Nonprofit US 2026 Nonprofit Outlook: Funding, Workforce & Risk Trends

Nonprofits that embrace innovation, diversify funding and improve resilience will be best positioned to serve with strength.

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What to Expect in 2026

Nonprofits will face unprecedented pressures as government funding priorities shift. As they reposition their organizations to do more with less, agile nonprofits will diversify revenue streams, embrace technology and form strategic partnerships to ensure long-term success. Staying vigilant about emerging risk exposures will become even more critical in 2026.

Economic Viability

Vitality

Resiliency

Profitability

Economic Viability

Nonprofits enter 2026 navigating considerable financial challenges as the new tax law signed in July 2025 threatens to cut off government funding to nonprofits,1 and economic uncertainty continues to affect private funding and individual donations. The law requires individuals to contribute over 0.5% of taxable income and corporations at least 1% of taxable income in charitable donations before they are eligible for tax benefits. However, the reinstated $2,000 universal deduction for non-itemizers might help offset some losses from smaller donors.2 Reduced funding from public and private donors is already impacting the sector: From January 20 to June 30, 2025, nonprofits shed nearly 23,000 full-time jobs.3 Cash raised in 2024 grew just 3.5%, barely outpacing the rate of inflation of 2.9%, while economic pressures continued to increase demand for services, especially those related to food security, mental health and housing.4 Forward-looking organizations are getting creative. Revenue diversification has become more important than ever, with many nonprofits expanding beyond traditional funding sources to pursue corporate partnerships, foundation grants, membership models and fee-for-service arrangements. These initiatives have proven beneficial, with 56% of nonprofits meeting or exceeding their goals using the fee-for-service funding model, where organizations derive a significant amount of their revenue from membership fees.5 In addition, nonprofits will focus on implementing operational strategies that reduce risk, such as shifting certain

Financial diversification key to easing funding pressures.

workloads to well-trained volunteers while maintaining professional oversight for sensitive functions. In addition, strategic partnerships and mergers can create stronger organizations that eliminate operational redundancy yet preserve service levels. Technology will be a driver of efficiency: About 58% of nonprofits already use AI in their digital communications, compared to the 47% adoption rate of other industries.6

However, making operational changes requires careful management. Policies to ensure proper screening and training of volunteers and cyber preparedness that enables safe digital innovation are critical. An insurance plan developed with a broker with deep expertise in the nonprofit sector can optimize financial protection and reduce the risk of reputational damage that could occur and damage an organization's economic viability. Properly executed, these strategies can turn a nonprofit from survival mode into a model for future growth.

Economic pressures continue to increase demand for services, especially those related to food security, mental health and housing.4

The core of any successful organization is its employees. But nonprofits are facing serious labor challenges, with 65% of organizations saying staffing shortages are affecting their ability to operate.7 This will only intensify as funding cuts collide with increased demand for nonprofit services. Financial pressures compound traditional recruiting and retention hurdles like low wages and high burnout. Seventy-two percent of nonprofits identify compensation and 66% cite budget constraints as the most critical factors in employee retention.8 The combination of mission-driven work and strained resources creates a perfect storm for employee burnout, making robust mental health support a most valuable benefit for nonprofits to offer. The aging nonprofit workforce further complicates labor issues, as more than half of nonprofit employees are over age 459 and most board members are over the age of 50.10 This demographic reality creates an urgent need for succession planning and knowledge transfer while recruiting younger leaders who come with a different set of compensation and benefits expectations.

To compete effectively, organizations must reimagine benefits as strategic retention tools rather than cost centers. Personalized benefits packages based on employee demographics can attract and retain highly skilled workers. In HUB's 2025 Workforce Vitality Gap Index, 73% of employees agreed that a comprehensive and personalized benefits program would increase the likelihood they would stay with their current employer.

HUB Workforce Persona Analysis can help organizations develop the right benefits options to maximize recruiting, retention and productivity in a competitive labor market.

Tackling labor shortages will require focus on retention and wellbeing.

Vitality

Download our 2026 Nonprofit Outlook and Insurance Market Rate Report to see what to expect in the coming year.

