The nonprofit sector has faced tremendous uncertainty this year amid federal funding cuts.
Since President Donald Trump took office in January, his administration has sought to cut government spending. Many of those funding cuts have affected nonprofit organizations in Milwaukee and across Wisconsin, and the possibility of future cuts loom.
This period of uncertainty for nonprofits is likely to continue for the rest of the year, said Tony Shields, president and CEO of the Wisconsin Philanthropy Network.
“Due to the dynamic process of creating federal legislation and the extensive discussions and information involved, continuous challenges and uncertainty are expected throughout the year,” Shields said.
Nonprofits and social service organizations are experiencing “increased competition for private and philanthropic dollars due to federal funding cuts and fewer federal funding opportunities,” the Federal Reserve Bank of Chicago reported in June.
Organizations serving low-income communities have also reported concern about the impact of reduced federal funding, such as on the availability of child care, according to the Federal Reserve.
The Wisconsin Philanthropy Network has heard similar concerns from grant makers and grantees. Organizations receiving significant federal funding are financially vulnerable, including those addressing basic needs such as food insecurity, housing and health care, Shields said.
“Some nonprofits believe philanthropy can compensate for federal cuts, like during COVID-19,” Shields said. “However, this is unrealistic because pandemic relief was supported by both philanthropy and federal programs. Nonprofits should not rely on this belief.”
Federal funding cuts disrupt food sector
Hunger Task Force, Milwaukee’s network of local food pantries, has experienced two significant federal funding cuts so far this year.
In the spring, the U.S. Department of Agriculture canceled the Local Food Purchase Assistance program, which provided funds for food banks to purchase food from local farmers and producers. Last year, Hunger Task Force received $250,000 through the program to purchase vegetables, beef and fish from Wisconsin producers.
At the time the LFPA was canceled, vegetable farmers had already planted seeds for this year’s growing season. Hunger Task Force secured funding from a donor to continue this program through its network of food pantries, said Matt King, CEO of Hunger Task Force.
“Hunger Task Force decided that we were going to honor our commitment to these farmers and make the investment to continue the program, because we believe that it’s the right thing to do,” King said. “These folks are vital to our state and local economy and food system, and their produce provides fresh and healthy foods that pantries don’t often receive.”
Soon after the USDA canceled the LPFA program, the USDA also canceled food bank deliveries nationwide, including $615,000 in food orders for Hunger Task Force. The canceled deliveries to Hunger Task Force included 13 semi-truck loads of milk, chicken, cheese, pork and eggs scheduled to arrive in summer and fall.
Considering the rising cost of groceries, having these healthy foods available at Hunger Task Force pantries is particularly crucial, King said.
The canceled items were also “a significant backbone of the food supply that we had anticipated for the second half of this year,” he said.
“Our food inventory is still strong, and so while those cuts were disruptive, they were not disastrous,” King said. “We have ensured that our local food pantry won’t feel those cuts. We’ve had to do that by making some food purchases, and so it has had a budget impact for our organization, and we have incurred unanticipated expenses as a result.”
Looking ahead, the federal reconciliation budget bill, known as “The One Big Beautiful Bill,” which Trump signed into law on July 4, includes at least $230 billion in cuts to the Supplemental Nutrition Assistance Program, or FoodShare in Wisconsin, and structural changes to the program.
As a result of those impending changes to SNAP, Hunger Task Force expects to see an increase in need and an increase in visits to food pantries, King said.
“This will be the single most devastating program change and cut that food banks and anti-hunger organizations across the country will see,” King said of the cuts to SNAP. “In Wisconsin, over 700,000 people participate in a SNAP program each month, including 240,000 in Milwaukee County, so the cuts in SNAP … will significantly increase hunger in our community, and will be hard to undo in the future.”
Medical College of Wisconsin funding uncertainty
The Medical College of Wisconsin, which received $113 million in funding from the National Institutes of Health in fiscal year 2024, faces the possibility of future NIH cuts that could force the academic nonprofit to shrink its research enterprise.
Trump’s budget request for fiscal year 2026 includes an approximate 40% reduction in funding for the NIH, equaling nearly $18 billion. This indicates that significant funding cuts for MCW may be on the horizon, Dr. John Raymond, president and CEO of MCW, previously told BizTimes.
