The Center for Effective Philanthropy (CEP) released its fourth annual State of Nonprofits report, accompanied by a webinar, bringing together researchers and frontline nonprofit leaders. The report draws on a February 2026 survey of 887 nonprofit leaders across the country that receive foundation funding, and the webinar brought those findings to life through candid conversation. Together, they point to three key takeaways for funders.
Finding #1: Burnout Has Increased Dramatically
Nonprofit leaders have long dealt with stress and overwork, but this year’s data shows something larger in scale. 89% of CEOs surveyed expressed some level of concern about their own burnout, and 46% said burnout is very much a concern, which is nearly double the amount who said the same last year. This is the highest rate recorded in the three years CEP has been tracking this question. The drivers are compounding: a rise in demand for services, fears for the safety of the communities they serve, pressure to reframe their public messaging, and legal challenges tied to the current political environment. About 30% of nonprofits have had to reduce staff since January 2025, with most cutting more than 10%.
The human toll came through clearly throughout the report. One leader described barely leaving bed during the holidays. Another wrote that while their team is strong, “that cannot go on indefinitely.” A third captured it simply: “We are strengthened in or resolve but personally exhausted.”
Dr. Laura Gerald of the Kate B. Reynolds Charitable Trust describes one concrete funder response: “Camp Kate,” a week-long retreat for nonprofit leaders, with no deliverables required. After the program’s success, they’re working on expanding it. As Diane Yentel, President and CEO of National Council of Nonprofits noted, relatively small investments like wellness days, stipends, and sabbaticals, can have meaningful and lasting impact. Supporting staff well-being isn’t a nice-to-have. It’s infrastructure.
Finding #2: More Difficulty Obtaining Foundation Funding
Close to 60% of nonprofit CEOs report it has become harder to secure foundation grants since January 2025, but the difficulty extends well beyond foundations. Nearly half said federal grants have also become harder to obtain, and many are struggling with state, local, and individual donor funding as well. More than 40% reported actual reductions in foundation funding received, and nonprofits that experienced government funding cuts were significantly more likely to have already reduced their services.
These issues are broadly spreading beyond those directly impacted. Even organizations that never relied on federal funding are feeling the squeeze, as others now compete for the same private donors and foundation grants. Sister Norma Pimentel of Catholic Charities of the Rio Grande Valley described navigating this firsthand, rebuilding on volunteers and community relationships after federal support was pulled back. Her approach is to get in front of people personally and make the need visible. “Share testimonies and actual facts,” she said.
For funders, Diane Yentel outlined several concrete ways to help: multi-year flexible grants, reduced reporting burdens, sustained infrastructure funding, and speaking out when grantees come under attack.
Finding 3: Leaders Are Making Strategic Changes In Order To Survive
Nearly 40% of nonprofits ran a budget deficit in the year 2025, up from 22% in 2022. Higher-than-expected costs were the most common driver, followed by lower-than-expected foundation revenue and individual giving. The actions CEOs are considering reflect the stakes: 88% are pursuing new funders, 46% are weighing delays on staff compensation increases, and 34% are considering reducing programming. As one CEO put it: “We are cutting fat and tightening up operations. But that also means we’re all working at 175%, and it is not sustainable.”
The more hopeful conversation is that of collaboration. About half of nonprofits surveyed have initiated new partnerships like sharing services, co-locating, and building joint fundraising efforts. Sister Norma described partnering with Meals on Wheels to help reduce their 3,000-person waiting list rather than duplicating their work. She also runs a 15-minute Friday morning check-in for nonprofits in her area. “It doesn’t take a lot of time,” she said. “It gives us a chance to know about how we’re continuing to stay afloat.” Diane Yentel echoes the value of collective action: “When we tell our story together, we’re able to not just defend ourselves but define ourselves.”
This same spirit of collaboration extends to funders, too. In a recent Foundation Source client spotlight, Greg Price of the Gamble Foundation shared how he subsidized a grant-tracking tool across ten grantees so they could build fundraising capacity together — a model for how funders can move beyond the check.
What Funders Should Take Away
Across researchers, funders, and frontline nonprofit leaders, the message was consistent: the sector is not going back to what it was, and this needs to be used as growth going forward. As Dr. Gerald said, “I hope we don’t let this good crisis go to waste.”
The question now is whether funders like foundations, individual donors, and corporate philanthropies will treat this moment as the turning point that it is. This includes flexible, multi-year funding, general operating support, investments in organizational health and staff well-being, and sustained infrastructure funding. The nonprofits navigating this moment need partners who are in it with them and there’s reason for optimism.
Foundation Source’s 2026 donor survey found that 86% of funders plan to maintain or increase their giving this year, sending a signal that they are ready to show up.
Check out CEP’s full State of Nonprofits 2026 Report and the Board Book Insert for key takeaways.
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