Nonprofits across the US received notices of federal government funding cancellations and freezes in early 2025 that made it harder to carry out their missions and serve communities. But nonprofits in the greater Washington, DC, region—where large numbers of federal government workers have been laid off and the unemployment rate has risen faster than in the rest of the US—were especially hard hit.
According to the 2025 National Survey of Nonprofit Trends and Impacts, conducted by the Urban Institute, American University, and George Mason University, 43 percent of nonprofits headquartered in the greater DC region experienced a disruption to their government funding earlier this year, compared with 33 percent of nonprofits nationwide. Among nonprofits in DC and the surrounding Maryland and Virginia suburbs,
- 33 percent reported experiencing a delay, pause, or freeze in their government funding;
- 33 percent reported losing at least some government funding; and
- 7 percent reported receiving a stop work order.
(Throughout, “nonprofit” includes public charities with a 501(c)(3) designation and at least $50,000 in expenses and revenues and excludes certain nonprofit types, such as foundations, schools, and hospitals. Learn more about the sample on the survey website.)
As residents of the region face increasingly high costs for necessities and losses of income from federal workforce reductions, sustaining the services that nonprofits offer has become even more important.
In this article, we explore the ripple effects of disruptions to nonprofits’ government funding on employment opportunities, affordability, and demand for nonprofits’ services in the greater DC region. Our findings offer important insights for nonprofits, funders, and policymakers looking to understand and address these intersecting challenges.
Disruptions to nonprofits’ government funding threaten a job market weakened by federal government job losses
When surveyed in spring 2025, 21 percent of nonprofits headquartered in the greater DC region reported they had decreased their total number of employees in the first four to six months of the year (compared with only 15 percent of nonprofits nationwide).
Further, when the survey was administered in late 2024, 57 percent of DC-area nonprofits anticipated they would hire new staff in the next 12 months. But when they were surveyed again in the spring of this year—following the start of government funding disruptions—that number dropped to 41 percent. Similarly, the share of DC-area nonprofits reporting plans to lay off staff in the next 12 months more than doubled between late 2024 and spring 2025, from 6 percent to 14 percent.
On top of these indicators of a shrinking nonprofit workforce, the greater DC region has experienced disproportionate federal government job losses this year because of the reductions in force across federal agencies. The increase in nonprofits that anticipate layoffs and decrease in nonprofits that plan to hire indicate that the nonprofit sector in the region won’t be well positioned to absorb former federal employees. This could lead to a rising unemployment rate for those who stay in the area or cause people to move for new job opportunities. It could also lead to an increase in need for nonprofit services.
High and rising costs of living compound employment challenges and likely increase demand for nonprofits’ services
Shifts in the employment landscape caused by government funding disruptions and federal government job losses are occurring alongside—and could worsen—the region’s ongoing affordability crisis.
The DC region is one of the most expensive places to live in the US. Average home sale prices currently hover around $680,000, 1.4 times the national average. And the District alone has the highest prices for child care in the nation. In 2024, the combined cost of center-based care for a 4-year-old and family-based care for an infant in DC was $47,200 (compared with $29,100 nationally).
Costs have risen in recent years, too, leaving many households struggling to afford the basics. Take housing and grocery prices, for example. Home sale prices in the greater DC region are 62 percent higher today than they were in 2017 (before adjusting for inflation). Rents in the region have also increased, climbing 27 percent between 2017 and 2025. And grocery prices increased by 40 percent over the same period, compared with a 32 percent increase for the nation overall.
And while residents of the DC region have historically had high earnings, their earnings haven’t kept pace with these cost increases. In the District alone, earnings rose only 31 percent between 2017 and 2025. And slower earnings growth captures affordability strains for only working families. Residents who have lost jobs and are looking for work likely have even fewer resources to deal with rising prices.
Together, these affordability challenges and nonprofit and federal government job losses could drive up demand for the region’s nonprofit services.
Though needs for nonprofits’ services are likely growing, DC area–serving nonprofits are already decreasing their staffing and programming
In spring 2025, two-thirds of nonprofits headquartered in the greater DC region that reported serving people locally or statewide—which we refer to as “DC area–serving nonprofits”—anticipated demand for their services to increase in the next 12 months. One such nonprofit, the Capital Area Food Bank, recently reported that more than 40 percent of people affected by federal job losses and spending cuts were food insecure.
The signing of the One Big Beautiful Bill Act in July 2025, which made changes to the Supplemental Nutrition Assistance Program (SNAP) and Medicaid eligibility, could further increase the need for food assistance and community health services. Urban research estimates that 230,000 families in the DC area will lose some or all of their SNAP benefits and that many working people could be shut out of Medicaid.
And while the region recently emerged from the longest federal government shutdown in history, it’s also bracing for another potential shutdown when the current funding runs out at the end of January 2026.
All these factors could raise demand for nonprofits’ services at a time when DC area–serving nonprofits are already decreasing their staffing and programming. In spring of this year, 22 percent of such nonprofits reported decreasing their total number of programs, and more than half reported keeping their total number of programs about the same—despite two-thirds of them anticipating an increase in demand for their services. These data suggest DC area–serving nonprofits might not have the capacity they need to help residents.
Taking a holistic view to meet community needs
The combination of nonprofits’ government funding disruptions, decreases to nonprofits’ staffing and programming, the growing need for nonprofits’ services, affordability challenges, and shrinking opportunities for federal government and nonprofit jobs presents a unique and varied set of challenges to DC-area nonprofits and residents.
To make life more affordable for DC-area residents and ensure nonprofits in the region can continue meeting communities’ needs, nonprofits, their funders, and policymakers should explore cross-sector solutions that seek to treat these issues together, instead of in isolation.
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