In every community across the US, nonprofits meet people’s needs for essential supports and services, such as job training, independent living assistance, disaster relief, and more. Yet disruptions to government funding—including losses of funding, funding freezes and delays, and stop work orders—have made 2025 a challenging year for nonprofits nationwide.
Massachusetts is no exception. According to Nonprofit Trends and Impacts Study data from 2019 to 2025, Massachusetts nonprofits were dealing with rising expenses and thin reserves even before government funding disruptions began this year. Though the Commonwealth’s nonprofit workforce had grown and revenue streams were diverse leading up to this year, threats to government funding could undermine those strengths and deepen the challenges Massachusetts nonprofits already face.
This article explores Massachusetts nonprofits’ financial health and workforce leading into 2025 to help nonprofits and their funders, policymakers, and advocates in the Commonwealth and across the US better understand and adapt to government funding challenges to ensure nonprofits can continue playing their vital role in communities.
Massachusetts nonprofits experienced similar government funding disruptions as nonprofits nationwide this year
When the National Survey of Nonprofit Trends and Impacts was fielded in early 2025, 30 percent of nonprofits in Massachusetts reported facing disruptions in funding from government grants, contracts, loans, or other government financial assistance. This is similar to the national share of nonprofits that reported government funding disruptions: 33 percent. (Throughout, “nonprofit” includes public charities with a 501(c)(3) designation and at least $50,000 in expenses and revenues and excludes certain types of nonprofits, such as foundations, schools, and hospitals. Learn more about the sample on the survey website.)
Among the types of disruptions we analyzed, funding freezes were the most common, followed by funding losses and stop work orders. The types of disruptions Massachusetts nonprofits experienced mirror those experienced among nonprofits nationally.
The Massachusetts nonprofit workforce was growing leading into 2025, but funding disruptions threaten those gains
The Massachusetts nonprofit workforce grew from 2019 and 2024. Despite challenges presented by the COVID-19 pandemic, the share of nonprofits with full-time paid staff increased from 73 to 82 percent. When surveyed at the end of 2024, 62 percent of Massachusetts nonprofits reported they planned to hire new staff, compared with 53 percent of nonprofits nationwide. That means, relative to nonprofits nationally, Massachusetts nonprofits entered 2025 more optimistic about adding jobs—and contributing salaries, wages, and benefits to residents.
But when asked the same question in early 2025 after government funding disruptions began, only 45 percent of Massachusetts nonprofits planned to hire new staff (compared with 38 percent of nonprofits nationwide). If these trends continue, it could put previous growth in the nonprofit workforce and the associated economic benefits at risk.
Massachusetts nonprofits have diverse funding sources, but that may not be enough to overcome other financial challenges
Massachusetts nonprofits have a diverse mix of revenue, potentially helping them adapt to shifts in the funding landscape. In 2023, the average Massachusetts nonprofit received 51 percent of its revenue from charitable giving and philanthropy, 26 percent from government agencies, 17 percent from fees for services, and 6 percent from other sources. With numerous funding streams, and with more nonprofits employing full-time staff from 2019 to 2024, the Massachusetts nonprofit sector entered 2025 well positioned to meet challenges and remain resilient amid economic uncertainty.
Still, the sector has three vulnerabilities that could make it less prepared to withstand financial downturns like the government funding disruptions this year.
- Rising expenses and limited reserves could put additional financial pressure on the sector and leave many nonprofits financially vulnerable. From 2022 to 2023, 69 percent of Massachusetts nonprofits saw an increase in overall expenses. And in January 2024, 45 percent of Massachusetts nonprofits had less than three months of revenue in reserves. Government funding disruptions this year are likely deepening nonprofits’ financial concerns. Our recent research found that even nonprofits that did not experience government funding disruptions are facing a new fundraising landscape characterized by increased competition for nongovernmental resources.
- Massachusetts nonprofits’ largest funding source—charitable giving and philanthropy—showed signs of strain. About one in five nonprofits reported experiencing a decline in charitable giving and philanthropy in 2023. Twenty-two percent reported decreases in foundation or corporate grants and donations, 18 percent reported decreases in small cash donations (under $250), and 17 percent reported decreases in larger donations. If these funding decreases have continued in 2025, many nonprofits will have to find new funding sources to maintain current staffing and programming levels.
- Massachusetts nonprofits were more likely than nonprofits nationwide to receive government funding, so they could be especially vulnerable to government funding disruptions. In 2023, 73 percent of Massachusetts nonprofits received such funding, compared with 67 percent of nonprofits nationwide.
Supporting the nonprofit sector requires attention to its financial health and stability
Nonprofits have faced increased inflation, government funding disruptions, and growing competition for charitable giving and philanthropic funding this year, intensifying issues the Massachusetts and US nonprofit sectors were already navigating.
Though the nonprofit sector is resilient, it faces strong headwinds. To ensure nonprofits can continue to meet community needs in Massachusetts and across the US, funders and policymakers should be attentive to the financial health and stability of nonprofits, which remain a core contributor to the Commonwealth’s economy.
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