How Nonprofits are Navigating Recent Federal Policy Changes: A Survey Review

At a glance

• The main takeaway: Recent federal policy changes, including President Trump’s executive orders that froze many federal grants, have created uncertainty for nonprofit organizations and associations reliant on aid.
• Impact on your business: Potential tax reform and funding cuts are affecting nonprofit and association activity, including membership, engagement, the ability to deliver programs and services, and conference attendance.
• Next steps: Nonprofits and associations should proactively take steps now to strengthen their operations, including seeking the help of a trusted advisor experienced in nonprofit and government contracting.

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The full story:

The Trump Administration’s Executive Order: Reevaluating and Realigning United States Foreign Aid, along with other changes to federal priorities, has impacted associations and nonprofits across the United States. As these service organizations evaluate their funding and operational capacity for the immediate future and beyond, some are experiencing the effects of recent change more acutely than others.

The American Society of Association Executives (ASAE) recently conducted a poll of its association members to quantify the impact across industries and organization sizes. The survey was sent to over 3,200 executives, and survey results reflect some common themes across associations.

ASAE findings

Executives from healthcare, education, professional services and other disciplines conveyed uncertainty around several themes. Some of these themes are summarized below:

• Funding and operations challenges: Many respondents expressed concern about the loss of federal grants or contracts, decreased conference attendance, legal/compliance difficulties, and member/staff wellbeing challenges.
• DEI program implications: Several executives reported that their organizations have rebranded or halted DEI programs. Many voiced uncertainties around how to navigate DEI activities in the current political climate.
• Government interfacing: Some respondents reported challenges communicating with federal agencies because of staffing changes.
• Coalition building: Several respondents expressed renewed efforts to foster collaboration and alliances as a strategy for weathering challenges.

While many executives expressed concerns, still others conveyed positive to neutral sentiments. For example, some respondents reported little to no changes in their operations, and others suggested that the shifting landscape could, in fact, benefit their organizations.

The variation in responses and thematic concerns points to the diverse ways in which organizations are affected by ongoing changes, depending on their sector, funding structures, and strategic priorities. As the landscape continues to evolve, leaders will need to adapt their approaches to mitigate risks and capitalize on emerging opportunities.

Other reporting and considerations

The U.S. is home to more than 1.8 million nonprofits and hundreds of thousands of associations. Together, these organizations employ more than 13 million people. Analysis of Form 990 data points to 2 of 3 nonprofits receiving at least one government grant or contract. Larger nonprofits – those with $10 million or more in annual expenses – have tended to have a greater dependence on government funding. Regardless of organizational size or industry, the effect of the federal funding freeze is widespread.

The bottom line

Despite shifting policy and funding tides, associations and nonprofits must act now to reduce operational inefficiencies and bolster financial reserves. Aprio’s Nonprofit and Government Contracting segments are here to help you navigate economic, regulatory, and operational complexity to best position your organization for success. Schedule a consultation with us today to learn more about assurance services, board trainings, and more.

Related Resources/Assets/Aprio.com articles/pages

• Case Study: Enhancing Operational Efficiency for a Nonprofit Organization
• Financial Action Plans for Nonprofits Impacted by Federal Funding Freeze
• Demystifying the Schedule A Public Support Test