Recent policy actions, funding adjustments, and shifts in oversight priorities by the federal government are creating new challenges for not-for-profit and philanthropic organizations across the United States.
As the government’s approach to oversight, funding, and compliance evolves, it’s critical that not-for-profit leaders assess the potential impacts and adapt to sustain their missions and community impact.
“
Given the rapidly evolving environment, not-for-profit and philanthropic leaders must take a proactive, strategic approach to risk management, compliance, and advocacy.
The impact of policy developments
Recent executive and legislative actions have introduced new considerations for how federal grants are awarded, managed, and reviewed. Updates to agency guidance and oversight structures reflect a broader focus on accountability, transparency, and alignment with federal priorities. For many not-for-profits and philanthropic organizations, these shifts may affect both access to funding and the administrative processes tied to compliance and reporting.
At the same time, proposed budget adjustments and funding rescissions have added complexity to the financial landscape, prompting organizations to assess potential impacts on programs and partnerships. As agencies refine their approaches to monitoring and enforcement, not-for-profit leaders are focusing on readiness — reviewing governance practices, documentation standards, and communication protocols to ensure continued compliance and operational stability.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.
As the operating environment becomes more complex, not-for-profits are also navigating heightened public scrutiny and evolving narratives about their role in civic and community life. Increased attention from policymakers, the media, and the public has underscored the importance of transparency, accountability, and clear communication about mission and impact.
In response, many sector leaders are emphasizing collaboration and proactive engagement. National coalitions and foundations are working together to share best practices, advocate for balanced oversight, and reinforce the sector’s contributions to economic stability and community well-being. At the same time, organizations are strengthening governance practices and communications strategies to help ensure their work is clearly understood and trusted by stakeholders.
What not-for-profits should do now: A framework for navigating uncertainty
Given the rapidly evolving environment, not-for-profit and philanthropic leaders must take a proactive, strategic approach to risk management, compliance, and advocacy. The following framework outlines key steps and considerations for organizations to prepare, adapt, and continue to advance their missions effectively.
Reinforce compliance and documentation practices
It’s essential for organizations to strengthen their compliance and documentation practices. This means reviewing and updating internal policies to ensure robust adherence to new federal oversight requirements, particularly regarding due diligence in grantmaking, partnerships, and political activities. Not-for-profits should maintain comprehensive records of funding sources, expenditures, and program outcomes, as increased scrutiny from agencies like the IRS and DOJ is likely. Regular training for staff and board members on compliance expectations, transparency, and legal obligations will help ensure everyone is prepared for heightened oversight.
Closely monitor funding and policy developments
Not-for-profits must closely monitor funding and policy developments. This involves tracking changes to federal grant opportunities and application requirements as agencies implement new review processes and plain-language standards. Organizations should assess the impact of funding freezes, rescissions, and budget cuts on their programs and beneficiaries, and where possible, diversify funding streams to reduce reliance on federal sources. Staying informed about legislative and regulatory changes, including shifts in charitable giving incentives, tax policy, and the status of the Johnson amendment, will be critical for strategic planning.
Strengthen advocacy and collaboration
Engaging in advocacy and sector collaboration is more important than ever. Not-for-profits can amplify their voices by joining sector coalitions, which enables collective responses to harmful rhetoric or policy proposals. Direct communication with elected officials about the essential role of not-for-profits, as well as participation in public education efforts, can help counter misinformation and highlight the sector’s transparency, accountability, and impact on communities.
Prepare for funding volatility and grant terminations
Organizations should prepare for the possibility of grant termination and funding volatility. This preparation includes reviewing all active grant agreements for termination clauses and seeking legal counsel before accepting amendments that introduce “termination for convenience.” Developing contingency plans for program continuity in the event of sudden funding loss, such as scenario planning and building financial reserves, will help organizations remain resilient. Open dialogue with funders about the risks and realities of the current environment can also foster flexibility and partnership.
Keep mission and community needs at the center
Not-for-profits must prioritize their mission and the needs of the communities they serve. Centering the organization’s mission in all decision-making ensures that compliance and risk management do not overshadow service delivery. Listening to community stakeholders to understand emerging needs and adapting programs accordingly will help maintain relevance and impact. Leveraging data and impact stories to demonstrate value and accountability to funders, policymakers, and the public will further strengthen the organization’s position in this challenging landscape.
What to monitor going forward
Implementation of Executive Orders and Memoranda. Watch for agency guidance, new grant terms, and enforcement actions stemming from recent executive directives.
Federal Budget and Appropriations. Monitor the status of key programs and funding streams, as well as the potential for further rescissions or shutdowns.
Legal Challenges and Court Rulings. Stay abreast of litigation affecting not-for-profit status, grant terminations, and sector protections.
Sector Advocacy and Policy Wins. Celebrate and build on successful advocacy efforts, such as the removal of harmful provisions from budget bills or the expansion of charitable giving incentives.
The current moment is one of both challenge and opportunity for the not-for-profit and philanthropic sector. While policy shifts and oversight changes may introduce new complexities, they also offer a chance to reaffirm the sector’s values — transparency, accountability, and community service. By strengthening compliance, monitoring developments, engaging in advocacy, and centering their missions, not-for-profits can navigate this turbulent period and continue to deliver vital services to those who need them most.
