S1 E23. Everybody’s Ordering From the Same Menu: The Ripple Effect of Federal Funding Cuts

Well, welcome everybody to Immigrants.

We are talking today about kind of in the same vein of our recent episodes that everybody is ordering from the same menu.

So the ripple effect

of federal funding cuts.

So right now, even nonprofits that never receive federal grants are feeling the effects of those federal funding reductions.

And so organizations losing government support are turning to foundations and individual donors.

And thus, we are having increased competition throughout our funding ecosystem.

The Chronicle of Effective Philanthropy specifically documented this downstream effect in their recent 2026 report that they released.

Valerie, I

feel like you work

with

more clients than we do who have federal funding or who apply for federal funding.

Do you find that those same clients that maybe have had experience cuts in federal funding are making the shift over to applying for foundation grants that they haven't previously?

Yes, yes.

We're definitely shifting to foundation grants as well as some state and maybe local contract opportunities to kind of try to make up what we had hoped would be federal funding that was, you know, unfortunately lost or is no longer available.

Even if the federal funding is available, there's still the kind of fear of the unknown of, Are these proposed rules and laws that are in the system or in the process of being voted on or being adopted, are they going to unnecessarily delay grant awards? Are they going to have an effect where...

grant awards could be taken away because there's disparity in political beliefs between the current administration and the nonprofit.

So there's so many other factors besides just the funding cut that is causing fear and anxiety amongst nonprofit leaders, as well as consultants who work in this field as because we don't know exactly what's going to happen in six months.

So when trying to evaluate, should we apply for this federal funding, we have to take more factors into consideration than ever, ever before.

And it's, you know, it is creating a ripple effect because If we're not applying for the funding at a federal level, we need to try to find funding elsewhere.

So what are you seeing, Carrie? I think

what we're seeing is sort of like the flip side of that coin, which is that, you know, we work with a lot of nonprofits that don't have federal funding dollars.

A lot of them don't even have any public sector dollars.

And so what they have been seeing is that a lot of funders are saying they're trying to find ways to respond to those federal funding cuts at the foundational level.

And so what oftentimes that looks like is a shifting in funder priorities.