Long-Term Outlook for U.S. Nonprofits by Sector: The Crossroads of Transformation

As nonprofit leaders look beyond 2025, one reality is clear: the long-term operating environment will be defined by volatility, complexity, and opportunity. Federal policy shifts, economic uncertainty, philanthropic realignment, demographic transitions, and digital disruption are reshaping the landscape in which mission-driven organizations operate. These changes are not uniformand are impacting different sectors in profoundly different ways.

Some sectors, such as healthcare, environmental, and mental health, are positioned for strategic growth due to rising demand and philanthropic attention. Others, including arts, civil rights, and international development, face intensified scrutiny, funding unpredictability, and ideological opposition. Across all sectors, however, the pressure to deliver measurable impact, adapt business models, and maintain public trust is growing.

For CEOs, CFOs, and senior nonprofit leaders, this is not just a moment for operational adjustments. It is a call to engage in sector-specific scenario planning, invest in financial resilience, and build policy fluency to navigate emerging risks and opportunities. Understanding your organization’s unique positioning within this evolving ecosystem is essential for long-term sustainability.

This article discusses a sector-by-sector outlook related to key trends in funding policy and organizational capacity, along with their implications, to assist in supporting informed decision-making. It concludes with cross-cutting imperatives that all nonprofits—regardless of size or mission— should consider embracing to thrive in an era of accelerated change.

Human Services

Forecast: Challenging but vital

Key Trends:

• Greater demand due to the aging population, housing insecurity, and mental health crises.
• Federal funding volatility and regulatory burdens (e.g., work requirements for Supplemental Nutrition Assistance Program (SNAP) and Medicaid).
• Increasing emphasis on outcome-based contracting and managed care integration. 

Implications:

• Organizations must demonstrate measurable impact and invest in data infrastructure.
• Revenue diversification (e.g., partnerships with hospitals, pay-for-success models) will be essential.

Healthcare and Behavioral Health

Forecast:  Mixed, with growth potential

Key Trends:

• Medicaid expansion uncertainty and behavioral health funding shifts.
• Rise of value-based care and integration with social determinants of health (SDOH).
• Increasing philanthropic support for mental health, though reimbursement lags remain.

Implications:

• Nonprofits will need financial reserves to weather payment delays and new billing models.
• Advocacy and alignment with healthcare systems offer growth opportunities.

Education (K–12 and Higher Education)

Forecast: Disruption and reform

Key Trends:

• Charter schools and voucher expansion may reallocate public funds.
• Declining college enrollments and state funding stagnation continue post-COVID.
• Diversity, Equity, and Inclusion (DEI) restrictions and regulatory rollbacks are chilling public discourse and grantmaking.

Implications:

• Independent schools and institutions of higher education must build alternate revenue (e.g., endowments, online learning).
• Financial aid models and governance will be under pressure.

International Development & Global Health

Forecast: Shrinking U.S. support, but rising global need

Key Trends:

• United States Agency for International Development (USAID), President's Emergency Plan for AIDS Relief (PEPFAR), and United States Department of State funding at risk due to changes in  the current administration’s policies.
• Growth in regional philanthropy (Africa, Asia) and multilateral giving.
• Greater localization—donors shift toward funding in-country partners directly.

Implications:

• U.S.-based NGOs must streamline operations, invest in compliance, and compete for fewer federal dollars.
• Diversifying toward private institutional donors is critical.

Arts, Culture & Humanities

Forecast: Funding at risk; innovation needed

Key Trends:

• Political and ideological constraints on content (DEI, gender identity).
• Generational shift away from traditional cultural institutions.
• Expanded digital delivery models, but monetization remains uneven.

Implications:

• Donor cultivation and legacy giving will be key to sustainability.
• Investment in digital infrastructure to increase delivery of performances and exhibits to the public
• Museums and theaters must reimagine relevance and access for younger, diverse audiences.

Religious Organizations and Faith-Based Charities

Forecast: Stable but evolving

Key Trends:

• Decline in weekly attendance but continued giving among committed members.
• Expansion of faith-based social services, particularly where government is retrenching.
• Rising scrutiny of religious nonprofits receiving federal dollars.

Implications:

• Faith-based organizations may increase their influence in human services and education setors, but they will need to caredfully manage potential reputational and other risks.
• Digital giving platforms and virtual congregations will continue to potentially increase long-term viability.

