NYC Human Services Sector Outlook 2026

Convergence of Challenge – and the Opportunity Within

A strategic trend analysis for human services nonprofit leaders

Introduction

Something important is happening in human services. Not a single crisis, but a convergence — ten major forces arriving simultaneously, each amplifying the others. Demographic transformation. A deepening housing shortage. Persistent poverty sustained by interlocking systems. A labor shortage that is structural rather than cyclical. A government contracting structure that has chronically underpaid the sector for decades. Rising insurance costs. Federal funding in disruption. A warming climate whose effects fall heaviest on the populations human services organizations exist to serve. And two major shifts in the philanthropy landscape — one created by policy disruption, one created by the arrival of AI — that are reshaping where money flows.

Taken one at a time, these are familiar challenges. Taken together, they are reshaping what human services organizations must do and how they must do it. And they are creating something else: genuine opportunity. When multiple systems are moving simultaneously, organizations that have done their strategic thinking clearly — and early — are the ones that gain ground while others scramble.

Each section of this report examines one of the ten forces, grounds the analysis in current data, identifies what it means for your organization through a Strategic Implications block, and highlights a real case study of an organization doing something transferable. This document is designed to be shared with your board and leadership team — not as a final answer, but as the richest possible starting point for the conversations that lead to one.

Section 1 – The People

Demographic Trends

The United States is in the midst of a historic population shift — one that will generate more demand for human services over the next two decades than at any comparable point in modern history. That is not a reason for anxiety. It is a reason for clear-eyed planning. Organizations that understand the demographic signal early will be positioned to serve intentionally, partner strategically, and make their case to funders compellingly.

The Age Wave is Here

The oldest Baby Boomers turn 80 in 2026. Approximately 11,400 Americans are turning 65 every single day this year — a phenomenon demographers call “Peak 65.” By 2030, every Baby Boomer will be 65 or older, and seniors will constitute one in five Americans.¹ The fastest-growing segment is the 80-and-over population, which will grow by more than a quarter in the next five years and nearly double by 2035.² These are precisely the people most likely to need home care, assisted living, adult day services, food support, behavioral health care, and transportation assistance — the core of what human services organizations provide.

11,400 Americans turn 65 daily through 2025–27 (“Peak 65”)

1 in 5 Americans 65+ by 2030 up from 18.7% today

55% growth in 80+ population projected by 2035

Declining Birth Rates and Immigration

The U.S. fertility rate has fallen to 1.6 — well below the 2.1 replacement rate — and without sustained immigration, the population will begin shrinking within five years.³ Immigration restrictions have reduced the flow of working-age people who historically fill direct care roles, while simultaneously creating new populations requiring intensive transitional services. Organizations that understand both sides of this equation are better positioned for workforce strategy and service planning

Racial and Ethnic Disparities

The populations with the highest and fastest-growing service needs are disproportionately communities of color. In 2023, 57% of Black renter households and 53% of Hispanic renter households were cost-burdened by housing, compared to 46% for white renter households.⁴ Nearly one in five Latina and Black women over 65 live in poverty — double the rate for white women.⁵ These are not peripheral concerns for human services strategy. They are the demographic reality that human services mission is built around.

The organizations that thrive in the next decade will be those that planned for the age wave before it arrived — building specialized capacity while many of their peers were still focused elsewhere.

STRATEGIC IMPLICATIONS
1	Audit your service mix against the 2030 demographic reality. If your organization serves older adults, or could, the time to build that capacity is now — before the wave fully crests. The demand is locked in by demographics. The question is whether your organization will be resourced and positioned to meet it.
2	Understand the dual immigration dynamic. The same policy environment that shrinks your direct care workforce also creates new populations needing transitional support. Both sides require active strategy.
3	Use demographic data to make your funding case. Funders respond to population-level demand signals. Organizations with clear, current maps of who is moving into their service area — and when — make a far more compelling case in grant applications and funder conversations than those speaking in generalities.

CASE STUDY  Metro Denver Homeless Initiative — Built for Zero

The Metro Denver Homeless Initiative (MDHI) coordinates homelessness response across seven counties, 40 municipalities, and 3.2 million residents. Rather than tracking program outputs organization by organization, MDHI adopted Community Solutions’ Built for Zero framework, which shifts the unit of measurement from programs to populations. Every person experiencing homelessness is known by name in a real-time, shared data system. Nine subregional teams work from that data toward a single goal: functional zero homelessness for defined populations, one group at a time. Over four years, Metro Denver reduced veteran homelessness by 30% even as national numbers worsened. Built for Zero has now expanded to more than 180 U.S. communities, backed by a $100 million MacArthur Foundation grant to drive the model to a national tipping point.⁶

What makes this transferable You do not need to be a coordinating body to benefit from this approach. Any organization can invest in by-name data for its own client population, align case conferencing around real-time information, and shift from program logic to population logic in how it measures and reports impact. The Built for Zero framework is freely available and actively supported by Community Solutions at community.solutions.

Endnotes — Section 1

1. Bankers Life. ‘The Year 2025: Record Numbers Are Turning 65.’ 2025. / Associated Press. ‘A look at aging baby boomers in the United States.’ December 23, 2025.
2. NIC MAP. ‘The Impending Age Wave.’ nicmap.com, October 2025.
3. Washington Times. ‘Baby boomers turn 80 in 2026.’ December 23, 2025. / CBO projections, September 2025.
4. Enterprise Community Partners. ‘Four Key Findings from the 2025 State of the Nation’s Housing Report.’ 2025.
5. National Council on Aging. ‘Get the Facts on Older Americans.’ ncoa.org, 2025.
6. Community Solutions. ‘Learning, Shifting, Proving: 2024 in the Built for Zero Movement.’ May 2025. / MacArthur Foundation. 100&Change award announcement.

SECTION 2  THE WORKFORCE

Labor Trends

The human services workforce faces a structural shortage — structural because it flows directly from demographic trends, compensation realities, and decades of underinvestment that no single organization created alone. Understanding this clearly is the precondition for responding to it with any effectiveness.

The Scale of the Shortage

The direct care workforce — personal care aides, home health aides, and nursing assistants — comprises approximately 5.4 million workers and is the largest occupational category in the United States. It is not large enough. Between 2024 and 2034, an estimated 9.7 million total direct care jobs will need to be filled, including 772,000 new positions and millions more vacancies as current workers retire, change careers, or exit the labor force.⁷ Most new direct care jobs will be in home care, driven by the overwhelming preference of older adults to age in place — a preference that is also, for most people, the most affordable option.

9.7M direct care job openings projected 2024–2034 (PHI)

$26K median annual earnings for direct care workers

49% rely on public assistance Medicaid, SNAP to survive

Wage Inequity and the ALICE Reality

The median hourly wage for direct care workers is $17.36, and because many positions are part-time or irregularly scheduled, median annual earnings are only about $26,000.⁸ Nearly half of all direct care workers rely on Medicaid and SNAP to survive. Among all nonprofit employees, 22% earn below the ALICE threshold — Asset Limited, Income Constrained, Employed — meaning they cannot afford basic household necessities despite working full-time. Rates are higher for workers of color: 34% of Black nonprofit employees and 35% of Hispanic nonprofit employees face financial hardship.⁹

Women make up two-thirds of the nonprofit workforce and are paid significantly less than men. The sector that most loudly advocates for economic justice has, in too many organizations, reproduced the very inequities it works to address. That is not a comfortable statement — but naming it honestly is where genuine change begins.

Leadership Pipeline and Burnout

The shortage extends well beyond frontline roles. Nearly 75% of nonprofits reported persistent vacancies in program and service delivery roles in 2023.¹⁰ Interest in senior leadership is declining: from 2016 to 2022, interest in executive positions fell from 50% to 46% among white respondents and from 40% to 32% among BIPOC respondents.¹⁰ᵇ The sector is not just struggling to fill roles — it is watching the pipeline for the next generation of leaders narrow.

The organizations that have made the most progress on workforce stability are not the ones with the biggest budgets. They are the ones that have redesigned work to make it sustainable — with flexibility, career laddering, and genuine investment in the humans doing the hardest jobs.

STRATEGIC IMPLICATIONS
1	Treat compensation as a board-level financial strategy — not an HR function. Every staff vacancy costs an estimated 50–200% of annual salary in recruitment, training, and lost productivity. The math of investing in retention always beats the math of accepting turnover. Your board needs to understand this arithmetic.
2	Build career laddering for direct care workers. Organizations that create clear advancement pathways — from direct care to team lead to supervisor — report significantly better retention. This is not expensive. It requires intentional design and honest conversation about what advancement means in your organization.
3	Know your own workforce data. Most organizations cannot answer basic questions about their own turnover rate by role, cost per hire, or time-to-fill. That data is the foundation of any serious workforce strategy. Build measurement capacity before you build a recruitment strategy.

CASE STUDY  Cooperative Home Care Associates (CHCA) — Quality Jobs, Quality Care

Cooperative Home Care Associates was founded in the Bronx in 1985 with 12 home health aides and a simple, radical premise: that the only way to deliver quality home care was to create quality jobs. Four decades later, CHCA employs more than 1,600 workers and is the largest worker-owned cooperative in the United States. Worker-owners — the home health aides themselves — sit on CHCA’s governing board and make the decisions that matter most: wages, benefits, safety protocols, and working conditions. In 1992, CHCA founded PHI (formerly the Paraprofessional Healthcare Institute) as an independent nonprofit dedicated to advancing quality direct care jobs nationally. Together, CHCA and PHI run a workforce development program that provides free training and guaranteed employment for more than 600 low-income women annually — the majority women of color and immigrants. CHCA’s Care Connections pilot, conducted with managed care plan Independence Care System and two other licensed home care agencies in New York City, demonstrated that a structured advanced caregiver role — the Certified Care Specialist — improved worker job satisfaction, strengthened client-caregiver relationships, and was associated with an 8% drop in emergency department visits among clients. CHCA became the first home care company to earn B Corp certification in 2012. A 2025 peer-reviewed analysis in Health Affairs Scholar found that home care cooperative workers experience lower turnover than industry norms and that clients remain with cooperatives significantly longer than with traditionally structured agencies.

What makes this transferable CHCA’s model is not easily replicated wholesale — worker-ownership requires organizational redesign and long-term commitment. But the transferable lessons are concrete and accessible to any organization: free training with guaranteed employment creates a pipeline that traditional recruitment cannot match; worker voice in governance and compensation decisions reduces turnover; advanced caregiver roles with specialty training build career ladders that retain experienced workers. PHI’s workforce development tools and training curricula are available to partner organizations nationally at phinational.org.

Endnotes — Section 2

7. PHI. ‘Direct Care Workers in the United States: Key Facts 2025.’ phinational.org, September 2025.
8. ASA Generations / PHI. ‘As a Matter of Facts, Direct Care Workers Need Our Attention.’ December 2025.
9. Social Current / Independent Sector & United For ALICE. ‘ALICE in the Nonprofit Workforce.’ 2024.
10. National Council of Nonprofits. ‘2023 Nonprofit Workforce Survey Results.’ councilofnonprofits.org, 2023.  10.1PHI. ‘Direct Care Workers Deserve Career Ladders.’ phinational.org. (Citing Care Connections pilot outcomes.) / Health Affairs Scholar. ‘Centering Marginalized Care: Home Care Cooperatives and System Change.’ March 2025. / CHCA. chcany.org. / B Lab. ‘Cooperative Home Care Associates.’ bcorporation.net. 10b Building Movement Project. ‘The Push and Pull: Declining Interest in Nonprofit Leadership.’ January 2024. buildingmovement.org. (Figure 1: white respondents interested in executive roles 50% in 2016, 46% in 2022; BIPOC respondents 40% in 2016, 32% in 2022.)

