Amidst Uncertainties, Trust is Helping Nonprofits Continue to Meet Community’s Needs

As the federal government cuts funding and programs that support essential services such as healthcare and education, many nonprofits in our region are facing rising demand for services and fiscal concerns. Funding pauses, cancelled contracts, and agency closures also have underscored how reliant our region and its residents are on federal support. For example:

• This month, the Health and Human Services regional office in Chicago was closed, eliminating the Midwest hub for federally funded programs such as Meals on Wheels, heating assistance, and childcare.
• Nearly 15 percent of the State of Illinois’ 2025 operating budget is federally funded, along with $2.7 billion in federal capital support. Federal funding drives a wide range of services, including road, bridge, transit, and sidewalk projects; housing assistance; food security programs such as school lunches; and early childhood education.
• Illinois has more than 81,000 federal employees, and the nonprofit sector employs some 575,000 Illinois workers. Layoffs from funding cuts could create housing instability and reduced spending and tax revenue that affects the entire state.
• Two out of three nonprofits surveyed for a February 2025 Urban Institute report said they receive at least one government grant or contract. Larger nonprofits with $10 million or more in annual expenses told Urban Institute that 54 percent of their revenue is from government sources.

Amidst federal funding uncertainties, The Chicago Community Trust is listening and learning alongside our partners and working to identify creative strategies to continue meeting our community’s needs. The Trust is working with BDO Management Consulting to better understand our nonprofit partners’ vulnerability to federal funding shifts. Findings will help inform the Trust’s efforts to support nonprofits in our region to continue to serve communities.

In March, the Trust along with the John D. and Catherine T. MacArthur Foundation convened more than 50 funding partners in the Chicago region to brainstorm what role philanthropy can play in supporting nonprofits dealing with unanticipated challenges. “As the region’s community foundation, The Chicago Community Trust has been here for more than 100 years, partnering with organizations and individuals to serve people throughout the region,” said Marisa Novara, vice president of Community Impact. “While philanthropic dollars alone cannot fill the potential gap left by federal cuts, we are committed to listening, collaborating, and getting creative to best meet the moment.”

The group will meet regularly to share learnings, support one another, and collaborate to be as efficient and effective as possible with the available resources. Trust staff are also participating in similar conversations led by funder collaboratives such as Chicago Funders Together to End Homelessness and Health First Collaborative.

In Illinois, Forefront—the statewide association representing nonprofits and grantmakers—is serving as a resource and leader educating and mobilizing constituents on issues that impact the field.

“We’re hearing that organizations need trustworthy advice about their business models, compliance, fundraising, and urgent legal support to navigate attacks on DEIA and challenges to their federal funding contracts. We’re proud to partner with the Chicago Lawyer’s Committee, Chicago Bar Foundation, and others who are building their capacity to meet this need,” said Monique Jones, president and CEO of Forefront. “Neither the state government nor private philanthropy can replace the scale federal funding, but stable sources of emergency funding are urgently needed to help organizations adapt and reprioritize. We are heartened to see funders like the Trust step up to meet this need. We’re grateful to support nonprofit organizations who are coming together to organize and act.”

The Trust is also continuing work begun in the midst of COVID to help nonprofits make the most of federal funding they’ve already secured. Building on what we learned from grants made in 2021 to help nonprofits administer federally funded COVID recovery programs, the Trust approved $1.5 million in grants in February 2025 to help nonprofits adequately cover the administrative and compliance costs of managing federal grants. The Trust’s Policy Change team is simultaneously working with partners to advocate for improved compliance and contracting requirements between the federal government and nonprofits.

Importantly, “the Trust is not stopping anything that we’re currently doing. We’re adding support on top of what we’ve already committed to do,” said Joanne Otte, Critical Needs program manager.

Be a part of helping the Trust support nonprofits at this time. Consider making an undesignated gift to allow more responsive, flexible grantmaking that meets the needs of nonprofits in this moment.