The Urban Institute recently published an online map tool to help donors and other nonprofit stakeholders better understand the financial risk to nonprofits if they lose their government grants. Nationwide, about 100,000 public charities reported receiving a total of more than $267 billion from government grants in 2021, amounting to nearly three times the amount received from foundation giving, according to The Urban Institute. In “more than 95 percent of counties in the United States, public charities receive government grants. Without these grants most nonprofits would be unable to cover their expenses,” The Urban Institute reported.

The U.S. government often outsources functions to charities or private businesses that governments in other parts of the globe provide directly as part of government services, such as housing programs, environmental protection, or aid to children and families. Eliminating such funding without insourcing these functions to government creates a gap in services that would be difficult to fill with private donations.

“In all but two of the 437 congressional districts in the United States, the typical nonprofit could not cover its expenses without its government grants. And in every state, between 60 and 80 percent of nonprofits that receive government grants would be at risk of a financial shortfall,” according to The Urban Institute.

The Urban Institute’s online tool breaks out the number of online nonprofit filers that receive government grants in each state and county; total government grants received by each county and state; the operating surplus or deficit of nonprofit filers by county and state with and without government grants; and the share of nonprofit filers in each county and state whose government grants are at risk.

Federal Anti-DEI Policies

The charity RAINN (Rape, Abuse, & Incest National Network) recently pulled back on its inclusion of trans people in its online materials. Rather than reflecting an ideological shift, the change appears to have been motivated, at least in part, by the organization’s concerns over losing government funding if it fails to comply with the Trump Administration’s anti-DEI (Diversity, Equity, & Inclusion) policies related to demanding the recognition of only two genders. RAINN reports that it received $738,265 in government grants in fiscal 2024.

In the face of such new dictates, many nonprofits face an existential crisis. Organizations that stand firmly behind their core values and stay true to their missions risk losing critical funding that in some cases will mean closing their doors and winding down operations. Those that compromise as a means of maintaining the flow of federal funding may put vulnerable populations, who already struggle to find adequate services, at greater risk. It can be a real Sophie’s Choice. While very committed donors might step up to replace the loss of federal funding in some cases, it is unlikely that private donations will fill the gap for most charities.

CharityWatch Flags Charities That Receive Significant Government Funding

On our online charity rating profiles and in our paper publication, the Charity Rating Guide & Watchdog Report, CharityWatch flags charities that receive significant government funding. After analyzing a nonprofit’s audited financial statements and tax filings, CharityWatch indicates if an organization receives between 25% to 49%, or 50% or more of its total support from U.S. government sources. Such charities may currently be experiencing potential losses in funding due to Trump Administration cutbacks of federal funding. Those organizations that do lose federal funding will be in need of more support from foundations, corporations, and the general public to make up for those losses if they hope to maintain their existing programs.

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