SECTION 3  THE HOUSING CRISIS

Housing Trends

There is no housing affordability crisis on the horizon for American human services organizations. It is already here, already severe, and already generating the homelessness, displacement, and service demand that organizations across the sector are struggling to address. The encouraging news is that some communities have found genuine traction — and their methods are replicable.

Historic Homelessness

HUD’s 2024 Point-in-Time Count recorded 771,480 people experiencing homelessness — the highest number ever recorded, an 18% increase from 2023.¹¹ Homeless response workers served more than 1.1 million people in need that year, a 12% increase from the prior year.¹² Chronic homelessness — long-term or repeated episodes — has nearly doubled since 2016. In no community did sufficient permanent housing exist to meet everyone’s needs.

 

771K people homeless in Jan 2024 highest ever recorded

18% increase from 2023 driven by affordability crisis

37 affordable units per 100 extremely low-income renters

The Rent Burden Epidemic

Harvard’s Joint Center for Housing Studies documents that housing cost burden is now spreading well beyond the very poor, into middle-income households earning $30,000 to $74,999 annually.¹³ The national shortage of affordable rental homes has grown by nearly 30% since 2020. Only 35 affordable and available rental homes exist for every 100 extremely low-income renter households. At minimum wage, a full-time worker must work 86 hours a week to afford a modest one-bedroom apartment.¹⁴ Over 3.5 million households faced eviction risks in 2024, with filings up 12% nationally.

The SSI-to-rent gap illustrates the crisis precisely. The maximum SSI benefit in 2025 is $967 per month nationally — uniform regardless of local cost differences. In Seattle, the fair market rent for a small efficiency apartment is $2,238 per month.¹⁵ A person with a disability relying on SSI cannot afford housing anywhere in the United States. That is not a market failure. It is a policy failure — and it is generating service demand that organizations did not create and cannot alone solve.

Climate-Driven Displacement

Severe weather disasters caused $180 billion in property damage in 2024. After a disaster, affected housing markets see rents rise 4–6% more than comparable unimpacted markets, and post-disaster homelessness spikes sharply.¹⁶ Organizations are now managing the overlap between the chronic housing affordability crisis and acute climate-driven displacement — two distinct emergencies that compound each other, and that will become more intertwined as climate change intensifies (see Section 9).

The housing crisis is not a temporary disruption awaiting a policy correction. It is a structural failure that will continue generating demand for human services indefinitely — and the organizations most prepared will be those that also engage the upstream solutions.

STRATEGIC IMPLICATIONS
1	Know your clients’ housing stability risk, regardless of your mission area. Organizations across every service domain have clients on the edge of housing instability. Screening for housing risk — and connecting people to preventive resources before a crisis — is among the highest-leverage interventions available and requires no housing program.
2	Develop a deliberate organizational position on housing solutions. Some organizations are becoming developers, acquiring property, or partnering with community land trusts. Others are focusing on systems advocacy. Neither approach is right for everyone — but having no position is increasingly a strategic liability.
3	Join a coordinated community response. Housing crises respond to coordinated, data-driven systems — not siloed programs. Organizations that serve as backbone entities or active participants in coordinated responses have significantly more leverage than those working alone.

 

CASE STUDY  Grounded Solutions Network — Homes for the Future

Grounded Solutions Network, a national nonprofit supporting community land trusts and shared equity housing programs, launched its Homes for the Future (HFTF) initiative in 2024. The model uses patient philanthropic capital — from investors willing to accept modest returns in exchange for long-term affordability outcomes — to acquire single-family homes and place them permanently in shared equity portfolios. By removing these homes from the speculative market, HFTF preserves affordability across generations without relying on government subsidy for every acquisition. In 2025, HFTF announced the preservation of 283 homes in the Minneapolis-Saint Paul area and plans to launch in Atlanta. The initiative won the 2025 Ivory Prize for Housing Affordability in the Finance category — one of the most prestigious housing innovation awards in the country.¹⁷

What makes this transferable This model opens a door that most human services organizations have never knocked on: blended capital strategies that position affordable housing as an investment with social returns. The key shift is framing — from grant-seeker to impact investment partner. Organizations do not need to replicate HFTF wholesale. They can begin by identifying one or two philanthropic investors interested in this framing and developing a small-scale pilot.

 

Endnotes — Section 3

11. National Alliance to End Homelessness. ‘State of Homelessness: 2025 Edition.’ September 2025.
12. Ibid.
13. Enterprise Community Partners. ‘Four Key Findings from the 2025 State of the Nation’s Housing Report.’ 2025.
14. United States Interagency Council on Homelessness. ‘Homelessness Data & Trends.’ usich.gov.
15. DESC. ‘Housing affordability crisis main driver for increase in homelessness.’ desc.org, 2025.
16. Enterprise Community Partners, 2025. Citing Brookings Institution and Harvard JCHS.
17. Grounded Solutions Network. ‘Grounded Solutions Network Recognized by Ivory Innovations.’ groundedsolutions.org, 2025.

SECTION 4  ROOT CAUSES

The Systems That Keep People in Poverty

Approximately 35.9 million Americans — 10.6% of the population — live below the federal poverty level.¹⁸ Poverty rates are substantially higher for communities of color: 17.9% for Black Americans, 19.3% for American Indian and Alaska Native people, 15.0% for Hispanic and Latino Americans, and approximately 22% for people with disabilities.¹⁹ These numbers are not the product of individual failure. They are the output of interlocking systems — legal, economic, political, and cultural — that were built over time and that, in many cases, function exactly as they were designed to function.

This section names those systems honestly and then asks the harder question: what leverage do human services organizations actually have over them? Because the answer is not none — and organizations that know where their leverage lives are the ones most likely to use it.

The Benefits Cliff: A System That Punishes Progress

The benefits cliff is the most concrete and immediate structural trap in the lives of low-income Americans. It occurs when a raise or income gain triggers the loss of means-tested benefits — SNAP, Medicaid, housing vouchers, childcare subsidies, WIC — that are worth more than the wage increase itself. The result is a system in which accepting a promotion can literally leave a family worse off financially.²⁰

Circles USA, a national poverty-alleviation network, identifies the benefits cliff as the single biggest structural barrier to families moving out of poverty. The problem is compounded by a patchwork of programs using different eligibility thresholds — some tied to the federal poverty level, some to Area Median Income — with different rules, timelines, and income calculations that create near-impossible navigation for clients and caseworkers alike.²¹ Some programs have hard cliffs: a single dollar over a threshold triggers complete ineligibility. The inconsistency is not accidental. It reflects decades of siloed policy development without attention to cumulative impact.

Structural Racism: The Architecture of Inequality

The Urban Institute, Brookings Institution, National Academies of Sciences, and virtually every major poverty research institution have reached the same conclusion: poverty in America is not primarily caused by individual choices. It is produced by structural barriers, and those barriers are disproportionately distributed along racial lines.²²

Redlining and housing segregation, formally codified through federal policy from the 1930s through the 1960s and enforced informally for decades after, concentrated wealth in white communities and poverty in communities of color. Because home equity is the primary vehicle for intergenerational wealth transfer — as of 2013, 69% of Black families’ household wealth derived from home equity, compared with 57% for white families²³ — the denial of homeownership created a wealth gap that compounds with every generation. Research from UCLA Anderson and the Federal Reserve Bank of Philadelphia shows that Black children from poor families growing up in areas with above-average segregation have a 29% greater probability of incarceration — a trajectory shaped by neighborhood conditions over which they had no choice.²⁴

Mass Incarceration, Education Inequity, and Healthcare Access

Mass incarceration — concentrated in Black and Latino communities through decades of racially disparate enforcement — creates cascading consequences: financial destabilization for families, restricted access to housing and employment for returning citizens, and communities weakened by the removal of working-age adults.²⁵ Public school funding tied to local property taxes ensures that children in poor communities attend schools with fewer resources. Medical debt remains one of the leading drivers of housing instability. Among people experiencing chronic homelessness, approximately 30% have a serious mental illness — yet research shows fewer than one in five receives consistent mental health treatment.²⁶

What Organizations Can Actually Move

Human services organizations operate inside these systems. Their leverage is real, though concentrated in specific places. Understanding where it lives — and where it does not — is essential to strategic honesty.

Direct Service Leverage Organizations have strong leverage over individual and family outcomes through effective case management, benefits navigation, housing stabilization, and workforce development. AI is now making this faster and more targeted. The evidence base for what works at the individual level is robust and growing.

 

Policy and Advocacy Leverage State-level policy is where organizations have the most actionable leverage over systemic change. Benefits cliff mitigation, Medicaid expansion, eviction prevention, minimum wage policy, and expungement of criminal records are all state-level interventions with documented poverty-reducing effects. Organizations with strong community trust and credible outcome data are powerful policy voices — but most invest little in this capacity.

 

Narrative Leverage The stories human services organizations hold — the lived realities of the people they serve — are among the most powerful tools available for shifting public understanding of why poverty persists. Changing the story is a strategic act, not a communications function.

 

Coalition and Systems-Change Leverage No single organization can move a system. Organizations that invest in coalition work, cross-sector collaboration, and participatory approaches — including the leadership of people with lived experience of poverty — are the ones that shift conditions rather than only ameliorate symptoms.

 

CASE STUDY  Circles USA — The Benefits Cliff as a Community Organizing Issue

Circles USA is a national network of community-based poverty alleviation chapters now in its 26th year of operation. The model matches families in economic hardship — called Circle Leaders — with volunteer Allies from middle- and higher-income households, building structured relationships that provide both social capital and practical guidance. But what distinguishes Circles from most relationship-based poverty programs is its integration of direct service with explicit systems-change work through its ‘Big View’ wing. Circles USA has identified the benefits cliff as the single biggest structural barrier its Circle Leaders face, and it has built an infrastructure for naming, measuring, and fighting that barrier at every level of government. A 2024 peer-reviewed analysis by researchers at the University of Western Australia — analyzing multiple years of Circles USA data — found significant income growth for participants over time, alongside measurable decreases in dependence on public assistance. Circles chapters actively assist local governments and employers with benefits cliff mitigation, including identifying the specific dollar thresholds where cliff effects occur in their local cost-of-living context and developing transitional benefits strategies that allow workers to accept promotions without triggering immediate benefit loss. The Circles policy platform provides specific, actionable recommendations at the local, state, and federal levels, and chapter participants — including Circle Leaders with lived experience — testify before state legislatures and city councils on cliff-effect policy.

What makes this transferable Circles USA’s transferable lesson is the integration of individual coaching with community organizing and policy advocacy — not as parallel tracks, but as a single, reinforcing strategy. The Big View approach names the structural barriers that clients face, collects data on their frequency and impact, and uses that data to drive policy change. Any organization doing poverty-related case management can build this layer — by documenting the structural barriers its clients hit most frequently, developing a clear policy ask, and creating space for people with lived experience to lead advocacy. Circles provides free training and chapter launch support at circlesusa.org.

 

Endnotes — Section 4

18. Candid. ‘Nonprofits serving people living in poverty face significant challenges in 2025.’ candid.org, 2025.
19. Ibid. / U.S. Census Bureau poverty estimates, 2024.
20. Circles USA. ‘The Benefits Cliff.’ circlesusa.org. / Women’s Money Matters / Springfield WORKS. ‘Bridge to Prosperity: Benefits Cliff Pilot.’ April 2025.
21. Fahe. ‘The Benefits Cliff: Eliminating Barriers to Transitioning Off Public Benefits.’ fahe.org. / Roll, Miller & Despard. ‘The Impact of Benefits Cliffs and Asset Limits on Low-Wage Workers.’ Washington University Center for Social Development, CSD Research Brief 25-07, 2025.
22. Urban Institute. ‘Poverty Results from Structural Barriers, Not Personal Choices.’ / National Academies of Sciences. ‘Reducing Intergenerational Poverty.’ 2024.
23. Center for American Progress. ‘Systematic Inequality: How America’s Structural Racism Helped Create the Black-White Wealth Gap.’ February 2018. americanprogress.org. Note: Figures reflect 2013 Survey of Consumer Finances data.
24. UCLA Anderson Review. ‘Segregation Compounds the Effects of Poverty.’ 2024. (Citing Chyn, Haggag & Stuart, Federal Reserve Bank of Philadelphia.)
25. HubSociology. ‘Mass Incarceration and Racial Inequality in America.’ February 2026.
26. SAMHSA. ‘Homelessness Programs and Resources.’ samhsa.gov (citing Office of National Drug Control Policy data). / USICH. ‘Federal Resources for Addressing Behavioral Health Needs of People Experiencing or at Risk of Homelessness.’ usich.gov. (18% received non-emergent mental health treatment in last 30 days.)

