August 17 is National Nonprofit Day, a day set aside to recognize the organizations that take responsibility for so much of the country's caregiving, advocacy and repair work. The year 2026 has been extremely challenging – arguably one of the hardest that nonprofits have faced in recent memory – so recognition today is about more than gratitude. It’s about calling out what nonprofits are up against and celebrating that the sector is still standing.

A funding floor that keeps moving

Increased financial uncertainty is a defining anxiety for nonprofits in 2026. Federal grant freezes and disruptions that began in 2025 have continued into this year, and the National Council of Nonprofits has documented how even short pauses in federal funding can trigger immediate reductions to staff and services. A food pantry can’t pause hunger while it waits on a grant to clear.

The Baldwin Group's mid-year market report similarly describes how the complex operating environment has impacted program delivery, with threatened or pulled federal funding sitting alongside heightened regulatory scrutiny. Nonprofit Finance Fund sees private funders, local governments and community development financial institutions trying to fill the gaps, particularly for organizations working on housing and food insecurity.

Nonprofits aren’t affected equally by this. Larger organizations with more diversified revenue are more able to absorb a funding shock. Smaller nonprofits face harder choices, including consolidation or closure, especially those dependent on one or few revenue sources.

New tax rules, a double-edged sword

The One Big Beautiful Bill Act that took effect in 2026 changed how Americans make charitable gifts and how donations to nonprofits can be taken as tax deductions. 

Some of it helps: a universal charitable deduction now lets standard-deduction taxpayers claim up to $1,000 individually or $2,000 jointly for charitable gifts, a change Giving USA expects to rekindle giving by the roughly 87 percent of filers who do not itemize. 

However, the law adds pressure in other ways. Corporations must now contribute at least 1 percent of taxable income before charitable gifts qualify for a tax deduction. That may lead some corporate donors to eliminate or scale back giving. According to Withum's analysis of the law, nonprofits with highly compensated staff also face a new excise tax, while large private university endowments face a higher tax rate on investment returns. 

None of this is simple, but it is required understanding. Nonprofit finance and development teams are working to translate tax code into donor conversations in real time.

Scrutiny that goes beyond funding

Federal funding cuts have taken shape with more direct political attention on what nonprofits say and do, particularly when working on diversity, equity and inclusion or environmental justice. GrantStation's tracking of federal actions affecting nonprofits notes that the fiscal year 2026 budget proposal singled out nonprofits in these areas by name, part of a broader and more critical posture toward nongovernmental organizations generally.

For nonprofit boards, this has raised the stakes. The Baldwin Group's report points to heightened liability exposure for directors and officers, driven by claims tied to decisions made under funding pressure, often involving disputes over restricted grant management and workforce reductions. Governing a nonprofit in 2026 increasingly means confronting risk that has nothing to do with the mission itself.

Doing more with less, again

Workforce strain is another major factor in 2026. Staff cutbacks due to funding gaps mean there are fewer people overseeing the same programs and donor relationships. PBMares' 2026 nonprofit outlook points to social assistance organizations in particular, where demand for housing and human services keeps climbing, even as federal funding remains uncertain and staffing stays thin.

This does not show up in budget lines. It’s felt when a development director writes five grant applications instead of two and short-staffed program teams don't take vacations because the needs of the people they serve never take a break.

Why nonprofits matter today anyway

None of this is a reason to look away from nonprofits. It is why everyone should look more closely.

Nonprofits are navigating funding cliffs, new tax rules, heightened political scrutiny and workforce strain, all without pausing the work that communities depend on. It’s a lot. It’s not something to be quietly dismissed as normal for "another hard year." It’s the very definition of resilience.

On National Nonprofit Day, this is what we at Give Lively have to say to nonprofits: We see what’s happening and we do not think the challenges are footnotes to the story. They are the story. To keep doors open, staff paid and mission intact is genuinely hard, especially when the system feels like it’s at odds with the work. And doing it in public, on behalf of everyone who cannot advocate for themselves, is what makes nonprofit staff the most amazing people we know and worthy of support.

That is worth recognizing loudly, not just today, but as long as nonprofits keep having to prove it. And succeeding at doing so.