Environment and Conservation

Forecast: Growing urgency and philanthropic interest

Key Trends:

• Climate change is continuing to increase donor and institutional attention.
• Government rollbacks and a decrease in focus on environmental issues and environmental enforcement may spur nonprofit watchdog roles.
• New private funding from climate-focused foundations, ESG-aligned corporations, and impact investors.

Implications:

• Strategic alignment with science, policy, and innovation is key.
• Growth likely among advocacy, litigation, and climate justice organizations.

Private Philanthropy and Foundations

Forecast: Adaptive and Responsive

Key Trends:

• Increased scrutiny of foundation endowments and payout rates.
• More strategic, equity-focused giving and a movement toward trust-based philanthropy.
• New taxes or regulations on donor-advised funds (DAFs) remain possible.

Implications:

• Foundations will play an increased  role in assisting to stabilize other sectors.
• Expect more pooled funds, fiscal sponsorships, and flexible grant structures.

Public Policy, Legal, and Civil Rights Organizations

Forecast: High need, but politically sensitive

Key Trends:

• Supreme Court and legislative actions altering civil liberties and legal protections.
• DEI and gender-related work under threat from federal/state policies.
• Growing public support for legal defense, voter access, and immigrant rights.

Implications:

• Funding is likely to be volatile but urgent, especially during election cycles.
• Legal nonprofits must maintain independence and invest in digital advocacy.

Animal Welfare and Wildlife Conservation

Forecast:  Niche but resilient

Key Trends:

• Broad donor appeal, especially among younger demographics.
• Federal land management rollbacks could boost watchdog funding.

Implications:

• Emotional storytelling, recurring giving models, and major gifts are key.
• Partnerships with science and climate orgs may unlock new funding streams.

Cross-Sector Pressures to Watch

BDO’s Take: 

Agile, impact-focused nonprofits will find success if they are able to pivot with changing policy, funding, and public expectations. Sector-specific dynamics will shape the path forward, but across the board, nonprofits must:

Invest in Financial Resilience

Building the organization’s capacity to withstand financial shocks and sustain operations during periods of revenue disruption or increased costs. This includes maintaining adequate operating reserves, diversifying revenue streams, strengthening cash flow management, and implementing multi-scenario financial planning.

With federal funding at risk, inflation increasing operational costs, and donor behavior shifting, financial resilience is no longer optional. A resilient nonprofit can navigate uncertainty without compromising its mission, retain talent during lean periods, and maintain public confidence.

Develop a Long-Term Revenue Outlook for U.S. Nonprofits

Nonprofit Leadership and their Boards of Directors should conduct an assessment of expected trends in revenue generation across different nonprofit sectors—such as health, education, environment, arts, and international aid—over the next 3–10 years. This includes projections tied to government funding, philanthropy, earned income, and donor behavior.

Understanding the long-term revenue outlook by sector enables leadership to make informed strategic decisions. For example, nonprofits in human services may need to prepare for tighter federal funds, while environmental groups may see increasing support from climate-focused philanthropy from the private sector. Sector-specific planning is essential for sustainability and impact.

Build Policy Fluency

Nonprofits increasingly operate in a politicized environment where a single policy shift can impact funding eligibility, program scope, or public perception. Policy fluency helps leaders anticipate change, engage in timely advocacy, and ensure alignment between mission and compliance requirements.

Developing a working knowledge of federal, state, and local policy landscapes that affect nonprofit funding, compliance, and mission delivery is essential. This includes understanding executive orders, appropriations, regulatory changes, and advocacy opportunities.

Strengthen Impact Measurement

Funders, regulators, and beneficiaries want to know not just what nonprofits do – but how well they do it. Strong impact measurement builds credibility, attracts funding, supports continuous improvement, and positions the organization as a leader in its field. 

Improve the systems, tools, and methodologies used to evaluate the outcomes and effectiveness of programs and services. This includes defining KPIs, implementing data collection and analytical processes, and reporting results to funders, partners, and the public.

Prioritize Trust and Transparency

In a time of heightened skepticism and scrutiny, trust is a nonprofit’s most valuable asset. Transparent practices reinforce donor confidence, foster stronger community relationships, and support long-term institutional health. Without trust, growth and sustainability are compromised. 

Embed openness, accountability, and ethical practices into all levels of organizational decision-making, communication, and reporting. This includes transparent financial reporting, ethical fundraising, inclusive governance, and responsive stakeholder engagement.