SECTION 4.5  BETWEEN THE WORKFORCE AND THE CONTRACT

When the Job Is the Mission: Social Enterprise and the Limits of Categorical Work

The previous two sections have described a labor crisis and a government funding architecture that together create a structural trap. The labor crisis is, at its root, a wage crisis: government contracts systematically underpay the true cost of services, organizations pass that underpayment on to workers, workers leave for sectors that pay more, and the clients who depend on those workers bear the consequences. The government funding architecture makes this worse, not better — categorical contracts that define work narrowly leave no room to pay for the organizational infrastructure, the relationship-building, or the career investment that would make human services jobs genuinely competitive.

A small but instructive set of organizations has found a partial escape from this trap — not by winning the advocacy fight for better contract rates (though many are also doing that), but by building revenue streams outside the categorical contract system entirely. These are social enterprises: organizations that generate earned income through market-facing business activity and use that income to fund workforce development, wraparound support, and the integrated service work that government contracts will not pay for. They are not a universal solution — social enterprise is difficult, slow, and often fails — but they represent something the rest of the report’s case studies do not: proof that an organization can partially decouple its workforce strategy from the government’s willingness to fund it.

Three New York-area organizations illustrate this in meaningfully different ways. GoodTemps, the nonprofit staffing agency of Goodwill NYNJ, uses commercial staffing revenue to subsidize mission-focused workforce development for people with disabilities. CPCHAP, the home care subsidiary of the Chinese-American Planning Council, uses Medicaid-funded home care delivery — a different form of earned revenue — to generate income that supports CPC’s broader wraparound service model for immigrant and low-income communities. And Greyston Bakery, in Yonkers, uses the market for brownies to fund Open Hiring® — a workforce model so radical it has no analog in the categorical contract world. Each is worth understanding on its own terms, and each offers a different lesson about what it takes to build a workforce model that government underpayment cannot collapse.

The organizations described in this section did not find a loophole in the system. They built their own. That is harder than it sounds — and it is not the right path for every organization. But understanding how they did it clarifies, by contrast, what the categorical contract system forecloses.

CASE STUDY  GoodTemps — Goodwill NYNJ: Staffing as Mission

GoodTemps is the nonprofit temporary staffing agency of Goodwill Industries of Greater New York and Northern New Jersey, established in 1996 on a premise that is straightforward in concept and difficult in execution: that placing people with disabilities and other barriers to employment in competitive jobs creates both mission impact and earned revenue that can fund more mission work. Thirty years later, GoodTemps maintains a pool of 20,000 temporary workers and sends more than 500 workers to assignments every single day across the five boroughs of New York City, Northern New Jersey, Westchester, and Long Island. It is the largest provider of diversified staffing services to the City of New York — a government contracting relationship that is the inverse of the typical nonprofit experience: here, Goodwill is not waiting to be paid by a government contract for delivering a mandated service. It is competing on quality and reliability to win government business on commercial terms.  The model works because Goodwill NYNJ built it slowly and on an existing organizational base. Goodwill’s retail operations — its thrift stores and donation infrastructure — provided the institutional infrastructure, cash flow cushion, and brand recognition that allowed GoodTemps to grow without requiring the agency to be immediately profitable. This matters enormously for organizations considering the social enterprise path: GoodTemps did not emerge from a standing start. It was built over decades, backed by an anchor institution with diversified revenue and patient leadership that understood the investment horizon. Today, GoodTemps places workers spanning the full occupational range — from laborers and warehouse staff to legal professionals, accountants, and IT analysts — and 75% of its temporary workers have a documented disability. That breadth of placement is not incidental to the mission. It demonstrates, with every placement, that disability is not a ceiling on what people can contribute.

What makes this transferable The transferable lesson from GoodTemps is not ‘start a staffing agency’ — it is that earned revenue from market-facing business activity can fund mission work in ways that no government contract can, precisely because it is not categorical, not compliance-burdened, and not dependent on political goodwill. But the honest caveat is that this lesson comes with a timeline attached. Social enterprise ventures typically require three to seven years to reach breakeven, and many do not survive the early years. Organizations exploring this path need patient capital, leadership with genuine business operations experience alongside mission expertise, a clear-eyed assessment of market demand, and an institutional balance sheet that can absorb losses while the venture matures. More at goodwillnynj.org.

CASE STUDY  CPCHAP — Chinese-American Planning Council Home Attendant Program: Care as Enterprise

The Chinese-American Planning Council Home Attendant Program, Inc. (CPCHAP) is one of the largest nonprofit home care agencies in New York City, serving over 2,400 home care recipients and employing more than 4,000 workers — predominantly women of color from Chinese, Spanish-speaking, Korean, and other immigrant communities. Licensed in 1998 by the New York State Department of Health, CPCHAP is a subsidiary of CPC, the nation’s largest Asian American social services organization. That structural relationship is the key to understanding what CPCHAP represents: it is not merely a home care agency. It is an engine that generates Medicaid-funded earned revenue from a service with genuine market demand — high-quality, culturally and linguistically competent home care for elderly and disabled New Yorkers — and that makes CPC’s broader wraparound service model financially possible.  The model is distinct from both traditional categorical contracting and conventional social enterprise. CPCHAP does contract with government — the NYC Human Resources Administration and multiple managed care organizations under Medicaid — but unlike a typical government service contract, these arrangements generate revenue that flows from Medicaid billing rather than from discretionary government appropriation. The revenue is mission-aligned, demand-driven, and not dependent on annual appropriation decisions or on a government agency’s willingness to fund a particular program category. And because CPCHAP is embedded within CPC’s larger organizational infrastructure, the workforce it employs has access to the full range of CPC’s wraparound supports: employment services, senior programs, childcare, housing assistance, and the cultural and linguistic competency that makes those services accessible to communities that standard agencies do not reach.  CPCHAP has been navigating one of the most significant transitions in New York’s home care landscape: the statewide shift of the Consumer Directed Personal Assistance Program (CDPAP) to a single fiscal intermediary, Public Partnerships LLC. Where many agencies faced the transition as a threat, CPC Consumer Directed — operating as part of CPCHAP — moved quickly to become an approved CDPAP facilitator under PPL, maintaining continuity of service for existing consumers and preserving employment for personal assistants. Simultaneously, CPCHAP has been at the forefront of advocacy to end New York State’s 24-hour live-in home care shift requirement, organizing alongside 1199SEIU and the NY Caring Majority for the two 12-hour split shifts that would make these jobs more sustainable for the workers who hold them.

What makes this transferable CPCHAP’s transferable insight is structural: a subsidiary that generates revenue from a service with genuine Medicaid-funded demand can provide the financial anchor for a parent organization’s broader integrated service model in ways that piecemeal government contracting cannot. The cultural and linguistic competency that CPCHAP embeds in its home care model — serving clients in Chinese, Spanish, Korean, and other languages — is not incidental. It is a genuine competitive advantage in markets where the standard home care agency cannot retain workers or serve clients effectively. Organizations with significant immigrant or LGBTQ+ or other culturally specific populations should ask whether a similar subsidiary structure could generate both revenue and more integrated service capacity. More at cpchap.org.

CASE STUDY  Greyston Bakery — Open Hiring and the Revenue Logic of Inclusion

Greyston Bakery was founded in Yonkers, New York in 1982 by Roshi Bernie Glassman, a Zen Buddhist teacher who believed that meaningful work was itself a transformative practice — and that the systematic exclusion of people with criminal records, housing instability, and other barriers from that work was both a moral failure and an economic one. The model he built, now trademarked as Open Hiring®, is exactly what it sounds like: anyone who wants a job at Greyston Bakery can get one, on a first-come, first-served basis, with no resume required, no background check, no drug test, and no interview. The only question is whether you want to work.  The bakery itself is a commercial-scale food manufacturing operation. Greyston produces brownies — famously, the brownie pieces in Ben & Jerry’s Chocolate Fudge Brownie ice cream — along with a commercial gift line and wholesale products. In a peak year, the bakery produced nearly 12 million pounds of brownies. It employs approximately 120 workers, roughly 75% hired through Open Hiring, approximately 95% of whom are people of color. The Greyston Foundation, the 501(c)3 nonprofit that owns the bakery, documented that each Open Hire employee generates an estimated $30,000 in annual public sector savings through reduced reliance on public assistance, corrections, and emergency services — approximately $4.5 million in annual public savings across its workforce. For many years, the bakery operated as a profitable subsidiary of the Foundation: a commercial enterprise with a genuine competitive product, national distribution through Ben & Jerry’s and Whole Foods, and margins that funded both the Open Hiring workforce and the Foundation’s community programs — childcare, affordable housing, workforce training, and community gardens in Yonkers.  The model’s core logic is simple and powerful: the workforce is not a program with a grant cycle. It is a production floor with a customer base. When the brownies sell, the hiring continues. That commercial anchor is what makes Open Hiring — the most radical workforce inclusion model in the country — sustainable in a way that no government-funded program could replicate. The Greyston Center for Open Hiring works with corporations and employers across industries to adapt the model, helping organizations begin with a single open-hire position or a defined percentage of their workforce, demonstrating that the hiring logic transfers across contexts without requiring a bakery.

What makes this transferable Open Hiring is a profoundly transferable idea. But its transferability carries a caveat that Greyston’s own history makes clear: the model took many years — and many years of thin margins and uncertain cash flow — to achieve the commercial stability that makes the commitment sustainable. The Ben & Jerry’s partnership, which became the commercial anchor, did not arrive immediately. It was earned through years of consistent quality. Organizations inspired by Greyston’s example should understand the lesson precisely: radical inclusion, combined with a viable product and patient investment in commercial quality, can produce a workforce model that no categorical contract can match. The question of whether this path is right for your organization depends on whether you have — or can develop — a product or service with genuine commercial demand, leadership with business operations experience alongside mission expertise, and capital that can wait for a return.

Endnotes — Bridge Section

bridge1.  Goodwill NYNJ / GoodTemps. goodwillnynj.org/goodtemps-jobs/. / GoodTemps. goodtemps.org/about-us/. / Goodwill NYNJ press release. ‘Goodwill NYNJ Names Derick Bowers GoodTemps Executive Director.’ June 13, 2023. goodwillnynj.org. (‘GoodTemps helps over 500 temporary workers, most of them people with disabilities, on to meaningful work each day.’ / ‘75% of temps have a disability.’ / ‘20,000 temporary workers.’ / ‘Largest provider of diversified staffing to the City of New York.’)

bridge2.  Chinese-American Planning Council Home Attendant Program, Inc. (CPCHAP). ‘About Us.’ cpchap.org/about. (‘One of the largest not-for-profit home care service agencies in New York City… serves over 2,400 home care recipients and employs over 4,000 employees.’) / CPC. ‘CPC Consumer Directed Continues to Provide CDPAP Services in Partnership with PPL.’ cpc-nyc.org, February 2025. / CPC. ‘Home Attendant Programs.’ cpc-nyc.org/news/category/home-attendant-programs. (Statements on 24-hour shift advocacy and 1199SEIU partnership.)

bridge3.  Greyston Bakery. greyston.org. / Greyston Bakery. ‘Open Hiring.’ greyston.org. (‘No interviews, no background checks, no resumes required.’) / Business Council of Westchester. ‘Greyston Delivers $11 Million in Economic Impact to Yonkers.’ thebcw.org, 2021. (‘Each Open Hire yields $30,000 in reduced government costs; approximately $4.5 million in annual public savings.’) / Jails to Jobs. ‘Greyston Bakery.’ jailstojobs.org. (‘Nearly 12 million pounds of brownies per year.’ / ‘120 employees.’ / ‘95% of Open Hires are people of color.’) NOTE: The Greyston Foundation has paused its community programs (childcare, housing, community gardens, workforce training) as of early 2025 to refocus on its core employment mission at the bakery. The Open Hiring model and the Center for Open Hiring remain active. greyston.org.

