Policy and Funding Trends Impacting Human and Social Service Organizations in 2025

The social sector is facing a complex and volatile landscape in 2025. While there are some positive trends, such as increased institutional trust in nonprofits, there are also significant challenges, including funding threats and policy changes. Our Knowledge and Insights Center information specialists recently compiled a report of trends to watch in 2025.

• Despite an increase in institutional trust, the social sector braces for funding threats
• Nonprofits continue to seek to diversify their revenue streams
• Unprecedented financial strain due to increased liability insurance costs
• The expiration of Tax Cuts and Jobs Act provisions and a new focus on nonprofit exemptions could result in major impacts to the social sector

To learn more about Social Current’s commitment to policy and advocacy and the financial health and sustainability of the social sector, register for the free four-part Advocacy in Action webinar series. The first webinar, Jan. 22 from 1-2 p.m. ET, will feature our 2025-2027 Federal Policy Agenda, which was developed based on the priorities of our network. We will share our key areas of focus for the 119th Congress and help you grow your advocacy skills. 

Institutional Trust

Despite an increase in institutional trust, the social sector braces for funding threats.

Nonprofits remain the most trusted institutions in the U.S. After four years of decline, trust in nonprofits rebounded 5 percentage points in 2024, according to Independent Sector’s latest report. In fact, nonprofits are the only institutions highly trusted by a majority of the American public, sitting at 57% as of the 2024 report. Small businesses were highly trusted by 43% of the public, while high trust levels in the federal government (18%), corporations (19%), and the news media (19%) are considerably lower and continue to decline.

Findings also revealed that trust remains small and local, with many Americans distrusting large national nonprofits. Small local nonprofits were viewed as more agile and believed to have a better understanding of and impact on the communities they serve. Even in a polarized political environment, nonprofits are well-positioned to retain and grow their local donor connections.

Despite these findings, nonprofits are bracing for a range of anticipated funding threats, particularly organizations involved in politically polarizing issues, such as equity, diversity, and inclusion (EDI), LGBTQIA+ advocacy, Palestinian rights, racial equity in education, reproductive rights, and immigration. A recent Building the Movement report found that 73% of social sector organizations tackling current issues are facing safety concerns, threats to funding, and reputational damage. Given the volatile political climate, these organizations are predicting an increase in threats and funding losses in 2025. Contributions from individual donors and foundations are particularly impacted when an organization suffers negative press and backlash. To guard against anticipated threats, it is crucial for the social sector to continue shaping public policy, influencing media narratives, and engaging donors that invest in ecosystem development to ensure these frontline nonprofits can continue their vital work.

Diversified Revenue Streams

To handle economic and political uncertainty, nonprofits seek to diversify their revenue streams.

Considering the 2024 election and the uncertain economic and policy outcomes that follow, nonprofits should continue seeking diversified revenue streams beyond traditional grants and individual-donor funding models. Diversified strategies include:

• Crowdsourcing and peer-to-peer campaigns
• Membership and subscription service models
• Selling branded merchandise
• Corporate giving partnerships
• Building long and short-term investment strategies

By diversifying revenue and reducing dependence on single-donor strategies, nonprofits can gain financial stability, remain flexible in light of changing tax policies, and expand their networks and impact.

Insurance Liability Crisis

Human services organizations are facing unprecedented financial strain due to increased liability insurance costs.

Social sector organizations, such as those providing foster care, mental health, and elder services, are facing a crisis due to escalating liability insurance costs. Rising costs are driven by factors like increasing demand for services, sector workforce shortages, and economic pressures from high-cost injury claims generated from millions of personal injury lawsuits. This financial strain threatens the stability of these organizations, which are essential to supporting the health and well-being of their communities.

To address this issue, Social Current advocates for policy solutions like public or captive liability insurance funds, federal legislation for affordable coverage, and shared liability insurance pools. These measures aim to ensure that human services organizations can continue to operate effectively and provide vital services to those in need. For more coverage of this escalating issue, read Social Current’s Policy Brief on The Growing Insurance Liability Crisis.

Tax Policy Implications

The expiration of TCJA provisions and a new focus on nonprofit exemptions could result in major impacts to the social sector.

President-elect Donald Trump and Congress have indicated that they will be taking a critical look at the tax code and nonprofit exemptions in 2025. As certain provisions of the Tax Cuts and Jobs Act (a major overhaul of the tax code signed into law during Donald Trump’s first term) are set to expire in 2025, tax policy changes are poised to have a dramatic effect on the social sector. The TCJA temporarily increased incentives for charitable giving, raised the Child Tax Credit, and offered tax credits to employers offering paid family leave. It also permanently cut the corporate tax rate. Extending the TCJA as currently written could cost more than $4.5 trillion. Nonprofits are rightly concerned that the new administration will be looking to offset those costs by cutting social sector spending and exemptions. (For more details on Social Current’s advocacy priorities around the TCJA, see the Policy Brief on The Tax Cuts and Jobs Act.)

Indeed, Congress has been reviewing various bills focused on challenging nonprofit tax-exemption status, including expanding the parameters of the Unrelated Business Income Tax (UBIT) in an effort to narrow nonprofit tax-exemption eligibility and possibly subjecting non-charitable income to the corporate tax rate. Vice President-elect JD Vance, has also been openly critical of large foundations and has promoted increasing payout requirements for both foundations and donor advised funds.

Another fast-tracked bill, the Stop Terror-Financing and Tax Penalties on American Hostages Act, also known as H.R. 9495, has been opposed by over 120 civil society groups. This act would grant the Secretary of the Treasury Department unilateral authority to revoke the tax-exempt status of any nonprofit deemed to be a “terrorist supporting organization” at the discretion of the president. The vague and subjective language of the bill has social sector organizations worried about the potential for politically-motivated abuse and weaponization.

While no crystal ball can predict exactly what policy changes are in store, we know that our advocacy priorities have shifted in light of an incoming Republican trifecta. President-elect Trump’s new cabinet nominees are predicted to impact funding, reduce federal support for equity initiatives, and increase regulatory oversight of the social sector. Nonprofits need to prepare themselves for the possibility of new exemption restrictions and regulatory policies that could greatly impact their operations, advocacy strategy, and bottom line.

Social Current is Here to Help Navigate These Changes

Our Government Affairs & Advocacy team is working diligently to identify opportunities for bipartisan consensus on crucial social sector issues. We are advocating for extending the Child Tax Credit, restoring the deductions for non-itemizers, and permanently establishing the AGI limits of the TCJA. Take advantage of our many resources that will help your organization build policy literacy, mobilize your community, and turn operational anxiety into impactful action.

Our Government Affairs & Advocacy team offers:

• Social Current Grassroots Network: Join our Grassroots Network to receive early access to action alerts to participate in political advocacy, exclusive resources detailing key political issues, and select training and networking opportunities.
• Policy Briefs and Toolkits: Resources developed by our Government Affairs & Advocacy team to keep you informed, increase your policy literacy, and develop your advocacy skills.
• Individualized government affairs and advocacy training and consulting: Connect with our experts for custom support and consulting tailored to the needs of your organization.

Be sure to download our 2025-27 Policy Agenda, which will be released next week, for our key areas of focus and vision for the 119th Congress. Join our free webinar Jan. 22 from 1-2 p.m. ET to learn more.