While MCW has strong private sector relationships, those companies “have a limited capacity to absorb such a tremendous cut that is happening in such a short period of time with no warning whatsoever,” Raymond said.
“In the long term, we may well have to shrink our research enterprise,” Raymond said. “If the NIH funding is reduced by 40%, you can’t go to the private sector and make up $20 billion of a deficit, and you certainly can’t pivot quickly to be able to fill those gaps.”
MCW has also had to navigate other threats to its NIH funding this year. In February, the National Institutes of Health issued guidance that capped the indirect cost reimbursement rate for all current and new NIH awards to 15% of grants effective Feb. 10, but a federal judge has since blocked that guidance. The NIH also began terminating research grants related to LGBTQ+ issues, diversity, equity and inclusion and other topics. MCW lost $6.6 million as a result of those grant terminations.
GMF survey reports ‘overwhelming concern’ about future cuts
In May, the Greater Milwaukee Foundation surveyed recipients representing grantees with open grants and organizations with agency endowments at the foundation to learn whether or how national changes may be influencing their work.
Based on 103 responses to the survey, the top three challenges nonprofits are facing are: an increase in community needs and demands for services; a reduction in funds and/or funding freezes from the federal government; and policy changes affecting services they can provide.
“Although a snapshot in time, the survey results underscore what we continue to hear from nonprofits at sector-specific convenings,” said Carrie Scholz, director of community leadership at the Greater Milwaukee Foundation.
Scholz said the survey responses indicate “an overwhelming concern about anticipated significant cuts on the horizon.”
“The nonprofits express concerns about how these cuts will impact their immediate capacity to deliver services and ultimately remain open,” Scholz said. “Many nonprofits are turning to one another to leverage resources so that community members can access what they need for as long as possible. As a next step, the foundation, in collaboration with others, is exploring how to further support nonprofit partners in this changing environment.”
A year of instability for AmeriCorps programs
A recent attempt to cut federal funding for AmeriCorps has also created instability for some nonprofits in Wisconsin.
At the end of April, the Trump administration cut funding for all Serve Wisconsin AmeriCorps programs. As Wisconsin’s AmeriCorps agency and state Board for National and Community Service, Serve Wisconsin administers federal AmeriCorps funding to organizations in the state.
On June 5, a federal judge ordered that the Trump administration must restore AmeriCorps funding to Serve Wisconsin programs, as well as to other states that sued the Trump administration in April, according to Wisconsin Watch reporting.
“We are excited that several programs have been able to welcome back AmeriCorps members who were serving prior to the grant terminations, and that others are moving forward with previously planned summer AmeriCorps members, including positions at youth camps and on conservation crews,” said Jeanne Duffy, executive director of Serve Wisconsin.
Many AmeriCorps members serve in schools, medical clinics, nonprofit organizations or local government offices. These AmeriCorps members provide literacy and math tutoring, substance use recovery coaching, support for youth who are homeless, and other services. Many AmeriCorps members receive living stipends during their period of service. AmeriCorps was founded in 1993.
In September, Serve Wisconsin announced it had received $12.8 million in AmeriCorps funding for 875 members.
Serve Wisconsin AmeriCorps programs include: Boys & Girls Clubs of Greater Milwaukee’s ClubCorps, College Possible Milwaukee, LibraryCorps, Marquette University’s 414 Fellows, Milwaukee Christian Center’s YouthBuild program, Milwaukee Justice Center’s MJC AmeriCorps, Public Allies Wisconsin, Racine Zoo AmeriCorps program, Teach for America Milwaukee, as well as other statewide programs.
The AmeriCorps cuts created uncertainty for Milwaukee Christian Center’s YouthBuild program, which depended on AmeriCorps funding to support nine members of the program’s current cohort.
“It was really heartbreaking to actually see that impact the young people that we serve and the staff that we serve in our community directly,” Andrea Grittner, director of development and communications at Milwaukee Christian Center, told BizTimes in May. “We had fear that this was coming, but to actually see it impact our young people was kind of a shock and a scary situation.”