 

SECTION 5  THE CONTRACT PROBLEM

Government Funding: The Chronic Underpayment Crisis

Federal funding disruption has dominated headlines since 2025. But the problem this section addresses is older, quieter, and in some ways more consequential: the structural underfunding embedded in the government contracting system that has persisted for decades, regardless of which party holds power. DOGE and executive orders disrupted the spigot. But even when the spigot was fully open, the water pressure was never high enough.

Failure to Pay Full Costs

Governments at every level — federal, state, and local — contract with nonprofits to deliver human services that government agencies themselves do not provide. In theory, these contracts cover the full cost of service delivery, including both direct program costs and indirect costs: rent, utilities, technology, insurance, human resources, accounting, and the administrative infrastructure that makes programs function. In practice, this has almost never been true.

The National Council of Nonprofits has documented this problem for decades. Nationwide, the majority of nonprofits report that governments do not pay them the full cost of the services they deliver under contracts and grants. Among nonprofits reporting that governments cap indirect cost reimbursement, the Urban Institute found that three out of four — 76% — were unable to recover an indirect cost rate of more than 10%. A quarter received zero reimbursement for indirect costs. The actual indirect cost rates for comparable for-profit businesses and well-run nonprofits typically run 25% to 35%.²⁷

The Nonprofit Finance Fund’s 2025 survey found that 70% of nonprofit respondents could only charge an indirect cost rate of 10% or less — a rate that OMB itself acknowledged in 2024 was inadequate when it raised the federal de minimis rate from 10% to 15%.²⁸ That raise, while welcome, still falls well short of actual organizational costs — and many state and local governments have not adopted the new federal standard at all.

76% of nonprofits recover ≤10% indirect cost rate (Urban Institute)

55% paid late by government of nonprofits with govt funding

81% struggle to cover full costs NFF 2025 State of the Sector

 

Late Payments and Cash Flow Crisis

The underpayment problem is compounded by chronically late payments. The Nonprofit Finance Fund found that 55% of nonprofits with government funding reported being paid late in 2024, with 11% experiencing average payment delays of more than 90 days.²⁹ Organizations are required to deliver services — paying staff, rent, and utilities on time — while waiting months for reimbursement from the government agencies they serve. This forces nonprofits to carry de facto lines of credit to fund their government work, consuming unrestricted reserves that should be building organizational resilience instead.

In New York City, the scale of this dysfunction reached a breaking point in 2024, when the NYC Council released a report revealing that 90.59% of all nonprofit contracts were registered late in Fiscal Year 2024 — meaning contractors began work without a finalized contract or payment.³⁰ The Human Services Council documented organizations accruing debt, laying off staff, and in at least one case shutting down entirely due to this chronic problem.

Wage Suppression by Contract Design

Perhaps the most consequential underpayment problem is the one least often named: government contracts that do not include adequate funding for competitive wages. When a government agency sets a contract rate based on historical costs or political pressure to minimize spending, and when that rate does not include sufficient room for salary increases, the result is direct wage suppression for the human services workforce.

The nonprofit starvation cycle, described by researchers Ann Goggins Gregory and Don Howard, captures this dynamic precisely: nonprofits that accept inadequate contract rates then accept inadequate wages, then lose workers to any sector that will pay a living wage, then lose program quality, then accept continued inadequate contract rates because they can no longer demonstrate the outcomes that would justify renegotiation.³¹ Staff who depend on government benefits — on the very safety net their clients rely on — to survive their own nonprofit jobs is not an anomaly. It is the predictable output of this system.

The contract system was built to minimize government expenditure, not to build the sector’s capacity. Until organizations name this clearly and advocate for change, funders and government partners will continue to assume that current rates are adequate.

The À La Carte Problem: How Contract Structure Prevents Systems Change

There is a deeper structural problem with the government contracting model that rarely gets named in policy discussions about underpayment — one that goes beyond money and into architecture. The problem is this: government funding for human services is overwhelmingly categorical. A contract for emergency food assistance is not a contract for housing stability. A housing stability contract is not a contract for workforce development. A workforce development grant is not a grant for mental health services. Each contract exists in its own silo, governed by its own eligibility requirements, its own reporting metrics, its own billing cycles, its own compliance framework, and its own theory of what constitutes a successful outcome.

For the government agencies that issue these contracts, this structure makes administrative sense. Categorical funding allows for accountability: you funded food distribution, you can count meals served. It allows for political specificity: legislators appropriate funds for defined purposes. And it allows for cost control: you cannot use your food contract to pay for a case manager, even if that case manager is the reason the family stays housed long enough to use the food pantry in the first place.

But for the organizations delivering services — and, most importantly, for the people receiving them — this architecture produces something absurd. A family navigating poverty does not experience their lives categorically. They experience a continuously interconnected set of pressures: not enough income, an unstable housing situation, a child struggling in school, a chronic health condition going untreated, a benefits cliff that punishes every step forward, and a relationship history with systems that have more often surveilled and sanctioned them than supported them. The problems interact. The family’s ability to address any one of them depends on making progress on the others.

What the categorical contract structure offers in response is a menu. Need food? Here is a food program. Need rental assistance? Different program, different application, different caseworker, possibly different agency, definitely different eligibility rules, and a waitlist. Need workforce training? Another application. Mental health support? Another referral, another intake process, another set of forms. Each program delivers something real. But none of them, individually or collectively, is designed to address the family’s situation as a system. They are each designed to address one defined line item on a government budget.

This is not a failure of individual programs. Many of these programs do exactly what they are contracted to do. It is a structural failure — built into how government funds human services in the United States — that privileges measurable, short-term outputs (meals served, applications processed, training hours completed) over the longer-term, harder-to-measure work of helping a person or family build genuine stability. And it is a structure that actively makes the harder work more difficult. When an organization’s funding is categorical, its staff time follows that categorization. The caseworker whose salary is paid by a housing contract is technically working on housing. The time that caseworker spends helping the same client navigate a benefits cliff, advocate at a school meeting, or process a trauma history that is directly affecting employment — that time is not billable. That work is not in the contract. Organizations absorb it anyway, because the alternative is abandoning the client at the precise moment the relationship becomes most valuable. But they absorb it at their own expense, using the unrestricted reserves and donated dollars that are already insufficient.

Government contracts are not designed to change systems. They are designed to purchase transactions. The distinction matters enormously for organizations that believe lasting change requires both.

The human services organizations that consistently produce the most durable outcomes for the people they serve are almost universally those that have found ways to integrate services — to wrap support around a person or family comprehensively, to maintain long-term relationships rather than episodic transactions, and to connect individual clients with the advocacy and community that can address the structural conditions shaping their circumstances. Built for Zero does this at the population level, coordinating every provider in a community around a single person-by-person dataset. Circles USA does this relationally, connecting individual families with community volunteers and with policy advocacy at the same time. Roca does this through years-long intensive engagement with young people that no single categorical contract could fund. These models work precisely because they refuse the category boundaries that categorical funding imposes.

The deeper irony is that this fragmentation is expensive. Research on integrated service models — including data from health systems that have adopted whole-person care approaches — consistently shows that coordinated, relationship-based care reduces total system costs even when its upfront cost per client is higher.³⁶ᵃ Emergency departments are expensive. Shelters are expensive. Incarceration is expensive. The crisis services that categorical contracts fund are expensive. The preventive, stabilizing, relationship-based work that categorical contracts do not fund is what reduces the demand for crisis services over time. The system pays for fragmentation many times over — it just pays in the form of crisis response rather than in the form of prevention contracts, which means the cost never appears on the ledger of the agency that refused to pay for integrated care.

For human services organizations, this has direct strategic implications. It means that the fight for full-cost reimbursement and the fight for contract reform are not just financial fights — they are fights about what kind of work government is willing to pay for. The question of whether a contract rate includes a realistic indirect cost rate is the same question as whether the government is willing to fund the organizational infrastructure that makes integration possible. The question of whether a contract allows for flexible case management is the same question as whether the government believes that people are best served categorically or as whole human beings. These are not accounting debates. They are arguments about what works.

Green Shoots: Advocacy That Is Working

The underpayment problem is not intractable. It is a policy design choice, and policy design choices can be changed. Several jurisdictions are demonstrating this. In March 2024, New York City committed $741 million toward a cost-of-living adjustment for approximately 80,000 human services workers employed by nonprofits under city contracts — one of the largest government investments in the nonprofit human services workforce in U.S. history. The city also passed landmark legislation requiring advance payments, appointed 18 Chief Nonprofit Officers within city agencies, and launched the first-ever Nonprofit Advisory Council.³²

These wins did not happen by accident. They resulted from sustained, coordinated advocacy by the Human Services Council of New York and coalition partners who built the data case, maintained relationships across administrations, and did not accept inadequate rates as inevitable. Their model is replicable.

STRATEGIC IMPLICATIONS
1	Know your actual indirect cost rate and advocate for it. Most organizations do not have a Negotiated Indirect Cost Rate Agreement (NICRA) and have never formally calculated what their indirect costs actually are. The 2024 OMB Uniform Guidance raised the de minimis rate to 15% and strengthened organizations’ rights to claim it. Know what you are owed and ask for it consistently.
2	Build the data case for what your contracts actually cost. Advocacy for full cost recovery requires evidence. Organizations that have tracked the gap between contract payments and true costs — and documented the organizational consequences — are far more persuasive than those making general arguments about underfunding.
3	Name the à la carte problem explicitly in contract and budget conversations. Most government funders have never been asked to consider the cumulative cost of categorical fragmentation. Making the case — with specific client stories that illustrate how categorical boundaries fail whole people — opens conversations that purely financial arguments cannot. Frame it as a cost-effectiveness argument: integrated services reduce crisis response, which is far more expensive than prevention.
4	Join or build a coalition for contract reform in your jurisdiction. No single organization has enough leverage to reform contracting norms alone. The NYC Human Services Council model demonstrates what sustained, coalition-based advocacy can win. Identify the equivalent body in your state or city and invest in it.
5	Make the wage suppression connection explicit in funder conversations. Most foundation funders are not aware that the contracts they supplement are contributing to wage suppression. Making this visible — calmly, with data — opens conversations about true cost funding that individual grant applications cannot.

 

CASE STUDY  New York City — The $741M COLA Victory

For years, the Human Services Council of New York (HSC) documented what nonprofits with city contracts knew in their own budgets: government contract rates had not kept pace with inflation, minimum wage increases, or the actual cost of delivering services. The workforce — 66% women, 46% women of color — was increasingly leaving for jobs that paid more. In March 2024, after sustained advocacy by HSC and its coalition partners, the Adams administration committed $741 million toward a cost-of-living adjustment for approximately 80,000 human services workers employed by nonprofits under city contracts. The city also committed to contract registration reform, launching a ‘Timely Registration Initiative’ that brought 88% of planned contracts to registration by July 1, 2025 — up from the prior year’s dismal 9.41% on-time rate. In January 2025, Mayor Adams issued Executive Order 47 formally establishing Chief Nonprofit Officers within 18 city agencies. A new Discretionary Grant Pilot, launching in fall 2025, eliminated 13 steps in the contracting process for small-dollar awards.³³

What makes this transferable HSC’s approach was not primarily confrontational. It was evidence-driven, relationship-based, and relentlessly consistent. The organization built the data case, maintained working relationships across mayoral administrations, framed the issue as a taxpayer and service quality problem — not just a nonprofit problem — and brought diverse coalition partners to the table. This is replicable in any city or state where a nonprofit advocacy body exists or can be built.

