Nonprofit industry outlook

Nonprofit organizations are working to adapt to the evolving philanthropy landscape of changing federal priorities, international trade modifications and ongoing policy shifts. The dual pressures of rising operational expenses and decreased federal funding are reshaping how nonprofits plan, secure resources and deliver programs. While challenging, this creates opportunities for the adoption of innovative strategies, and chief among them is impact investing.

Impact investing is an investment strategy that aims to generate measurable social or environmental benefits alongside financial returns. This approach aligns with the objectives of many nonprofit organizations, enabling them to seek investments from individuals or groups interested in their cause.

Among the many stressors mounting for nonprofit leaders in 2025, one rises to the top: a potential economic downturn roiling their donor base. Many economists now project an economic downturn—if not a full recession—later this year. So what will be the likely impact on nonprofits?

Historical data and key positive trends in philanthropy show that nonprofits can offset risks related to an economic downturn. Understanding this data and trends is vital for nonprofit leaders in planning and executing their organizational budgets and fundraising strategies.

Total grants from donor advised funds (DAFs) have grown significantly over the past decade, nearly doubling in the last five years alone. DAFs permit donors to irrevocably contribute assets, including appreciated property, to public charities that own, sponsor and control the funds. Donors obtain an immediate income tax deduction and retain advisory privileges over the investment and distribution of such assets for charitable purposes.

DAFs are popular philanthropic vehicles because they alleviate administrative burdens commonly associated with stand-alone charitable organizations and typically accept gifts of complex assets, among other benefits.