Charitable giving reached a record high last year, with individuals, corporations, bequests and foundations doling out $592.5 billion in donations nationwide, according to “Giving USA 2025: The Annual Report on Philanthropy for the Year 2024.”

That represented a 3.3% increase in contributions over 2023, after adjusting for inflation, according to the report produced by Giving USA Foundation and released in June.

Things may be different this year.

With federal funding decreases causing downhill impacts on financial contributions from states and cities, some are wondering if people who financially support causes close to their heart will be able to keep up with a louder clamor for stepped-up donations from the private sector.

“These are incredibly challenging times for nonprofits across Colorado,” said Paul Lhevine, president and CEO of the Colorado Nonprofit Association.

The big picture looks daunting. Some budgeted federal dollars have been withdrawn, with other reductions to come. Support mechanisms for some clients, including food stamps and Medicaid benefits, are being altered, and the unknown ramifications on state and local governments is creating further unease.

“The fear is that we’re going to have more people in the state needing the services and resources of our nonprofit sector, which is going to put more pressure on nonprofits to provide those services, which is going to put more pressure on Coloradans to step up and support these critical needs,” Lhevine said.

The trade organization he leads has about 1,200 members, roughly 10% of the state’s 12,000 primary 501(c)(3) organizations. Just over 100 are located in El Paso County.

“Nonprofits over the last couple of years have seen operational costs skyrocket, demand increase by big numbers, and philanthropy has constricted,” Lhevine said.

More competition for philanthropic dollars and what seems to be a softening of individual giving this year are contributing to the high fear factor coursing through the sector.

Furthermore, nonprofits don’t like to admit when they’re having financial problems because they’re afraid they’ll be passed over by funding institutions, said Noah M. Atencio, CEO of Philanthropy Colorado. But he believes that attitude needs to be tossed aside in this new environment and replaced by open and bold conversations.

“From a funder or grant-maker perspective, they’re as interested in supporting the mission of an organization and that infrastructure piece,” he said. “The time is now to be transparent and honest.”

Some organizations already are fighting the shifting currents. Three large safety-nets in Colorado Springs recently announced budget shortfalls for a combination of reasons that include decreased private donations, and they issued appeals for community contributions to help fill the gaps.

• Springs Rescue Mission, which runs the city’s largest homeless shelter for individual adults, was facing a $1.5 million budget shortfall before cutting staff, including some administrators, and streamlining operations for the fiscal year that began July 1, President and CEO Travis Williams told The Gazette on July 7. The decision was made proactively to ward off further budget problems, he said. 

• The Salvation Army Corps of El Paso County, which operates the area’s largest homeless shelter for families with children, launched a “Hope Needs Help” fundraising campaign on Friday for public assistance in filling a budget gap of up to $1 million for the fiscal year that begins Oct. 1. The organization also apprised Colorado Springs City Council on July 21 of its situation and asked for help, but the city itself has an $11.5 million deficit it needs to balance. 

• Care and Share Food Bank for Southern Colorado has cut its budget by $1.35 million, President and CEO Nate Springer told The Gazette on Thursday, due to federal funding changes to food assistance programs that were made in the spring. The organization is preparing for a time of less food circulating in the federal supply and more need in communities, he said.

A blip or a new normal?

The headwinds that began under President Joe Biden’s term have intensified with the Trump administration’s goal to downsize the federal government and reduce spending, Lhevine noted.

Some think the situation will normalize as instability gives way to vision and the economic pendulum stops swinging.

“There’s always a role for philanthropy to address most community problems,” said Beth Roalstad, CEO of Homeward Pikes Peak, which provides street outreach, transitional housing and addiction-recovery programs for homeless and low-income people.

During the recession of 1981-1982, charitable contributions dipped when the stock market declined significantly and uncertainty reigned, she noted.

“It rebounded as clarity was made available,” Roalstad said, adding that the same scenario could happen this go-around.

Federal funding can’t be replaced

Others do not foresee a correction coming anytime soon and warn that nonprofits need to prepare for such a possibility.

What has become apparent, Atencio said, is that “is no amount of philanthropic giving can fully replace the scale of federal funding.”

What he calls “a critical pivot” is happening in Colorado and nationwide.

