The Waymark — Nonprofit Sector Brief

The Landscape

What's shifting in the sector right now

The nonprofit sector is navigating one of its most turbulent periods in decades. Federal policy is in flux, individual giving patterns are changing, and the needs your communities face are growing. Here's what the trends are telling us.

Plain Language Summary

The money coming from Washington is less reliable than it was a year ago. At the same time, foundations and major donors are stepping up. The organizations that will fare best are the ones that see this shift coming and adjust their mix before they have to.

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Federal Funding Reliability

Grants from federal agencies like SAMHSA, HHS, and HUD are facing delays, freezes, and restructuring. If your organization relies heavily on federal dollars, this is the trend that deserves your attention most urgently.

Medicaid, housing, and behavioral health programs are most exposed.

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Foundation & Emergency Grantmaking

Major foundations are responding to federal volatility by increasing their grantmaking — particularly for organizations serving vulnerable populations. This window may not last, but it's open now.

National foundation giving reached $103B in 2024, up 4.2% year over year.

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Number of Individual Donors

Fewer households are giving than at any point in the last 25 years. In 2000, 53% of American households donated to a nonprofit. Today that number is closer to 36%. Total giving is still up, but it's coming from fewer, larger donors.

This means donor retention and mid-level giving programs matter more than ever.

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Community Need — Across the Board

Demand for mental health services, housing support, food assistance, and legal aid is rising. The combination of post-pandemic need and reduced government services means nonprofits are being asked to do more with less certainty.

Oregon's 988 call volume has increased significantly since 2022.

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Giving Triggered by Political Events

Donations to civil rights, immigration, and advocacy organizations surge during periods of political uncertainty. If your mission connects to contested policy areas, you may have an opportunity to tap into this energy with the right framing.

Organizations in contested policy areas have seen 20%+ giving surges in similar periods.

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Watch Closely

$230B Sitting in Donor-Advised Funds

Donor-Advised Funds now hold record levels of money that has been donated but not yet distributed to nonprofits. Proposed legislation would require these funds to pay out faster. If passed, this could meaningfully increase dollars flowing to organizations like yours.

No timeline confirmed — proposed legislation has stalled in previous sessions.

The Signals

Legislation and external factors affecting your income

You shouldn't need a policy team to track what's happening in Washington and Salem. These are the bills, proposals, and regulatory changes most likely to affect how your organization is funded — explained plainly.

Plain Language Summary

The single biggest risk right now is a federal spending bill called HR1. If it passes as proposed, organizations that bill Medicaid or receive federal grants could see meaningful revenue reductions. The time to model that scenario is before it happens, not after.

HR1 — "One Big Beautiful Bill"

A sweeping federal spending and tax bill that proposes deep cuts to Medicaid, housing assistance, and behavioral health programs. If passed, organizations with more than 40% of their revenue from government sources — especially Medicaid — face the most direct exposure. This is the legislation to watch most closely in 2025.

High Risk

Medicaid Block Grant Proposals

Proposals to convert Medicaid from an open-ended federal program to fixed block grants distributed to states. When states face budget pressure under a block grant system, optional services — behavioral health, dental, vision — are historically the first to be reduced. Oregon's Coordinated Care Organization model provides some protection but not full insulation.

Watch Now

ARPA Funding Expiration — December 2026

Federal pandemic relief funds (ARPA SLFRF) must be fully spent by the end of 2026. Many nonprofits received multi-year contracts funded by these dollars. If your organization expanded programs or added staff on ARPA money, now is the time to build a plan for what happens when that funding ends. Do not assume an extension.

Deadline: Dec 2026

Federal Agency Restructuring (DOGE / HHS)

The restructuring of HHS and other federal agencies has caused grant award delays, funding freezes, and in some cases rescissions of already-awarded grants. If your organization has active federal grants, it's worth reviewing your award terms and staying in close contact with your program officer.

Active

Oregon State Contracts (OHA / ODHS)

State-level behavioral health, housing, and social service contracts in Oregon remain relatively stable for now. Oregon's coordinated care system and its existing OHA/ODHS infrastructure provides more predictability than federal discretionary funding. Monitor the 2025–2027 state budget process.

Currently Stable

Universal Charitable Deduction (Proposed)

A bipartisan proposal to restore a tax deduction for charitable giving for people who don't itemize their taxes. If passed, this could meaningfully increase the number of donors and the volume of small-dollar giving. This has stalled in previous sessions but remains in discussion. A potential upside signal for organizations with broad community donor bases.

Potential Upside

DAF Minimum Payout Requirements (Proposed)

Legislation has been proposed that would require Donor-Advised Funds to distribute money within a set number of years. With over $230B currently sitting in DAFs, a payout requirement could trigger a significant increase in charitable distributions. Nonprofits with existing relationships with DAF donors are best positioned to benefit.

Watch for Upside

Know Your Exposure

How much of your revenue is at risk if HR1 passes?

A Financial Health Assessment maps your organization's funding mix against current risk signals — so you know exactly where you're exposed and what to do about it.

Learn About the FHA →

The Crossroads

Decisions worth bringing to your leadership team

Strategy isn't just about setting a vision. It's about making clear-eyed decisions when the environment changes. These are the questions that the current landscape is forcing — whether organizations choose to address them or not.

