There are 1.9 million registered nonprofit and philanthropic organizations in the United States (Internal Revenue Service, 2025). These organizations play a critical role in helping communities meet human service, healthcare, and educational needs. They enrich our lives through their support of faith-based, arts, and cultural institutions, and they are instrumental in efforts to protect the environment. They strengthen social connections and encourage civic engagement.
Nonprofits are among the most trusted institutions in America. Today, the public sees nonprofits as better equipped than any other part of society to bridge the social divisions that dominate our landscape.
For nonprofits to sustain these vital roles, Independent Sector believes that four conditions must hold true when we assess the health of the charitable sector:
- Charitable organizations must be financially robust.
- Charitable organizations must be powered by a thriving workforce that reflects the communities we serve.
- Charitable organizations must be trusted, well-governed, and effective.
- Charitable organizations must be informed and active advocates, as allowed by law.
Comprehensive data are crucial for charitable sector leaders, policymakers, and other stakeholders to understand how the nonprofit sector is faring against these and other benchmarks of health. This annual report aims to address that need by providing a timely, holistic picture of the health of the U.S. nonprofit sector.
We hope that charitable sector leaders, policymakers, and other stakeholders will use this information to inform decisions that affect economies, employment, and the critical roles nonprofits play in their local communities.
Letter from the CEO
As I traveled the country on a listening tour in 2023 and 2024, I heard about challenges being faced by nonprofit organizations, their communities, and the sector: increasing costs of operating for all nonprofits; the physical and psychological burnout of staff and leadership; insufficient support for leaders of color; and difficulty recruiting, retaining, and supporting staff with the right training and skills to meet nonprofit missions. Workforce concerns are an old story in the sector, and they are closely tied to ongoing concerns about funding and resources: How can our organizations do everything expected of us while being asked to make do with limited dollars and staff? Beyond resources and staff, we also ask ourselves: How can our organizations continue to strengthen relationships with our funders and communities while effectively advocating for ourselves and others?
In 2025, we also face more urgent challenges: disruptions to government grants and programs, a new tax code with concerning implications for our sector, looming cuts to the social safety net, and a political environment that makes it even more challenging to find a path to stability for our organizations and the communities we serve.
These challenges—old and new, chronic and acute—happen in real time. In this report, we use the best and most timely data available to illuminate the issues the sector is facing, but data on the sector are not always as timely and precise as we would like. Independent Sector is advocating for timelier sector-specific data, an issue that feels more urgent than ever in a year when many organizations have laid off staff in response to funding cuts and policy shifts. What’s more, we are concerned about the possibility that the data we currently have on our sector may be rendered less timely or reliable due to changes at the agencies that produce these data resources.
As you read this report, I would like to highlight a few crucial points: first, not only does our sector help weave the social fabric of America, it also is the third largest private employer. Second, our sector is an economic driver to the tune of $1.5 trillion annually, over 5% of America’s GDP. We have power! Lastly, conducting and understanding research allows Independent Sector to fine-tune its strategies to defend and strengthen the sector.
At Independent Sector, we take a long view of the health of the sector. But we also prioritize advocating for what the sector needs right now and defending the sector from immediate threats. This annual report focuses on the long view of the health of the sector, but we have attempted to share information on more urgent concerns as well.
I encourage you to fill out the quick form below to let us know more about you.
I hope that as you review the data and research shared here, you better understand the challenges we face and the enormous potential of collective action to address those challenges.
Acknowledgments
This report was compiled and authored by Dr. Kevin Miller, director, research and policy analysis, with substantial contributions from Jeffrey Moore, chief strategy officer; Ben Kershaw, director, public policy and government relations; and Jay Guzmán, manager, policy research.
We are grateful to the researchers and institutions that contributed to the research cited in this report, especially the Center on Nonprofits and Philanthropy at the Urban Institute, George Mason University, and American University for providing data from the 2025 National Survey of Nonprofit Trends and Impacts. We thank Dr. Alan Abramson, professor of government and politics and director of the Center on Nonprofits, Philanthropy, and Social Enterprise at George Mason University, for his contribution to the research and thought partnership that led to the initial creation of this report in 2020 and for ongoing collaboration on this and other projects.
Dr. Lilli Shaffer contributed expert data analysis to this report. We also thank Dr. Akilah Watkins, president and CEO of Independent Sector, for her guidance on this and other projects, as well as the Independent Sector communications team for their critical work supporting, improving, and promoting this report.