As Americans have coped with higher prices at the checkout counter, so, too, have the country’s nonprofits, which are paying more for basic goods, salaries, and rents than they did five years ago.
In 2023 — the last year for which there is publicly available data — the anti-hunger juggernaut Feeding America spent about $100 million on produce, over five times more than it spent in 2019. During that same period, Samaritan’s Purse spent 80 percent more on Bibles, St. Jude’s spent 30 percent more on pharmaceutical supplies, and Toys for Tots spent 59 percent more on toys. The Metropolitan Opera spent almost 80 percent more on production equipment, even as ticket sales tumbled by one-fifth and overall revenues declined.
None of those increases can be attributed exclusively to inflation. There may be more hungry people to feed, more proselytizing to do, and more gifts to give than in years past — but they do reflect the compounding economic pressures that have left many nonprofits running on fumes, or dwindling reserves, as they enter 2025.
That’s been the bleak calculus for many of the country’s charities, which have experienced a wave of program cuts, layoffs, and even closures as they face a triple economic threat — inflation driving up expenses, pandemic relief funds drying up, and donations falling. Now, with even more uncertainty due in 2025, nonprofit employees are nervously awaiting what’s next for themselves and the people who need them most.
“When inflation hits the pocketbooks of our neighbors facing hunger, it’s also hitting our pocketbooks” in the form of steeper prices, higher salaries, and once-reliable donors forced to cut back on their regular contributions, says Linda Nageotte, president of Feeding America.
Over the past few years, food banks have faced an inflationary double whammy, she says, from higher direct costs and an increase in American families turning to food banks after being priced out at the grocery store: “We can’t spread our resources thin like peanut butter.”
In the years since the pandemic, demand has continued to rise while food prices have increased and donations have fallen, Nageotte says, forcing many food banks to cut back on staff, programming, and the quality and quantity of food they can provide. This leaves families with, for example, a quart of milk instead of a gallon.
Indeed, even as the rate of inflation has slowed in recent months, hitting a three-year low of 2.4 percent in September, many are still feeling the crunch.
“I get frustrated sometimes when people say inflation has eased,” says Brian Kearns, an audit partner at UHY Advisors who works with nonprofits. “That doesn’t mean it’s gone negative. Costs are still going up. They’re just going up at a slower rate.”
Upended Finances
Few organizations have felt the financial crunch as acutely as the nation’s arts institutions, which have faced challenge after challenge since the pandemic shuttered their doors nearly five years ago. Even today, audiences have not fully recovered to pre-pandemic levels, making arts groups reluctant to raise ticket prices even as their own costs have skyrocketed.
This has forced leaders to walk an ever-tighter financial tightrope.
Take Robert Barry Fleming, who took the helm of Louisville’s storied Actors Theatre at the end of 2019 and soon realized the math wasn’t adding up anymore. Rising costs and declining patronage had left one of America’s premier regional nonprofit theaters — once a $13 million-a-year operation — on the brink of financial collapse, forcing Fleming to slash nine senior positions that January.
Costs are still going up. They’re just going up at a slower rate.
It would be the first of what has become a seemingly endless stream of impossible decisions. Six years, one pandemic, and a global inflation crisis later, Actors Theatre is a wisp of its former self. Gone is its annual Humana Festival — a showcase for new work from American playwrights since 1976 — and with it, over 75 percent, around 100, of the organization’s employees.
There was no choice but to downsize, Fleming says. Revenue collapsed to $2.6 million by 2023.
“We don’t have any millionaires to come fill that gap anymore,” Fleming says, citing three recently deceased Louisville patriarchs who supported the theater and whose families have since prioritized other causes. “We had to rethink the model to match our ambition with our capacity,” he explains, “and not work with those structural deficits.”
For Fleming and the theater’s remaining staff of 30 — down from 130 at its peak — the path forward has been both painful and illuminating.
“As devastating as all of it was, it laid the foundation for where we are now,” Fleming says. “How do you manage that in a way that people have a livable wage and a manageable workload? That was the exploration that we did. We found some great things there, and we found some things that are still very challenging.”
Hard Choices
The largest or wealthiest organizations might be able to dip into their reserves to survive a downturn, but the majority of nonprofits can’t operate on empty for long. When the math doesn’t add up anymore, most have few options but to fall into debt, downsize, or dissolve altogether.
Ever since the pandemic, the 15-year-old Latino STEM Alliance, a tiny education nonprofit in Boston, Mass., struggled to attract enough funding to afford its small staff and modest expenses. One by one, longtime grants from local foundations dried up as they shifted priorities to focus on basic needs, like housing or food insecurity.
“I thought this was just hitting STEM organizations in Boston,” says Karen Chacon, the group’s former executive director, who repeatedly cut her own salary as a stopgap measure for dwindling funds. Several board members made personal loans, and Chacon reached out to every funder and partner she could think of for help.
The majority of nonprofits can’t operate on empty for long.