 

Endnotes — Section 5

27. National Council of Nonprofits. ‘Common Problems in Government-Nonprofit Grants and Contracts.’ councilofnonprofits.org. (Citing Urban Institute surveys.)
28. Nonprofit Finance Fund. ‘2025 State of the Nonprofit Sector Survey Executive Summary.’ nff.org, 2025.
29. Ibid.
30. New York City Council. ‘NYC Council Releases New Report Outlining Challenges for Nonprofits to Receive On-Time City Contract Payments.’ April 17, 2025.
31. Ann Goggins Gregory & Don Howard. ‘The Nonprofit Starvation Cycle.’ Stanford Social Innovation Review, 2009. Referenced in: ‘The Systematic Starvation of Those Who Do Good.’ SSIR, February 2017.
32. NYC Mayor’s Office. ‘Mayor Adams, Speaker Adams Announce Bold Contract Reform to Help Nonprofits Get Paid Faster.’ August 21, 2025. / NYC Mayor’s Office. ‘Mayor Adams Kicks Off NYC Nonprofit Week.’ August 2025.
33. Ibid. / NYC Council. ‘NYC Council Advances Legislation to Reform City Contracting.’ April 30, 2025. / NYC Mayor’s Office of Contract Services. ‘Nonprofits Initiatives.’ nyc.gov/mocs.  36a.  Robert Wood Johnson Foundation. ‘Connecting Systems to Build Health Equity.’ rwjf.org, 2020. / Robert Wood Johnson Foundation. Aligning Systems for Health, alignforhealth.org. (HealthierHere, King County, WA: documented goals of reducing per-capita costs through integrated delivery.) / Commonwealth Fund. ‘Integrating Behavioral Health Services into Primary Care.’ December 2022. commonwealthfund.org. (Cambridge Health Alliance evaluation: shift to global payment with wraparound services led to improved population health and quality.) / Kresge Foundation. ‘The 2Gen Investment Case: Making the Most of Capital in All its Forms.’ kresge.org, May 2025. (More than $500 million invested in two-generation approaches since 2010, with documented rationale for cost-effectiveness across sites.)

SECTION 6  THE POLITICAL ENVIRONMENT

Geopolitics and Federal Funding Disruption

Human services organizations have always operated in a political environment. What distinguishes the current moment is both the scale of federal intervention in nonprofit funding and the ideological coherence driving it. The disruptions of 2025 and 2026 are not random budget pressures or administrative inefficiency. They reflect a deliberate reorientation of the federal government’s relationship to civil society — one with real implications for organizational survival and positioning, and one that is unlikely to fully reverse even under a different administration.

The DOGE Effect: Unprecedented Scale

By January 2026, the Department of Government Efficiency had driven the termination of 15,887 federal grants totaling approximately $49 billion.³⁴ The National Science Foundation lost $1 billion in already-awarded grants.³⁴ᵃ AmeriCorps saw nearly $400 million in active grants terminated, shutting down over 1,000 programs and eliminating more than 32,000 positions.³⁴ᵇ TRIO educational opportunity programs had $660 million withheld, affecting 2,000 programs serving first-generation college students — though most funds were ultimately released under legal pressure by September 30, 2025, and over 100 grants were permanently cancelled.³⁴ᶜ

The Urban Institute reported that one in three nonprofit service providers experienced a government funding disruption in the first four to six months of 2025. Among those disrupted, 21% lost a grant or contract outright, 27% faced delays or funding freezes, and 6% received stop-work orders.³⁵ Nonprofits serving people living in poverty were more likely to experience losses (25%) than organizations without poverty-focused programs (15%).

$49B in federal grants terminated 15,887 grants by Jan 2026

1 in 3 nonprofits disrupted in first 6 months of 2025

21% lost a grant outright among those disrupted

What Was Targeted and Why

The terminations were not random. Programs with DEI components, housing and anti-poverty programs, public health and research, international aid, and education programs serving first-generation and low-income students faced disproportionate scrutiny. DOGE personnel used keyword searches through grant databases to flag and target awards. Organizations that had built substantial portions of their revenue on federal grants — an average of 27% of revenue for human services nonprofits — were structurally exposed in ways that few had planned for.³⁶

HHS lost 20,000 positions — a nearly 25% workforce reduction — through a combination of firings and departures. HUD office closures and staff reductions have impaired fair housing enforcement and housing voucher administration at precisely the moment when housing need is at its historical peak. The longest government shutdown in U.S. history, which began October 1, 2025, added bureaucratic delay to already-strained grant pipelines.³⁷

The Authoritarian Turn and What It Means for Civil Society

The pattern of the past year — defunding organizations serving marginalized communities, restricting DEI programming, concentrating power in the executive, and using funding as a lever of ideological compliance — reflects a global trend toward authoritarian governance. Authoritarian governments historically narrow the space for advocacy and dissent and defund civil society, precisely because civil society organizations are the infrastructure through which communities organize and hold power accountable.

Human services organizations are not partisan actors. But they are, by their nature, advocates for the people and communities they serve — and that advocacy now operates in a political environment that treats it with suspicion. This is a governance challenge as much as a funding challenge. Organizations must decide, with their boards and communities, what they stand for and how they will protect the ability to say so.

Federal funding will not return to its pre-2025 form. The organizations that endure will be those that treated federal grants as one component of a diversified portfolio — not as the portfolio itself. They will also be those that built the strongest relationships with their communities before the crisis made those relationships urgent.

STRATEGIC IMPLICATIONS
1	Conduct a federal funding exposure audit immediately. Know exactly what percentage of your revenue comes from federal sources — directly and through state pass-through — and what would happen if it disappeared. If you do not know this number, you cannot plan around it.
2	Accelerate revenue diversification toward individual donors and DAFs. Total charitable giving reached $592.5 billion in 2024 — the highest inflation-adjusted level on record. Donor-advised funds distributed $65 billion to charities in 2024, an all-time record. Philanthropic capacity is strong right now, even as government funding contracts. Organizations that invest in individual donor cultivation now will be on more durable financial footing than those waiting for federal stability to return.
3	Protect your advocacy capacity. The organizations most at risk in a politically hostile environment are those that have been most reliant on government and most silent about policy. Building community trust, public visibility, and legislative relationships is not a distraction from mission in this environment. It is mission protection.

 

CASE STUDY  National Council of Nonprofits — Litigation, Advocacy, and the Funding Freeze Response

When the Trump administration issued its broad federal funding freeze in January 2025, the National Council of Nonprofits (NCN) — a network representing more than 30,000 member organizations — moved immediately. Within days, NCN had partnered with the American Association of Museums, the American Public Health Association, and other sector bodies to file suit in federal court seeking a preliminary injunction against the freeze. The court granted the injunction, providing immediate relief to thousands of organizations that had received stop-work orders or funding cancellations. NCN then launched a comprehensive public tracking system — updated continuously throughout 2025 — documenting every federal action affecting the nonprofit sector: grant terminations, agency reductions, stop-work orders, and policy changes. This real-time data resource became one of the primary tools organizations used to understand their exposure and plan their responses. NCN simultaneously advanced legislative advocacy for the Protecting Nonprofits from Catastrophic Cash Flow Strain Act, which would require federal agencies to continue reimbursing nonprofits for allowable costs incurred before a grant termination. NCN tracked that by mid-2025, 1 in 3 nonprofits had experienced a disruption — and that disrupted organizations were nearly twice as likely to have reduced staff. The organization’s public data, testimony, and litigation record through this period constitute one of the most comprehensive responses to a government funding crisis in the sector’s history.

What makes this transferable NCN is not a direct service organization — it is the meta-infrastructure of the nonprofit sector. Its response to the 2025 funding crisis demonstrates what that infrastructure makes possible: rapid coalition-building, legal action, data systems, and legislative advocacy operating in parallel. For individual organizations, the transferable lesson is the value of sector membership and investment in umbrella bodies that can do the things no single organization can do alone. The NCN toolkit for managing federal funding disruptions, its real-time tracking database, and its model contingency planning resources are available to member organizations at councilofnonprofits.org.

Endnotes — Section 6

34. Granted AI. ‘DOGE Has Terminated Nearly 16,000 Federal Grants.’ grantedai.com, February 2026.

34a.  House Committee on Science, Space, and Technology. Letter to NSF Acting Director Brian Stone. democrats-science.house.gov, May 2025. (‘NSF crossed the billion-dollar mark of terminated awards’ between May 1–2, 2025.) / Democracy Forward. ‘Court Allows Mass Termination of Grants at NSF.’ democracyforward.org, September 10, 2025.

34b.  Washington Post. ‘DOGE orders major cut to AmeriCorps funding, imperiling agency’s work.’ April 25, 2025. / Senate letter to AmeriCorps Agency Head (Sanders et al.), May 15, 2025. (Confirming: nearly $400M; 1,031 organizations; 32,465 positions.)

34c.  Council for Opportunity in Education. ‘Protect TRIO.’ coenet.org, September 2025. / Inside Higher Ed. ‘Trump Administration Delays Millions for TRIO Programs.’ September 12, 2025. / COE. ‘The Council for Opportunity in Education Challenges Department of Education Discontinuation and Denial of TRIO Grants.’ October 3, 2025.

35. Granted AI, citing Urban Institute, October 2025.
36. Indiana Capital Chronicle. ‘Federal funding cuts could impact private, nonprofit sector.’ October 13, 2025. (Citing Urban Institute data.)
37. HHS.gov. ‘HHS Announces Transformation to Make America Healthy Again.’ March 27, 2025. hhs.gov/press-room/hhs-restructuring-doge.html. / Citizens for Responsibility and Ethics in Washington. ‘DOGE’s Big Illusion.’ June 2025. / The Nonprofit Alliance. ‘2025 Nonprofit Policy Moments and a 2026 Look Ahead.’ February 2026 

SECTION 7  THE COST OF RISK

Insurance Trends

For human services organizations, insurance has moved from a background administrative function to a frontline financial threat. Premiums for general liability, abuse and professional liability, umbrella coverage, workers’ compensation, and directors-and-officers insurance are rising at rates that strain already-thin operating budgets — and for some organizations, particularly those serving the highest-need populations, are rising beyond what any budget can sustainably bear.

The Scale of the Premium Crisis

A 2025 national survey by the National Organization of State Associations for Children (NOSAC) and the Association of Children’s Residential & Community Services found that since 2019, human services nonprofits have experienced an average premium increase of 163% — with one in four organizations seeing increases of 200% to 1,800%.³⁸ An organization that paid $100,000 annually in premiums six years ago may now be paying $263,000 for equivalent coverage. For under-resourced organizations, these are not inconveniences. They are existential.

According to Risk Strategies’ 2025 Insurance Trends Report, general liability is rising 5–10%, abuse and professional liability 15–20%, and umbrella coverage 20–30%.³⁹ Workers’ compensation costs face upward pressure from rising medical inflation and cumulative trauma claims.⁴⁰ The bright spots — management liability, D&O, and cyber — are holding flat or declining, which matters, but does not offset pressure on the other lines.

163% average premium increase since 2019, per NOSAC survey

+20–30% umbrella coverage increase projected 2025 (Risk Strategies)

25% of organizations saw 200–1,800% increases

Why Premiums Are Rising

Several interconnected factors drive this crisis. Human services organizations often care for individuals with significant physical, emotional, or behavioral needs — making the likelihood of incidents and claims inherently higher than in most other nonprofit sectors. Staff shortages compound this risk: when workers are overextended, the likelihood of mistakes, accidents, and oversights rises. The legal environment has grown more litigious, with abuse and trauma-related claims carrying substantial jury awards. Climate-related property damage adds pressure to property and umbrella lines. And insurers are re-pricing their entire nonprofit portfolio based on actuarial experience that reflects years of accumulating claims.

As costs reach unsustainable levels, organizations must choose: reduce services, reduce staff, discontinue programs, or exit certain service lines. Several states are witnessing the closure of residential programs, child welfare providers, and behavioral health organizations not because of program failure but because insurance is no longer affordable.⁴¹

Strategic Responses

Organizations with the sophistication and scale to pursue alternatives are exploring captive insurance structures, in which multiple organizations pool risk — and which have seen significant growth across sectors in 2024 and 2025 as commercial markets hardened.⁴² Risk-sharing cooperatives, accreditation-based risk mitigation through programs like COA Accreditation, and proactive safety culture investment all remain accessible levers. The most immediate action available to any organization is a thorough risk management review — documentation, safety culture, staff-to-client ratios, and incident reporting discipline — that may not reduce premiums immediately but establishes the track record that insurers use to price future renewals.

STRATEGIC IMPLICATIONS
1	Treat insurance renewal as a year-round strategic activity, not a once-a-year transaction. Engage your broker six months before renewal. Provide organized loss run data, demonstrate your risk management practices, and ask carriers to compete for your business. Passive renewal consistently produces worse outcomes.
2	Explore group purchasing and risk-sharing structures. No mid-size organization has enough leverage in the insurance market alone. Associations, networks, and peer organizations in similar service lines are natural partners for group purchasing arrangements that aggregate risk and increase negotiating power.
3	Quantify the insurance cost in every government contract and grant budget. If insurance costs are rising 20–30% annually and your contracts are not including that cost, you are absorbing it in your operating budget. Every new contract or grant application should include a realistic insurance line item — and you should advocate for funders to fund it.

 

CASE STUDY  Social Current and COA Accreditation — Risk Culture as Insurance Strategy

Social Current is the premier network and solutions provider for human and social service organizations, serving more than 1,800 organizations nationally. Its COA Accreditation program — one of the oldest and most rigorous accreditation frameworks in the human services sector — has emerged in the current insurance crisis as one of the most concrete, evidence-based tools organizations can deploy to reduce their insurance exposure and demonstrate risk management maturity to carriers. COA Accreditation requires adherence to research-based standards across critical operational areas: legal compliance, financial management, human resources, governance, and program delivery. Organizations that achieve accreditation must implement clear policies and procedures, robust internal controls, incident reporting discipline, and continuous quality improvement practices — all factors that directly reduce the frequency and severity of insurance claims. Social Current documented in its 2024 and 2025 policy briefs that the insurance crisis in human services is disproportionately severe for organizations in high-risk service lines, and that risk mitigation through accreditation, safety culture, and governance investment offers the most accessible path for individual organizations to improve their actuarial positioning. COA is also updating its standards for spring 2026 to incorporate ethical and responsible AI practices, adding a governance dimension that insurers and funders are increasingly scrutinizing. Social Current’s Government Affairs team has simultaneously engaged state legislatures and insurance commissioners to develop sector-specific solutions, including group purchasing structures and captive insurance pilots.

What makes this transferable COA Accreditation is one of the few organizational investments that simultaneously reduces insurance costs, improves program quality, builds funder credibility, and creates the governance infrastructure that AI adoption requires. The accreditation process itself — which involves a structured self-study, a site visit, and ongoing compliance review — is a strategic planning discipline as much as a certification. Organizations that have treated accreditation as a compliance burden often miss its strategic value. Those that have treated it as a quality improvement process consistently report operational benefits well beyond the insurance category. More information at socialcurrent.org.

Endnotes — Section 7

38. Social Current. ‘The Ongoing Crisis of Nonprofits and Liability Insurance.’ social-current.org, August 2025. (Citing NOSAC/ACRC 2025 national survey.)
39. Risk Strategies. ‘State of the Insurance Market 2025 Outlook: Nonprofit and Human Services.’ risk-strategies.com.
40. Insurance Business Magazine. ‘US workers’ comp market faces rising costs and regulatory shifts in 2026.’ December 9, 2025.
41. Social Current. ‘The Ongoing Crisis of Nonprofits and Liability Insurance.’ August 2025.
42. Captive Insurance Companies Association. ‘2024: A Milestone Year for Captive Insurance Growth.’ January 2025. / Marsh. ‘2025 Captive Benchmarking Report.’

SECTION 8  THE TECHNOLOGY SHIFT

Technology and Artificial Intelligence

AI’s arrival in the human services sector is not a coming event. It is a current one — uneven, often informal, and imperfectly governed, but unmistakably underway. For human services organizations, AI represents something more specific than a general technology trend. In a sector facing simultaneous labor shortages, administrative overload, and funding contraction, it is one of the few tools available that can meaningfully expand what an organization can do without proportionally expanding what it costs. The question is no longer whether to engage. It is whether to do so deliberately.

Where the Sector Currently Stands

In 2026, more than 92% of nonprofits have adopted some form of AI — but only 7% report that it has actually expanded what their teams can accomplish.⁴³ The majority are what researchers call the “efficiency plateau”: faster drafts, quicker emails, same results. Formal AI strategy exists in only 24% of organizations, and 47% have zero AI policy in place.⁴⁴ The digital divide within the sector is stark: nonprofits with annual revenues over $1 million are adopting AI at nearly twice the rate of smaller organizations, and roughly 41% of those under $1 million rely on just one staff person to make all AI decisions.⁴⁵

92% of nonprofits use some AI but only 7% expand capacity

47% have zero AI policy governance gap, 2026

2× AI adoption rate gap orgs over $1M vs. under

What AI Does Well in Human Services

The clearest, most documented gains from AI in human services fall into four categories. First: administrative efficiency. AI-driven automation is saving nonprofits an estimated 15–20 hours per week through automated meeting notes, document summaries, grant proposal drafting, donor communications, and report generation.⁴⁶ For organizations where administrative staff are stretched across too many functions, this is meaningful capacity recovery. Second: case management support. AI is being used in child welfare and other services to support risk screening, identify early indicators of harm, and improve resource coordination. A 2025 systematic review found effective outcomes in seven of eight AI-assisted case management studies.⁴⁷ Third: data-driven program management. Organizations are shifting from static, backward-looking reports to real-time AI-powered insights that support faster course correction and more credible impact reporting.⁴⁸ Fourth: donor engagement. AI-enhanced CRM systems are enabling organizations to segment donors, identify lapsing givers before they leave, and personalize outreach at a scale that previously required dedicated staff.⁴⁹

The Infrastructure and Governance Gaps

Despite enthusiasm, most human services organizations are trying to use AI on top of legacy systems, inconsistent data practices, and outdated infrastructure that actively limits its effectiveness. Organizations that want AI to produce real operational gains need to invest in the data foundation that makes AI reliable — and most have not yet done so.⁵⁰

The governance gap is equally urgent. More than 80% of nonprofits report using AI, but only 10–24% have formal AI policies or governance frameworks.⁵¹ AI is no longer a staff-level tool. It is a governance issue — and boards are being asked to understand how AI is used, how data is protected, and how risks including bias and privacy breaches are managed. COA Accreditation is updating its standards for spring 2026 to incorporate ethical and responsible AI practices.⁵²

AI will not solve the human services sector’s structural challenges. But used with clarity and governance, it can give organizations the capacity to do more of what they are already good at — while protecting the human relationships that no algorithm can replace.

STRATEGIC IMPLICATIONS
1	Start with one high-value use case, not a platform. Organizations that succeed with AI almost always begin with a specific, bounded problem — case note documentation, grant writing, donor segmentation — rather than a general “AI strategy.” Pick the place where your team loses the most time to administrative work, and start there.
2	Build your data foundation before buying AI tools. AI produces reliable results when it operates on clean, consistent, accessible data. If your case management system cannot produce basic outcome reports, AI will not fix that — it will amplify the noise. Data quality investment comes before AI investment.
3	Develop a board-level AI governance policy. Funders, accreditors, and clients are beginning to ask how organizations govern their AI use. A clear, thoughtful AI policy — covering data privacy, bias review, staff training, and human oversight requirements — demonstrates organizational maturity and builds the trust that AI adoption requires.

 

CASE STUDY  Feeding America — AI at Scale for Food Distribution Logistics

Feeding America is a national network of 200 food banks and 60,000 food pantries serving more than 46 million people annually. Its AI deployment is among the most comprehensively documented in the human services sector — and among the most directly applicable to organizations thinking about how to use AI for program efficiency rather than just administrative tasks. Facing the challenge of matching millions of pounds of donated food across a continental network — where perishability, transportation costs, nutritional value, and local demand all vary dramatically — Feeding America partnered with technology teams to build an AI-powered supply chain optimization system. The system uses machine learning algorithms to analyze historical donation patterns, regional demand, transportation capacity, and nutritional gaps to predict where food should go and when. The result: dramatically reduced food waste, improved nutritional quality of distributed food, and more efficient routing that lowers costs. Beyond logistics, Feeding America has deployed AI tools for donor segmentation and communications, using predictive analytics to identify lapsing major donors before they disengage and personalize outreach at scale. The organization has also built data-sharing systems that allow its member food banks to access AI-powered insights from the network’s aggregated data — giving smaller regional organizations access to analytical capacity they could not afford to develop independently.

What makes this transferable No mid-size human services organization needs to build what Feeding America built — that took years, specialized staff, and national scale. The transferable insights are about approach: begin with a specific, bounded operational problem where the cost of inefficiency is measurable; use existing data before buying new tools; share analytical infrastructure across organizations rather than each building independently; and invest in staff training alongside technology investment. The Feeding America model also illustrates the value of network data — organizations that are part of federated networks have access to aggregated insights that standalone organizations do not. For organizations exploring AI for the first time, NTEN’s 2025 AI readiness assessment and Fast Forward’s AI for Nonprofits playbook are accessible starting points.

Endnotes — Section 8

43. Virtuous Software. ‘The 2026 Nonprofit AI Adoption Report.’ virtuous.org, February 2026.
44. Cerini & Associates. ‘AI Trends for Nonprofits in 2026.’ ceriniandassociates.com, February 2026.
45. Social Current. ‘The Growing AI Gap Between Social Sector Organizations.’ January 2026. Citing TechSoup/Tapp Network 2025 State of AI in Nonprofits Report.
46. Cerini & Associates. ‘AI Trends for Nonprofits in 2026.’ February 2026.
47. Li, Wang & Jian. ‘AI-Assisted Case Management in Social Work Services: A Systematic Review.’ SAGE Journals, 2025.
48. Grassi Advisors. ‘Strategic Technology Planning for Nonprofits: Priorities for 2026.’ December 2025.
49. BizTech Magazine. ‘Tech Trends 2026: What to Anticipate in the Nonprofit Sector.’ January 5, 2026.
50. BizTech Magazine. ‘Tech Trends 2026.’ Citing NTEN CEO Amy Sample Ward, January 2026.
51. Cerini & Associates. ‘AI Trends for Nonprofits in 2026.’ February 2026.
52. Social Current. ‘The Growing AI Gap Between Social Sector Organizations.’ January 2026. Citing COA Accreditation spring 2026 standards revision.

 SECTION 9  THE CLIMATE FACTOR

Climate Change and Human Services

Climate change is not primarily an environmental issue for human services organizations. It is a service demand issue, an operational cost issue, and — most importantly — an equity issue. The populations that human services organizations serve are, in nearly every documented way, the most vulnerable to climate impacts. They are the least able to prepare, the last to receive help, and the slowest to recover. Understanding climate change as a human services issue — not just an environmental one — is the reframe that changes what organizations do about it.