Philanthropy Colorado serves 115 institutional-giving members statewide, from large and small private foundations to community foundations, giving programs like United Way and government agencies that distribute funds, all of which are concentrating on “meaningful grant making,” Atencio said.

“We’re seeing doubling-down on trusted relationships, recognizing nonprofits are struggling across the board with both federal and state budgets,” he said. “Our membership is not stepping back. They’re focusing on deep listening.”

For example, El Pomar Foundation headquartered in Colorado Springs is convening focus groups and conducting surveys with its grantees statewide to “tune into what they’re experiencing, mapping impacts of rollbacks,” he said.

Organizations that have counted on receiving yearly grants from federal programs, from housing and urban development to forestry and the environment, to education and the arts are seeing those dollars simply disappear.

“What they’re experiencing today is an unexpected, overnight drop in that money going away,” Atencio said.

Creativity, innovation needed

Foundations are being flooded with more applications for grants, which means more competition.

“We have seen more pressure on nonprofits to bring in more money, which has created more interest in our grant-making process,” said Kevin Farley, spokesman for the Pikes Peak Community Foundation, which brings donors’ money to the table for various projects.

“We’ve heard from other foundations say they’re seeing a large uptick in applications. There certainly seems to be a big need out there.”

To ease the process, the community foundation recently launched a new online grants portal for available funding for proposals related to the outdoors and the arts, he said.

Private money continues to flow to nonprofits. Pikes Peak United Way announced on July 24 that it had granted $550,000 to 27 local nonprofit programs in El Paso and Teller counties through its Community Investment Fund, which supports projects that address family stability, youth success and health initiatives.

Tax code changes might help

But nonprofits must be innovative, experts say, to not only weather the storm but survive the challenges.

Some organizations in Colorado have folded because of the difficulties, Lhevine said, while others have been acquired by larger organizations or are considering merging with another like-minded group.

One way to help stem the funding losses is for philanthropy to provide capacity grants to help nonprofits adapt and evolve, Atencio said.

Another idea that’s taking hold, Lhevine said, is organizations sharing back-office support such as bookkeepers, communications and even fundraising drives.

“Organizations are looking at collective fundraising and different ways to create earned-income revenue streams — diversifying beyond philanthropy to a paid membership or subscription model,” he said.

Many are embracing artificial intelligence to pinpoint operational efficiencies, and they’re also making changes to improve employee retention.

“We’ve seen a lot of burn out, so they’re spending more energy around the health of team members,” Lhevine said. “They have to be more competitive than private sector, and it’s often not through salaries. So they’re being creative on benefits with flexible hours and continued remote work.”

He also doesn’t see the situation as a momentary blip.

“I don’t think in three and half years when a new administration comes in the light will switch back on and we’ll get more funds,” Lhevine said. “I think organizations will have to work public and private sectors to fundamentally change the way they look and do business.”

Not all nonprofits are suffering at this point. Court-Appointed Special Advocates of the Pikes Peak Region, referred to as CASA, slightly increased its more than $2 million budget for the fiscal year that began July 1, spokeswoman Keri Kahn said via email.

“While we will do everything in our power to meet our budget, there is still much uncertainty regarding government grants we have not yet received,” she said.

The organization, which trains volunteers to become advocates for children undergoing court proceedings after being removed from their homes due to abuse or neglect, has maintained a diversified funding base that includes government money.

But it also relies on “an extremely loyal donor base and a profitable business partner program,” according to Kahn. Its “Start with One” program encourages businesses to hold fundraisers that generate enough money, or $1,200, to serve one child for a year. Tommy’s Express Carwash recently raised $1,000 for CASA by donating $1 for every carwash sold, for example.

“Over the last year, some individual gifts have been smaller, which we believe is due to individuals and families not having as much expendable income as they once did,” Kahn said.

However, the number of donations did not decrease, which means the same number of people are supporting the organization.

“This is a good thing,” Kahn said. “It is through community support like this that we will continue to help children in need.”

And upcoming changes to the federal tax code could incentivize individual donors and portend a robust year-end giving season, industry leaders say. The return of a 2018 tax provision allowing for deductions of up to $1,000 for individuals and $2,000 for couples for cash donations to qualified charities could bring significant increases.

“That’s our hope,” Atencio said.