She laid off two of her three staff members, but it still wasn’t enough. The board voted to dissolve the organization entirely last November, a decision that spurred a mixture of sorrow and some relief for Chacon, after seeing the writing on the wall for months before the closure.
“I kept blaming myself for not doing a better job of fundraising. As a leader, you think it’s 100 percent your fault,” regardless of broader financial pressures, she said. “I wanted to provide robotics and programs that I never had when I was a kid. That’s the part that I’m grieving. I’m grieving for the students that won’t have that program.”
But Chacon was not alone in navigating a tough decision during a complicated economic period. While some nonprofits have weathered the storm, many across the sector have been forced to make difficult cuts. The exact number of layoffs is not known because the next batch of nonprofit employment data from the U.S. Bureau of Labor Statistics won’t be published until 2029 — but there are many anecdotal accounts. The Public Theater laid off 19 percent of its staff in 2023. United Way of Greater Philadelphia and New Jersey laid off nearly two in five workers in 2024, and roughly 18 percent of employees at the Trevor Project lost their jobs in two rounds of layoffs in 2023 and 2024.
“We’ve seen an increase in longstanding organizations deciding to close over the last three to six months,” says Kristin Giantris of the Nonprofit Finance Fund. “What we’re finding with these longstanding leaders is that they’re at a point in their own careers where transitioning the organization to its next iteration, at a time when funding is decreasing and there is so much external pressure on nonprofits, just doesn’t feel realistic.”
During the pandemic, both increased donations and government relief programs helped ward off layoffs and program cuts at the country’s nonprofits. By one estimate, the Paycheck Protection Program saved more than 450,000 nonprofit jobs in the pandemic’s early days.
But most of those government relief programs have long since expired, and with donations down, too, nonprofits are struggling to stay afloat. In Minnesota, by several measures, the number of nonprofit dissolutions has increased significantly since 2020, with a doubling in the number of groups falling inactive between 2019 and 2023, according to data from the Secretary of State’s office.
Over the past year, many of those shuttered organizations have been older and more entrenched in their communities rather than newer pandemic-era enterprises, says Nonoko Sato, head of the Minnesota Council of Nonprofits. She has heard of a 150-year-old child-care nonprofit in the state that’s exploring dissolution amid untenable financial troubles, a loss she says could be devastating for rural areas of the state where “the next similar organization might be 20 miles away.”
A survey in 2024 by the Minnesota Council of Nonprofits found that 79 percent of organizations in the state said they have less than 12 months in reserves before they start experiencing financial distress, compared with 61 percent that said the same in 2023 and less than half in 2022. As a result of inflation, donations and grants simply don’t go as far as they used to for many of the state’s nonprofits, Sato says.
“The $10,000 of three years ago is not the same as the $10,000 of today,” says Sato, who thinks groups across the state ought to reach out to one another and share ideas for how to cope with a difficult climate, while funders should communicate with grantees about how much they’re able to support.
“It’s really helpful for nonprofits to know they’re not alone,” she says. “You’re not alone in the challenges you’re facing.”
An Uncertain Future
By some indicators, the financial tides have finally been turning, with prices rising far slower than they were a year ago, robust economic growth, and low levels of unemployment. Yet, with several of President-elect Donald Trump’s campaign promises spurring uncertainty across the nonprofit world, leaders say it’s unclear whether 2025 will hold relief or further turmoil.
It’s possible that high tariffs — as promised by the president-elect — could spark higher inflation once again, and mass deportations could traumatize immigrant communities while decimating some American industries, which could further drive up prices.
And the government funding that undergirds about one-third of the cost of nonprofits’ work? That could dwindle, too, if promised spending cuts come to fruition, while cuts to federal social services could plunge millions more families into poverty, stretching food banks and homeless shelters even thinner.
“I’m hopeful, but not optimistic — the next four years are going to be difficult,” says Frank Delaney, managing director of the Alaska-based Perseverance Theatre, which in recent years has been operating on a deficit with a bare-bones staff, as inflation struck Alaska harder than other parts of the country. Even as costs have risen, the theater has been reluctant to raise prices as audiences continue to trickle back, charging $45 for performances that cost $140 per person to put on.
The group is part of a coalition that has been holding its breath for a federal bailout, with some Democratic lawmakers considering a bill that would allocate $1 billion annually to struggling nonprofit theaters for the next five years. With Republicans about to take control of Congress, advocates for small theaters say that seems unlikely to pass now.
Still, “we’re struggling but we’re not losing hope,” Delaney says. “Theater is one of the only industries that has been reported to be dying for 1,000 years.”
Actors Theatre in Louisville is still putting on new plays. It’s still bringing audiences back and finding new ways to connect. This month, its new production of The Color Purple spurred enough ticket sales that staff had to open up sections of the theater that had been closed off for years.
Yes, the theater downsized, Fleming says, but it has also grown in ways he and his colleagues couldn’t have imagined: “It feels good to open up the mezzanine again.”