The Human Health Burden Falls on the Vulnerable

Extreme heat is now the leading cause of weather-related deaths in the United States, resulting in more than 238 fatalities annually between 1995 and 2024 — a number that increased by more than 50% between 2000 and 2025. The year 2024 was the hottest year on record globally, with average temperatures more than 1.5°C above the 1850–1900 baseline. In U.S. cities, the average rate of extreme heat events has increased from two per year in the 1960s to ten per year between 2010 and 2020, and the average heat-wave season has lengthened by 46 days since the 1960s.⁵³

These averages obscure a more important reality: climate impacts are not distributed equally. Underserved communities — people of color, older adults, people with disabilities, people with low incomes, and those in inadequate housing — face substantially greater vulnerability to the health consequences of extreme heat, flooding, and air quality degradation. People who cannot afford air conditioning are more likely to suffer from unsafe indoor temperatures. People with disabilities face barriers to evacuation. Older adults, especially those living alone, are at highest risk of heat-related death.⁵⁴ These are precisely the people on human services organizations’ caseloads.

Climate as a Demand Multiplier

Climate change is a demand multiplier for human services. Every major weather event — hurricane, wildfire, flood, heat wave — generates cascading service needs: emergency food, temporary shelter, mental health support, medical care, housing stabilization, and income support for workers who lose hours or jobs. After a disaster, affected housing markets see rents rise 4–6% more than comparable unimpacted markets, and rates of post-disaster homelessness and chronic homelessness both increase.⁵⁵

The United States experienced $180 billion in severe weather disaster damages in 2024 alone. In 28 extreme weather events that year, the combination of climate change, high exposure, and limited adaptive capacity drove mass displacement and overwhelmed local human services infrastructure. Climate-driven displacement is beginning to concentrate in already-underserved communities, compounding existing poverty and housing instability.⁵⁶

Operational Vulnerabilities

Climate change also creates direct operational challenges for human services organizations. Rising insurance costs, driven partly by climate-related property damage, are already documented in Section 7. Organizations that operate facilities in flood-prone areas, wildfire corridors, or regions with extreme heat events face escalating property insurance costs, cooling system expenses, and the real possibility of facility disruption or loss. Organizations that transport clients are exposed to extreme weather disruptions. Those that serve outdoor populations — homeless service providers, agricultural worker advocates — face direct service delivery challenges during heat events.

Every major heat wave, flood, or wildfire is a human services event — one that creates demand, strains capacity, and falls most heavily on the people organizations already serve. Organizations that treat climate as someone else’s problem will find that the emergency response demands it creates are very much their problem.

STRATEGIC IMPLICATIONS
1	Integrate climate vulnerability into your community needs assessment. Who among your current and potential clients faces the greatest climate risk? Where do they live? What are their heat resilience and evacuation capacities? This data should inform your service planning — and your funder conversations about emergency response capacity.
2	Develop a climate emergency response protocol. Every organization serving vulnerable populations should have a documented plan for how it will continue serving clients during extreme heat, flooding, or other climate events. What triggers the protocol? Who is responsible? How will you reach your highest-risk clients?
3	Connect climate and housing advocacy. The organizations best positioned to prevent climate-driven displacement are those already engaged in housing stability work. If your organization operates at this intersection, the climate frame opens doors to new funders — particularly foundations with climate and environmental justice portfolios.
4	Audit your own facilities for climate resilience. Adequate cooling, emergency generators, and flood mitigation are not luxury investments for human services organizations. For organizations that operate residential programs, crisis shelters, or services to medically vulnerable populations, they are operational necessities.

 

CASE STUDY  SBP — Shrinking the Time Between Disaster and Recovery

SBP was founded in 2006 in St. Bernard Parish, Louisiana, after Hurricane Katrina devastated communities that the official disaster recovery system reached slowly, unevenly, and — for low-income homeowners without flood insurance — sometimes not at all. Over nearly two decades, SBP has rebuilt more than 2,300 homes for disaster survivors across 13 communities in the United States, with 130,000 volunteers and a rigorously documented process that moves people from disaster to recovery substantially faster than both government programs and traditional voluntary disaster recovery approaches. SBP’s model is built on three interconnected functions: Reach (preparedness and resilience-building before disasters strike), Rebuild (efficient, volunteer-driven home reconstruction after disaster), and Reform (policy advocacy and system redesign to make official disaster recovery faster and fairer). When Hurricane Harvey devastated Houston in 2017, SBP responded within weeks and has remained in Houston continuously since — completing 426 home rebuilds for Harvey and Tropical Storm Imelda survivors, co-developing the Connective case management platform with the Greater Houston Community Foundation to coordinate nonprofit recovery efforts across the city, and completing 294 emergency plumbing repairs for Winter Storm Uri survivors in 2021. When Hurricanes Helene and Milton struck in late 2024, SBP mobilized multi-state responses within days. A coalition SBP leads has advocated to Congress for the Disaster Assistance Simplification Act, which would streamline FEMA processes that currently delay recovery for the most vulnerable survivors. In 2024, SBP partnered with impact investor Maycomb Capital to launch a Recovery Acceleration Fund providing bridge financing for low-income homeowners who qualify for federal aid but cannot self-finance repairs while waiting for reimbursement.

What makes this transferable SBP demonstrates that climate resilience is not primarily a technology challenge — it is a systems design challenge. The organization’s transferable contributions include its Connective platform (available to disaster response coordinators), its SHARE program (providing grants and technical assistance to local rebuilding partners), its Resident Fellow model (embedding disaster resilience professionals in at-risk communities), and its policy reform playbook. Human services organizations that serve vulnerable populations in climate-exposed regions can partner with SBP for preparedness campaigns and post-disaster coordination without building their own disaster infrastructure. SBP’s resources are available at sbpusa.org.

Endnotes — Section 9

53. Center for Climate and Energy Solutions. ‘Extreme Heat and Climate Change.’ c2es.org, July 2023. / World Weather Attribution. ‘Unequal Evidence and Impacts: Extreme Weather in 2025.’ December 2025.
54. Harvard T.H. Chan School of Public Health / Annals of Allergy. ‘Effects of Extreme Weather on Health in Underserved Communities.’ 2024. / EPA. ‘Climate Change and Human Health: Who’s Most at Risk?’ epa.gov.
55. Enterprise Community Partners. ‘Four Key Findings from the 2025 State of the Nation’s Housing Report.’ 2025. (Citing Brookings Institution / JCHS.)
56. National Centers for Environmental Information cited in Annals research. / World Weather Attribution. ‘Unequal Evidence and Impacts: Extreme Weather in 2025.’ 2025.

 SECTION 10  THE FUNDER LANDSCAPE

Foundation Funding and AI Philanthropy

Philanthropy is not a stable backstop for the losses documented in the previous nine sections. But it is undergoing significant changes — some that create genuine opportunity, some that require careful navigation — and organizations that understand the current landscape are better positioned to access it. Two dynamics deserve particular attention: the overall state of foundation giving in 2026, and the rapid emergence of a major new philanthropic focus on AI and technology for social good.

Foundation Giving: Strong but Shifting

Foundation assets reached an estimated $1.75 trillion as of September 2025, driven by strong stock market performance.⁵⁷ Foundation giving is projected to increase 5–7% in 2026, to as much as $122 billion — a values-driven response to rising community needs and decreasing federal support. Notably, 30% of foundations have already increased their payout rates beyond their original plans, and 64% have provided emergency or rapid-response funding specifically because of federal disruptions.⁵⁸

The composition of philanthropic giving is shifting in ways that matter for strategy. Human services is the third-largest category for private foundation giving, behind education and public & societal benefit, with $139 million from one sample of foundation clients alone.⁵⁹ Total charitable giving reached a record-adjusted $592.5 billion in 2024, and 2025 totals are comparable. Donor-advised funds distributed $65 billion to charities in 2024 — an all-time record, up 85% since 2020. Major gifts from high-net-worth donors — fueled by strong stock market performance — are the primary driver of growth. Monthly recurring giving now constitutes 31% of online revenue for nonprofits.⁶⁰

The structural tension in foundation funding is real: philanthropic dollars — even at record levels — cannot replace the scale of federal investment. Government awards in 2025 had a median value of about $300,000, compared to $55,000 from private funders.⁶¹ Philanthropy can provide flexibility, innovation funding, and emergency relief. It cannot provide the scale that human services delivery requires. Organizations that understand this distinction — and that position philanthropic support as a complement to diversified government, earned, and individual revenue rather than a substitute for any one of them — are the ones building durable financial models.

Where Philanthropy Has Actually Worked: Funding What Government Won’t

The previous section on government funding described a structural problem: categorical contracts that purchase discrete transactions but cannot fund the integrated, relationship-based work that produces lasting change. Philanthropy, at its best, has stepped into exactly that gap — not as a substitute for government funding, but as the funding source that makes integrated approaches possible in the first place, sustains them long enough to demonstrate outcomes, and builds the evidence base that eventually changes what government is willing to pay for. Understanding when and why this works is one of the most strategically important things a human services organization can know.

The clearest examples share a common architecture. A foundation identifies that the dominant service model — categorical, transaction-focused, short-term — is structurally incapable of producing the outcomes it promises. It then funds organizations willing to do something structurally different: whole-person approaches, multi-year relationships, wraparound supports that cross service categories, integration between service delivery and advocacy. The funding is multi-year, flexible, and explicitly designed to protect the organizational infrastructure that integrated work requires. And critically, it is coupled with learning and field-building — connecting grantees to each other, building shared evidence, and creating the intellectual infrastructure that makes the model replicable.

The Kresge Foundation’s NextGen initiative is among the most sustained and explicit examples of this approach in human services. Kresge’s NextGen program supports cohorts of nonprofit and public human services organizations committed to person-centered, outcomes-based, data-driven work using two-generation, whole-family approaches — the exact kind of integrated service model that government contracts systematically exclude. Organizations in the cohort receive up to $500,000 over two years alongside participation in a structured learning and peer network. Kresge is not simply funding services. It is funding the development of an organizational practice that categorical contracts cannot produce, in an environment where those organizations can learn from each other and from national experts. This is the foundation-as-field-builder model, and it represents one of the most valuable things philanthropy can do that government cannot.

The Annie E. Casey Foundation has played a comparable role in child welfare and family economic security, investing over decades in two-generation approaches that combine adult economic mobility with child development support. The JPB Foundation has built sustained general operating support relationships with organizations working on poverty, health, and disability — prioritizing unrestricted multi-year grants precisely because it understands that the organizations most capable of integrated work are also the most constrained by categorical funding. The Robert Wood Johnson Foundation has for decades funded the integration of health and human services — embedding health workers in social service settings, funding co-location of medical care and wraparound support, and building the evidence base that has since been adopted into Medicaid-funded models.

What these investments have in common is that they funded something before government would — and stayed long enough for the model to mature. The evidence base for integrated service approaches, two-generation models, and whole-person care did not emerge from government-funded programs. It emerged largely from philanthropy-funded pilots that government later adopted, scaled, or incorporated into its contracting requirements. That is the pattern worth understanding: philanthropy as risk capital for service innovation, and sustained philanthropy as the bridge between proof of concept and systems change.

The organizations doing the most durable work in human services are almost always organizations that received sustained philanthropic investment in integration — in the organizational infrastructure that categorical contracts actively undermine. The foundation that funds that work is not filling a gap. It is creating something that the government system cannot create for itself.

The present moment is testing this dynamic in a new way. With government funding disrupted at unprecedented scale, foundations that have historically played the innovation and infrastructure role are being asked to do something different: stabilize organizations whose government funding has disappeared entirely. The CEP’s 2025 research shows that many foundations have made meaningful emergency responses — 64% provided rapid-response grants, 30% increased their payout rates. But the foundations that have been most explicit about where they can and cannot help are the ones whose strategic logic is clearest: they can fund integration, they can fund advocacy for systems change, they can fund the organizational resilience that allows an organization to navigate disruption — but they are not structured to replace government at scale.

For human services organizations, this has a specific strategic implication. The organizations best positioned to access philanthropic capital right now are not necessarily those most in crisis — they are those that can demonstrate they are doing what government contracts cannot fund. An organization that can articulate a clear theory of integrated, wraparound service delivery, show that philanthropic investment in that integration has produced measurable outcomes, and connect that work to a credible advocacy strategy for policy change is describing exactly what the most thoughtful foundation funders are looking for. The conversation is not ‘our government funding was cut and we need help.’ It is ‘we are doing work that categorical funding cannot sustain, and we have the evidence to prove it.’ That is the frame that has historically moved foundation dollars — and it is the frame most likely to move them now.

The AI Philanthropic Moment: A Major New Funding Category

In 2025, philanthropy made a historic bet on artificial intelligence for social good — not on AI as a technology curiosity, but on AI as a tool for the people most left behind. Two landmark initiatives signal how large this emerging funding stream is.

In July 2025, a coalition of major philanthropies — Ballmer Group, Gates Foundation, Stand Together, Valhalla Foundation, and individual donor John Overdeck — announced NextLadder Ventures, a $1 billion, 15-year initiative dedicated to developing AI tools for frontline human services professionals: social workers, legal aid attorneys, public defenders, parole officers, and others managing caseloads far beyond their capacity. Anthropic joined as inaugural AI partner, providing technology and expertise to supported organizations.⁶² The initiative specifically focuses on the more than 1.6 million frontline helpers who guide people through critical life moments — and on equipping them with tools that reduce administrative burden and allow them to serve more people with greater precision.

In October 2025, a separate coalition of ten major foundations — including MacArthur, Ford, Mellon, Omidyar Network, Packard, Mozilla, and Kapor — announced Humanity AI, committing $500 million over five years to ensure that AI serves people and communities rather than replacing or diminishing them. MacArthur’s Big Bet on AI Opportunity focuses specifically on the intersection of AI, the economy, and the workforce — with early grants already awarded to the AI Now Institute and Brookings. The Humanity AI pooled fund, managed by Rockefeller Philanthropy Advisors, begins making grants in 2026.⁶³

$1B NextLadder Ventures AI tools for frontline workers, 15 years

$500M Humanity AI coalition 10 foundations, 5-year initiative

90% of nonprofits want more AI use but 90% get no funder AI support

The Foundation AI Gap — and the Opportunity In It

Despite this remarkable commitment at the philanthropic leadership level, an enormous gap exists between foundations and their grantees on AI. The Center for Effective Philanthropy found that nearly 90% of foundations provide no AI implementation support to grantees, and fewer than 15% plan to increase this in the next three years.⁶⁴ Three-quarters of nonprofits believe their funders have little to no understanding of their AI-related needs. At the same time, 90% of nonprofits and 94% of foundations report wanting to expand their use of AI.⁶⁵

This is not a conflict. It is an opening. Organizations that can clearly articulate their AI needs — what they would do with AI support, what the organizational and client impact would be, and what governance structures they would put in place — are positioned to benefit from a wave of funder interest that is just beginning to reach operational grantmaking. The KPMG Foundation has committed $6 million to help nonprofits integrate AI into operations. GitLab Foundation offers $250,000 grants plus six months of OpenAI technical support. Microsoft, OpenAI, and others have launched free AI training programs designed for nonprofit professionals.⁶⁶

The organizations that position themselves as thoughtful, governed, equity-conscious adopters of AI — not enthusiastic adopters of every tool, but deliberate and accountable ones — are the ones that will attract the next major philanthropic investment priority.

STRATEGIC IMPLICATIONS
1	Map your funder portfolio against the new AI funding priorities. Review your current and prospective funders’ AI-related grantmaking. MacArthur, Ford, Mellon, Omidyar, and their Humanity AI co-funders are actively seeking grantees. So is the NextLadder Ventures network. Organizations that can articulate their AI work in alignment with these priorities are well-positioned for this emerging funding stream.
2	Make the case for AI as a capacity investment to your funders. Most funders still treat technology as overhead. The organizations that change this for their specific funders are those that bring data: what administrative time would AI recover, how many more clients could they serve, what would governance look like. This conversation requires specificity, not aspiration.
3	Frame your philanthropic asks around integration, not crisis. The organizations that have historically attracted sustained foundation investment are those doing what government contracts cannot fund: wraparound support, whole-family approaches, integrated service models with multi-year relationships. If that is your work, make it visible and explicit in how you describe it to funders. If it is not yet your work, consider whether building toward it would both serve clients better and open new funding relationships. The conversation that moves foundation dollars is not ‘our government funding was cut’ — it is ‘we are doing what categorical contracts cannot sustain, and here is the evidence.’
4	Cultivate individual major donors and DAF holders with urgency. Philanthropic capacity is strong right now, and donor-advised funds hold enormous assets seeking deployment. Organizations without active major gift programs — particularly those that have been heavily reliant on government funding — are leaving accessible revenue on the table.
5	Position for the trust-based philanthropy moment. Multiple foundations are shifting toward general operating support, multi-year grants, and reduced reporting requirements. Organizations with strong relationships, clear impact narratives, and demonstrated financial health are well-positioned for this shift. It rewards the investment in funder relationship cultivation that many human services organizations have chronically under-resourced.

 

CASE STUDY  Roca — Outcomes-Based Funding and the Evidence Imperative

Roca, a violence intervention and behavioral health organization based in Chelsea, Massachusetts, provides intensive, evidence-based programming to the highest-risk young people: gang-involved young men and women with criminal justice involvement, no employment history, and low educational attainment. Rather than managing to outputs, Roca’s entire model is built around measurable behavior change tracked in a robust data system. In 2014, Roca signed one of the first Pay for Success contracts in the country — the Massachusetts Juvenile Justice Pay for Success Initiative, a $29.5 million partnership with the Commonwealth of Massachusetts, Goldman Sachs, the Kresge Foundation, and others. The initiative represents a fundamental shift in how government funds social services: paying not for activities delivered but for outcomes achieved. A 2024 Abt Associates analysis of Roca’s Massachusetts cohorts found that after three years, 37% of Roca participants were reincarcerated — 30% lower than the state average for comparable young men, even though Roca works with the highest-risk individuals. Roca has since built the Roca Impact Institute, which has now served 75 cities and counties across 24 states and Washington D.C., training 103 organizations in its Rewire CBT model. Its 2024 Annual Report documents direct service to nearly 2,000 young people at the center of urban violence in three states.⁶⁷

What makes this transferable Roca’s lesson is not ‘pursue Pay for Success’ — that model has produced mixed results in independent evaluations and requires significant organizational readiness. The transferable insight is the organizational commitment to rigorous data, defined theory of change, and willingness to be evaluated. Every human services organization can invest in these capacities. And organizations that build them are better positioned for every kind of funding conversation — government contracts, foundation grants, and the emerging AI philanthropy landscape alike.

Endnotes — Section 10

57. Chronicle of Philanthropy. ‘Up or Down? Forecasts for Foundation Giving in 2026.’ November 13, 2025. (Citing FoundationMark CEO John Seitz.)
58. Center for Effective Philanthropy. ‘A Sector in Crisis: How U.S. Nonprofits and Foundations Are Responding to Threats.’ cep.org, January 2026. (30% of foundations increased payout beyond planned; 64% provided emergency or rapid-response grants.) / GEO. ‘How Foundations Can Support Nonprofit Partners Now.’ geofunders.org, January 2026.  58a.  Kresge Foundation. ‘Kresge Foundation Grants $5 Million to 10 Organizations Advancing the Social and Economic Mobility of Families.’ kresge.org, July 15, 2019. (Primary source confirming: each of the 10 second-cohort NextGen organizations received a $500,000 grant plus two-year learning program participation.) / Kresge Foundation. ‘Next Generation (NextGen) Initiative.’ kresge.org. (Program description: person-centered, outcomes-based, data-driven, two-generation whole-family approaches.) / Center for Effective Philanthropy. ‘A Sector in Crisis.’ January 2026. cep.org. (64% of foundations provided emergency or rapid-response grants; 30% increased payout rates.) / MacArthur Foundation. ‘Five Foundations Commit $1.7+ Billion to Nonprofit Organizations in Wake of Pandemic.’ macfound.org. / John Palfrey. ‘Philanthropy Must Accelerate Spending and Broaden Collaboration.’ Stanford Social Innovation Review, June 17, 2025. ssir.org.

59. Foundation Source. ‘2026 Giving Outlook.’ November 13, 2025.
60. DAF Research Collaborative. ‘Annual DAF Report 2025.’ dafresearchcollaborative.org, December 2025. (FY2024 data: $64.89 billion in grants from DAFs, up 19% from 2023 and 85% from 2020.) / Chronicle of Philanthropy. ‘5 Trends That Will Shape Fundraising in 2026.’ January 7, 2026. / Orr Group. ‘Trends for 2026.’ December 2025.
61. Grant Assistant AI. ‘5 trends that defined the funding landscape in 2025.’ grantassistant.ai.
62. Gates Foundation Press Release. ‘NextLadder Ventures to advance economic mobility with $1 billion in philanthropic commitments.’ July 17, 2025. / Philanthropy News Digest. ‘Funders launch $1 billion AI economic development initiative.’ July 2025.
63. MacArthur Foundation. ‘Humanity AI Commits $500 Million to Build a People-Centered Future for AI.’ macfound.org, October 2025. / NonProfit Times. ’10 Funders, $500 Million Targeting AI and Humanity.’ October 16, 2025.
64. Bridgespan. ‘Closing the Nonprofit Funding Gap in the Age of AI.’ bridgespan.org. (Citing CEP AI With Purpose report.)
65. Grant Assistant AI. ‘5 trends that defined the funding landscape in 2025.’ Citing CEP AI With Purpose report.
66. Charitable Advisors. ‘The AI Questions Foundations Will Ask In 2026.’ November 24, 2025.
67. Roca. 2024 Annual Report. rocainc.org. / Abt Associates. ‘Roca Massachusetts Reincarceration Rates.’ March 2024. rocainc.org/wp-content/uploads/2024/05/ABT_MA-3-YR-RECIDIVISM-RATES-2024.03.19.pdf. (The 30% lower figure is a comparison group analysis; note that a separate RCT evaluation under the Pay for Success contract found no statistically significant impact on reincarceration — No-Spin Evidence Review, October 2024: nospin.evidencebasedpolicy.org.) / Federal Reserve Bank of Boston. ‘A Pay-for-Success Opportunity to Prove Outcomes.’ Spring 2017.

What This Convergence Demands

Ten forces. Ten sections. One underlying truth: the human services sector is being asked to do more — serve more people with greater complexity of need, against greater structural resistance, with less reliable funding, in a warming world — at precisely the moment when the tools available to do that work are expanding faster than in any previous period.

That is the honest framing. Not doom and not naïve optimism, but the actual situation: simultaneously harder and more capable than it has ever been. The organizations that lead in this environment will be those that hold both truths at once — that name what is hard with clarity, and move toward what is possible with intention.

Strategic planning in this environment requires more than tactical adjustment. It requires organizations to ask uncomfortable questions with their boards and leadership teams: Are our current programs still the highest-leverage use of our resources and relationships? Are we building the revenue diversification and cash reserves that this level of volatility demands? Are we investing in our workforce the way we say we value it? Are we using technology to extend our capacity, or ignoring it? Are we addressing the symptoms of poverty, or are we willing to also name and engage the systems that produce it? Do we have a position on climate — as a service demand and operational reality, not just an abstract concern?

None of these questions have easy answers. But organizations that refuse to ask them will find the environment making the answers for them — in the form of program closures, staff exits, funding crises, and communities left without the support they need and deserve.

The organizations in this report that are doing transferable, replicable work — Metro Denver and Built for Zero, Grounded Solutions Network and Homes for the Future, New York City’s Human Services Council and the contract reform coalition, Roca and its outcomes discipline — did not have more resources than their peers. They made more deliberate choices, earlier. That is the invitation this report extends to every executive director, board member, and leadership team that reads it.

 

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