Plain Language Summary

The organizations that will struggle in the next two years aren't necessarily the ones with the least money. They're the ones that waited too long to ask hard questions about their funding mix, their reserves, and their plan B.

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Revenue Concentration

Funding Resilience Decision

No single funder should represent more than 25–30% of your organization's revenue. That's not a rule — it's a principle that becomes painfully obvious when that funder changes direction. In the current environment, government revenue concentration is the most acute risk. Organizations with 50%+ in government dollars should be actively modeling what a 20% reduction looks like and where the replacement revenue comes from.

What's your single largest revenue source as a percentage of total income, and do you have a plan if it drops by 20%?

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Operating Reserves

Financial Cushion Decision

How many months of operating expenses does your organization have in reserve? The sector standard is three to six months. In a high-volatility environment, organizations with less than two months of reserves are operating without a safety net. The time to build reserves is when you don't need them — which means now, not when a grant falls through. This is one of the clearest predictors of organizational survival in turbulent periods.

If your two largest revenue sources were delayed by 60 days simultaneously, could you make payroll?

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Financial Visibility for Leadership

Decision-Making Infrastructure

Many nonprofit leaders make consequential decisions about programs, hiring, and growth without a clear picture of their organization's financial position. Not because they're careless — but because the financial reporting they receive wasn't designed to answer the questions they're actually asking. If your board or leadership team can't easily answer questions about cash runway, revenue trend, and margin by program area, that's not a data problem. It's a design problem.

When was the last time your leadership team looked at a financial report and made a strategic decision based on it?

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Individual Giving Infrastructure

Long-Term Stability Decision

The organizations most resilient to government funding volatility are the ones that have invested in individual giving — not because major donors replace government contracts dollar for dollar, but because unrestricted individual gifts provide flexibility that restricted grants never can. Building a donor program is a multi-year investment. The best time to start was five years ago. The second best time is now, while the external environment is creating urgency and awareness around the causes you serve.

What percentage of your revenue is unrestricted, and is that number growing or shrinking?

Turn Questions Into Answers

A Financial Health Assessment gives you the full picture

Five pillars. Real numbers. A clear action plan. Built for nonprofit leaders who want to lead with financial confidence — not just survive audit season.

Learn About the FHA →

The Opening

Where the real opportunities are right now

Government retreat and market failure create something real: space for nonprofits to step in and do work that nobody else will. These are the areas where the conditions are most favorable — where need is high, competition is low, and funding pathways exist.

Plain Language Summary

The same forces creating stress on nonprofit revenue are also creating genuine openings. The organizations that grow in this environment won't be lucky — they'll be the ones that saw the gaps forming and moved toward them intentionally.

Behavioral Health in Rural & Underserved Areas

No private market will enter this space — the economics don't work. But state funding is available, FQHC designation pathways exist, and telehealth has dramatically reduced the infrastructure required. Federal shortage designations also unlock additional resources for qualifying organizations.

⬆ Conditions: Favorable · Window: Now

Transitional & Supportive Housing

Private developers won't build at affordable price points. Government is exiting direct provision. But the funding tools — LIHTC, HOME grants, community foundation dollars — are still available. Foundation interest in this space is strong. The demand is certain for at least a decade.

⬆ Conditions: Strong · Window: Multi-year

Immigration & Legal Aid Services

Zero private market at accessible price points. Federal policy is actively creating demand. Emergency foundation grantmaking is flowing in real time. Organizations with immigration legal capacity are seeing unprecedented need and funding simultaneously — a rare alignment.

⬆ Conditions: Urgent · Window: 12–24 months

Peer-Delivered Recovery Services

A Medicaid billing pathway for peer support specialists now exists — meaning these services can generate sustainable revenue where they couldn't before. Private providers aren't entering. Workforce development funding is available. This is a new opening created by policy change.

⬆ Conditions: New · Window: Early Mover Advantage

Community Dental / Safety Net Oral Health

Private dental practices won't see Medicaid patients at scale. Oregon restored adult dental in Medicaid in 2023 — a rare policy win that created a funding pathway. FQHC look-alike designations offer a viable cost model. Rural Oregon in particular faces a severe shortage.

⬆ Conditions: Oregon-Specific Window · Act Now

Financial Coaching & Economic Mobility

Banks won't serve low-income households on financial coaching. Government does it inconsistently. Foundation interest is growing, particularly as economic stress increases. Organizations already working with economically vulnerable populations are well-positioned to add this as a complementary service.

⬆ Conditions: Emerging · Foundation Interest High

The 3-Filter Test

How to evaluate any new program area

Before pursuing a new opportunity, run it through three questions. If the answer is yes to all three, you're likely looking at a genuine opening — not just a trend.

1. Has government exited or never entered this space? Is the public sector reducing, eliminating, or structurally unable to deliver this service — because of cost, complexity, political will, or stigma?

2. Will the private market not serve this population profitably? Usually true when the payer mix is Medicaid-only, the population is high-complexity, or the volume is too low for a for-profit to make money.

3. Is there a funding pathway that can sustain it? Unmet need alone doesn't sustain a program. There must be grants, contracts, philanthropy, or earned revenue that closes the financial model. If not, it's a cause — not yet a program.

Is Your Organization Ready to Move?

Knowing the opportunity is only half the equation

A Financial Health Assessment tells you whether your organization has the reserves, margin, and financial foundation to pursue new opportunities — or whether shoring up the core comes first.

Learn About the FHA →