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Nonprofits are feeling the squeeze with their insurance as they absorb higher deductibles and lower policy limits across areas such as auto liability, excess and umbrella and cyber insurance. Meanwhile, organizations face growing threats that make it imperative they have strong risk management and insurance programs. Cybersecurity is one such growing threat. Nonprofits’ increased reliance on technology — including operations with donor data and digital fundraising — makes them prime targets for cyberattacks, which are becoming more sophisticated and expensive. In 2024, 67.4% of all phishing attacks utilized artificial intelligence.11 The average cost of a data breach reached $2 million.12 Nonprofits experienced a 50% increase in credential phishing attacks, where cybercriminals gain access to internal communications, donor databases and financial records.13 Most organizations are taking notice, with 60% indicating they are concerned about technology and cybersecurity risks, a 16% increase over 2025, according to HUB International’s 2026 Profitability & Resiliency Executive Survey.14 The good news is cyber coverage has become noticeably more affordable in recent years, with current rates flat to up slightly at the end of 2025. Nonprofits should work with their broker to either enhance their current cyber coverage or secure better rates, rather than simply renewing as-is. A broker with deep carrier relationships can help you find better value and stronger terms, taking full advantage of market capacity and competitive pricing rather than settling for the status quo. Insurance carriers are also wary of nonprofit sexual abuse exposure after a number of high-profile abuse cases and large settlements. Rates are rising for nonprofit umbrella and excess liability coverage 5% to 15%, with even greater increases for organizations with significant abuse and auto exposures. Many organizations have received nonrenewal notices, reductions in coverage limits and increased policy exclusions as insurers seek to limit the risk of sexual abuse claims.15 Standalone sexual misconduct liability insurance rates are rising as much as 20%. Because market dynamics have forced nonprofits to absorb more risk through higher deductibles and self-insured retentions and by carriers reducing the limits they will offer, it is incumbent on nonprofits to meticulously manage risk.

Organizations must take comprehensive risk management steps, including enhanced background screenings and training of staff and volunteers to secure coverage and safeguard their organizations. Insurers are also demanding strong cybersecurity measures before even considering a nonprofit for cyber insurance. These measures are not just necessary business practices — they also help organizations avoid reputational damage, preserve donor trust, sustain funding and attract talent. Nonprofits must safeguard their reputation through transparency, accountability and crisis communication planning well before problems arise. Ultimately, risk management starts at the top and is the responsibility of everyone within the organization, including volunteers. Effective enterprise risk management (ERM) requires board-level engagement to set organizational priorities and provide resources for risk mitigation. This approach ensures risk management becomes embedded in organizational culture rather than being an afterthought. Organizations practicing comprehensive ERM are better positioned to identify emerging risks early and develop appropriate response strategies.

An experienced, proactive broker can provide comprehensive risk advisory services — from developing staff training programs to conducting insurance gap analyses that identify vulnerabilities. The right partner seeks to avoid the risk for the organization rather than just transfer it, offering an important perspective on exposures that may not have been previously recognized or considered. Organizations that invest in comprehensive risk management today will be better positioned to navigate uncertainty and service their communities effectively in 2026 and beyond.

As operating models evolve, adaptive ERM will be vital in 2026.

Resiliency

The average cost of a data breach reached $2 million in 2024.12

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Profitability

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HUB’s specialized nonprofit team is ready to help you adapt and thrive through a tailored strategy that will protect the bottom line, support your workforce and build resiliency for 2026. Here are key areas to prioritize:

Moving Your Organization Forward

A thorough ERM process can help identify, prioritize and remediate exposures to avoid losses and place your nonprofit in the best light if an unfortunate incident occurs. Work with a broker who can evaluate your risks holistically — including those beyond reach of commercial insurance — and find a strategic solution.

Advance your risk maturity.

Personalized benefits can differentiate your organization from other nonprofits. By taking a creative approach to benefits and working with a nonprofit benefits specialist, your organization can deliver more affordable benefits that give you an edge in recruiting and retaining talent.

Create a personalized benefits strategy.

Damage to a nonprofit’s reputation can cause irreparable harm. Take advantage of your broker and insurer’s expertise in responding if an event occurs. They can assist with developing a thorough crisis response plan to minimize financial and public relations impact.

Rely on your broker in a crisis.

Consistent communication with your insurance broker will help identify and mitigate issues in advance of renewal and position your organization to get the right coverage at an affordable rate. Review exposures and insurance needs at least 90 days prior to policy renewal to allow your broker to find the optimal mix of coverage for your organization’s needs.

