Recent federal funding cuts have had a deep and widespread impact on the nonprofit sector. An analysis by Candid found that over 14,000 nonprofits would deplete their reserves within three months without government grants, putting an estimated 2.8 million jobs at risk and impacting nearly every U.S. county.
As government support dwindles—for free school lunches, community health clinics, housing initiatives, etc.—needs have only grown. And the sector is being left to do more with less.
As a nonprofit leader, I want to share what many of us may be thinking: We cannot survive in this environment—without a radical redesign of the nonprofit ecosystem we’re part of.
For too long, many nonprofits have been treated—and seen themselves—as stopgaps, filling holes left by broken systems, offering services where public institutions have failed. But if we’re to meet the scale and urgency of today’s challenges, we must shift from viewing nonprofits as service providers to recognizing them as builders of solutions and architects of systemic change. And, most critically, we must stop thinking in silos.
What’s broken in the current nonprofit model?
The current funding system incentivizes competition over collaboration. Nonprofits fight over limited, restricted dollars. Funders prioritize short-term metrics over long-term systemic change. And overhead costs—things like leadership development, data infrastructure, and strategic planning—are often considered an expense rather than an investment. As former Candid executive vice president Jacob Harold argues in The Toolbox: Strategies for Crafting Social Impact argues, we need to shift from programmatic thinking to systemic strategy. Nonprofits can no longer afford to treat symptoms; they need the tools—and the capital—to address root causes.
Taking a nonprofit ecosystem approach to solve interconnected problems
What we need now is an ecosystem approach—where different actors bring their specific strengths, expertise, and local knowledge to the table. We need specialists who deeply understand housing policy, food insecurity, or mental health access. We need community-rooted leaders who have proximity to the problem and insight into hyperlocal realities. And we need the muscle and convening power to bring them together to jointly problem-solve and co-implement solutions.
That kind of deep collaboration means setting aside our egos, letting go of the idea that our theory of change is the right one, and embracing the messiness of shared work. It means designing solutions together and executing them in sync.
Why? Because the challenges we face—poverty, housing, health care, and education—are interconnected. So too must be our responses. We need funding models and organizational cultures that support shared accountability for outcomes and align not just on mission but on strategy. Without this, we risk solving one problem while unintentionally worsening another.
Moving beyond the referral model
Much of the service delivery nonprofit sector still operates within a referral-based model: identify a need, refer it to another agency, and hope that disjointed services will collectively create impact. But that model is outdated.
For example, Upwardly Global helps college-educated immigrants restart their careers in the United States. We understand the systemic barriers—in credentialing, employer practices, and workforce development systems—and we know how to dismantle them. Yet, too often, this kind of essential expertise remains siloed or under-leveraged. As we face a future defined by uncertainty, we need a nonprofit sector built not just for service delivery but for resilience and adaptability.
That’s not to say we don’t need generalists, too. A healthy nonprofit ecosystem depends on field builders—those who can convene stakeholders, foster cross-sector collaboration, and drive systems alignment. But we must elevate both the insight and infrastructure necessary for the sector to evolve to meet society’s most urgent challenges.
Funding for collective action to address root causes
Spreading resources too thin across too many organizations can inadvertently dilute impact, as it limits grantees’ ability to scale or sustain programs and increases the administrative burden on nonprofits. What if, with a focus on depth over breadth, funders were to support a coalition of organizations, investing in leaders who build trust, navigate conflict, and are committed to the same long-term vision?
What if funders shifted their focus from supporting service delivery and referral to supporting leaders building platforms for solving problems at their root? It’s the difference between giving a clinic a grant for flu shots and investing in a local health coalition that can shift citywide access to preventive care.
Philanthropy can support nonprofits as field catalysts that create the infrastructure, policy change, and cultural shift necessary for others to act.
Building toward a new nonprofit ecosystem
So, how do we reimagine the ecosystem so nonprofits can function not only as service providers but as field catalysts?
Shift the narrative: Nonprofits aren’t side players; they are solving for public goods. They need investment, not charity.
Rethink philanthropy: Fund grantees deeply. Focus on systems, not just services.
Support infrastructure: Data, leadership, and advocacy aren’t “extras”; they are core to the sector’s work, i.e., the commitment by a group of actors from different sectors to an aligned strategy for solving a specific social problem.
Enable collaboration: Fund networks and coalitions, not just individual programs.
Adopt an ecosystem mindset: Align strategies, share accountability, and co-design solutions with humility and trust.
The nonprofit sector already has the insight, the innovation, and the trust of the communities it serves. What it needs now is reimagined nonprofit ecosystem, with a collective, collaborative approach and the resources to lead. What we build next will shape whether we simply endure this era—or transform it.
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