Grant funding in 2026, and what to do about it

Does your grant income feel less reliable than it did two years ago? You are not imagining it, and you are not alone. Here is what the numbers say, and what is worth your time in the next few months.

What actually happened

In early 2025, a third of nonprofits reported a disruption to their government funding. One in five (21%) lost at least some of it. More than one in four (27%) had government money delayed, paused or frozen. That comes from a national survey of charities with budgets of $50,000 or more (Urban Institute, October 2025).

A lot of groups lean on that money. Among nonprofits that file the full IRS Form 990, more than 80,000 reported government grants each year from 2021 to 2023. Those grants came to at least $240 billion a year. In 2023, about four in five of those groups (79%) would have run a deficit without them (Urban Institute, updated March 2026).

Foundation money has not filled the gap. In February 2026, the Center for Effective Philanthropy surveyed nonprofit CEOs whose groups get foundation grants. Since January 2025, 57% said those grants had become harder to win, and 44% got less foundation money. Nearly three in four (73%) saw more demand for their services. And 39% ran a deficit in 2025, up from 22% in 2022 (Center for Effective Philanthropy, May 2026).

What that means if you are small

More demand, less certain money, and the same number of hours. That is the squeeze, and no grant strategy makes it disappear.

What it does change is where your effort goes. When money was steadier, one more application could be a good use of a free afternoon. Now that afternoon may do more good keeping the money you already have safe.

Four things worth doing now

1. See how much rides on one funder

Work out what share of your budget comes from your largest funder. The bigger that share, the more one decision can change your year. Plan for that funder first, before the grant you have not applied for.

2. Get your reporting ahead of schedule

A late report can cost you a renewal, and it is a risk you control. Put every report due date where you will see it. Build each report from numbers you already track. Then each report shows your funder the good their money did, without a last-minute scramble.

3. Ask your current funders first

Start with the funders who already know your work. A program officer may hear about changes before you do. Ask them directly what they expect for next year. While you talk, ask whether the next grant could be one of the unrestricted grants, money with no limits on how you spend it. A funder who knows your work is the easiest one to ask.

4. Write down what a 20% cut would mean

Not a full scenario plan. One page: what you would stop, what you would protect, and who decides. Doing that calmly now is very different from doing it in a panic later.

Check a number before you plan around it

You may see claims that each grant now draws twice as many applications, or that success rates have halved. Before you plan around a number like that, look for who measured it, when, and how. If you cannot find that, set it aside.

What the research does show is simpler: demand is up, government money got less certain, and foundation money got harder to win. Foundations see it too. Almost 9 in 10 foundation leaders said demand for their funding rose in 2025 (Center for Effective Philanthropy, November 2025). That is enough to plan around.

Sources: Urban Institute, How Government Funding Disruptions Affected Nonprofits in Early 2025 (October 7, 2025); Urban Institute, What Is the Financial Risk of Nonprofits Losing Government Grants? (updated March 23, 2026; the 79% is from its 2023 national fact sheet); Center for Effective Philanthropy, State of Nonprofits 2026 (May 2026); Center for Effective Philanthropy, Mounting Pressure (November 2025). Read 24 September 2026.