too surprising, as he said volatility is inextricably tied to donor hesitancy.

“[Nonprofits] may have a commitment — a long-term commitment from a donor, a multi-year commitment — but each time that there's volatility in the market, the donor may defer, or in one case that I have seen, they completely just canceled their commitment,” he said.

Another factor for high-net-worth donors is the onslaught of donation requests from a potentially greater number of organizations — meaning they have to pick and choose who they’re giving to. Plus, as some loyal supporters pass down their wealth to their heirs, there is no guarantee that next generation of donors will maintain the same giving levels or even share their parent philanthropic goals.

High-net-worth individuals aren’t the only ones whose behavior may be shifting. Small-dollar donors are curbing their contributions, Mike Esposito, CFRE, founder and lead fundraising strategist at Mike Esposito Fundraising, said. Meanwhile, donors who have been making larger donations — and therefore may have a stronger connection with the recipient nonprofit — are donating more.

Some foundations are actually increasing their giving as well, Esposito said.

“There's a list of over 80 foundations that are stepping up in this time and giving out more,” he said. “Typically, they give out a minimum of 5% by law, but some are giving 6%, some are giving 10%. And some, as we've seen with recent announcements, are looking to use all of their funds in the next, say, 10 or 15 years.”

Another upside is there’s been no signs of a corporate giving slowdown, Widjaja said, due in part to the fact that corporations have already budgeted their charitable gifts for this year. Plus, pulling back on promised funding would look bad for corporations.

“That would not bode well for their reputation, but more importantly, that would also create panic within Wall Street sentiment: ‘What happened to them? They canceled a $50,000 commitment,’” Widjaja said.

In the grand scheme of things, Carter said some donors are shifting from making global-minded donations to supporting causes closer to home, while others are trying to fill the gaps internationally. It’s a pendulum that’s swung back and forth during his time in the sector, he said.

“I believe that there's a balance to be had there, as opposed to one or the other extreme, where we go through periods where people … are less likely to support — in some cases — international charities versus taking care of business at home,” Carter said. “And that's when we sort of withdraw and come into our own ‘charity begins at home’ mentality. And I think that at the top of the food chain — in terms of the largest possible givers — that's not necessarily as true, but in the middle and certainly toward the bottom end, that is very true, it seems.”

What Can Nonprofits Do?

While a lot of things are uncertain for nonprofits, there’s still plenty within your control.

“I generally say you have 30 to 60 minutes to be upset about something,” Carter said. “You can wring your hands, you can cry out of control, you can do whatever, but after that, you need to start preparing for the new reality that's coming down.”

Widjaja offered these actionable tips for nonprofits.

Do some scenario planning. Managing your nonprofit’s assets to prepare for a range of possibilities can help maintain sufficient cash flow.
Control expenses. Widjaja said this is crucial for nonprofits that are facing funding uncertainty.
Expand your donor base. Regardless of donor fatigue and uncertainty, it is possible — and critical — to attract and retain new donors. Adding younger donors in particular will help you build a potentially longer-term donor base.

From a fundraising perspective, Esposito sees a few opportunities. A big one is to keep making those asks.

“If you are really struggling, reach out to those tried-and-true donors,” Esposito said. “Tell your board. Talk to your major donors and let them know the struggles that you're facing in this time, because it is kind of an unprecedented time.”

In terms of seeking out grants and other funding opportunities, being diligent is key to making the most of your efforts. This includes everything from focusing applications on funding opportunities that align with your mission to building relationships with potential funders.

Esposito also advocated for embracing new and emerging strategies, such as welcoming donor-advised fund (DAF) gifts and using generative artificial intelligence (AI) to help free up time for higher value activities, like major gift cultivation and corporate sponsorship outreach.

He also pushed for nonprofits to support their employees’ wellness so they can thrive at work.

“Just seeing the effect that layoffs have had on the industry, seeing the increased pressure on philanthropic dollars, what that does to fundraisers and the enormous pressure that that puts on them — just making sure that you're checking in with them [is necessary],” Esposito said.

Though there are many challenges stacked against the nonprofit industry, Carter sees it as the time for leaders to step up.

“This is why we have leaders in position with a steady hand at the wheel — whether it's the CEO or a board chair, whatever it is — keeping the ship on course as very best you can,” he said. “And at times, that means not going direct into the wind. Maybe it's falling off a little bit here. Maybe it's redirecting to the wind there. Some people say, ‘well, we were going to hunker down, we're going to anchor down.’ If you throw an anchor out in the storm, you know what happens? The waves wash over you because you're tied to the bottom. You have to move with the tide; you have to roll with the waves to survive a storm.”

Editor’s Note: For more tips on how to take on 2025, download NonProfit PRO’s free resource, “40 Nonprofit Trends for 2025.”