The Year That Changed Everything and the Year(s) Ahead

There is a striking irony to this moment: the social sector is under direct assault by the government that helped to build it.

Let’s not forget that nonprofits and philanthropies came into existence because the federal government failed to meet the needs of the public. In the decades following the Great Depression, the government acknowledged that reality by funding nonprofit service providers and scaling programs using philanthropic funds.

In the new political reality that began last year with lawsuits against major academic institutions, the federal government has attacked its nonprofit partners and eliminated funding for programs and research that do not directly align with the Presidential agenda. The administration has also begun threatening to classify some organizations with objectives it disapproves of as foreign agents, raising concerns about how these measures could affect civil society.

The unsurprising result of all of this: a number of organizations have downsized or folded altogether due to reductions in federal funding and/or declines from concerned donors. Others in the sector are watching, wondering if their communities will be affected next.

Next Year Does Not Look Better

In a typical piece looking ahead to the coming year in the social sector, this would be the point where we would say, “But there are reasons for optimism in the coming year.”

Unfortunately, from our perspective, that is not the case for 2026, 2027, or possibly the foreseeable future.

Despite the questionable popularity of the current Presidential administration, there has been no indication that it is reconsidering any of its policy agenda or tactics. The outcome of the 2026 midterm election may lead to some reassessment of priorities, but, even if this happens, the results would not begin to be felt until 2027 at the earliest. And few are predicting a reemergence of longstanding reliable partners such as United States Agency for International Development (USAID), the National Institute of Health (NIH), the National Endowment for the Humanities (NEH), and the National Endowment for the Arts (NEA).

We also face the potential bursting of the double-bubble of AI and crypto next year. Just as with the dot-com boom of the late 1990s and the housing boom of the mid-2000s, promises of new economic fundamentals all too often end with the old fundamentals taking hold and affecting the broader economy. Even with a milder correction, it appears unlikely that the markets will deliver double-digit returns to the philanthropic community, returns that have bolstered the nonprofit sector in recent years.

The engagement of today’s wealthy in supporting the historically under-resourced also raises profound questions for the future. For every MacKenzie Scott distributing unrestricted billions to nonprofit organizations advancing health, education, and numerous other priorities, there are many, many more billionaires and multi-millionaires doing very little to give back to the society that made them rich. Or they may choose, like Michael and Susan Dell recently did, to bypass the nonprofit sector entirely—in their case by using their charitable billions to fund Trump Accounts for children directly.

Ultimately, there may be few U.S. nonprofit or philanthropic organizations that will see a return to business as usual in the coming year. From TCC’s vantage point, the relationship of third sector organizations and the federal government as it existed for decades no longer exists.

These approaches will not guarantee your organization’s continued success or even survival. What they will do is enable you to continue providing meaningful support to those in greatest need and, ideally, be in a position to contribute to the development and delivery of new, resilient solutions down the road. At TCC, we are responding by sharpening our focus on what our clients need most: clear strategy, practical decision-making, and communication that aligns with a rapidly shifting world. We look forward to working alongside you to navigate what comes next.