Be transparent with your broker.

Download our 2026 Nonprofit Outlook and Insurance Market Rate Report to see what to expect in the coming year.

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HUB Nonprofit

When you partner with us, you’re at the center of a vast network of experts who will help you reach your goals. For more information on how to manage your insurance costs, reduce your risk and take care of your employees, talk to a HUB Nonprofit insurance specialist.

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Financial diversification key to easing funding pressures.

Tackling labor shortages will require focus on retention and wellbeing.

As operating models evolve, adaptive ERM will be vital in 2026.

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3. Chronicle of Philanthropy, “What We Know — and Don’t Know — About the Nonprofit Layoff Crisis,” April 10, 2025.

4. Chronicle of Philanthropy, “Donors Down, Dollars Flat: Trends in 2024 Set Stage for 2025,” April 28, 2025.

1. NonprofitQuarterly.org, “Trump Budget Bill Spells Trouble for Nonprofits,” July 1, 2025.

2. BDO USA, “New Tax Law Will Have Significant Impact on Tax-Exempt Organizations,” July 23, 2025.

5. The Center for Effective Philanthropy, “State of Nonprofits 2025: What Funders Need to Know,” accessed August 4, 2025.

6. Twilio, “2024 State of Nonprofit Digital Engagement Report,” accessed August 19, 2025.

7. Forvis Mazars, “2025 Annual Report State of the Nonprofit Sector: Rising to the Moment in Evolving Times,” February 7, 2025.

8. Urban Institute, “Nonprofit Leaders’ Top Concerns Entering 2025: An Analysis from the Nonprofit Trends and Impacts Study,” accessed August 4, 2025.

9. Social Impact Architects, “2025 Nonprofit Trends: Uniting Generations in the Workplace,” January 29, 2025.

10. Stanford Law School, “Recruiting Young People to Nonprofit Boards,” January 10, 2022.

13. Abnormal.ai, "Mission Interrupted: Nonprofits Face a Rising Wave of Email Attacks,” March 5, 2025.

14. The HUB International 2026 Profitability & Resiliency Executive Survey polled 350 industry leaders and executives across North America on the issues facing them on profitability and resilience.

15. Insurance Business Magazine, “Hiring Practices in Spotlight for Nonprofits as Abuse and Molestation Claims Rise,” January 22, 2025.

11. CyberAngel, “External Threat Intelligence Report,” accessed August 4, 2025.

12. BDO USA, “The Crucial Role of Cybersecurity for Nonprofit Organizations in 2024,” February 19, 2025.

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of organizations say staffing shortages are affecting their ability to operate.7

65%

Economic Vitality

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Download our 2026 Nonprofit Outlook and Insurance Market Rate Report to see what to expect in the coming year.

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Download our 2026 Nonprofit Outlook and Insurance Market Rate Report to see what to expect in the coming year.

Download Report

Download our 2026 Nonprofit Outlook and Insurance Market Rate Report to see what to expect in the coming year.

When a reputational crisis left Operation Underground Railroad (OUR) without insurance coverage, HUB stepped in to rebuild trust and stability. By assessing risks, strengthening governance and implementing new safety and crisis management protocols, HUB helped OUR transform into a risk-aware organization with improved protections for staff and clients. Within a year, the organization — now operating as OUR Rescue — secured comprehensive insurance, regained donor confidence and established a strong foundation for sustainable global growth.

Case Study

Case Study Local competition meant a 25-bed, 220-employee critical access hospital had trouble attracting and retaining top talent. Working with HUB, the hospital formed an employee value proposition (EVP) that gave existing and potential employees compelling reasons to work at the hospital — while delivering a benefits package that lowered costs and put the hospital on a competitive footing with larger institutions.

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Pooling with other nonprofits for better health insurance rates through a captive. Self-funding low-risk benefits like dental and vision coverage. Offering flexible work arrangements and professional development opportunities. Consider the dual-value of strategic partnerships with an insurance partner like VIU by HUB and offer employees access to competitive personal insurance programs and generate much-needed income to offset operating costs. Creating volunteer recognition programs to boost engagement and enhance employee culture.

Nonprofits have several options to improve benefits and lower costs: