MCN has published new research on how Minnesota nonprofits are navigating 2025. The 2025 Current Conditions of Minnesota’s Nonprofit Sector, reports on how the rapidly evolving federal context is adding stress and challenges, and actions nonprofits are taking to move their work forward.
Key findings
2025 Continues to Bring Tough Conditions for Nonprofits: Nonprofits continue to report financial challenges driven by stagnant or decreased funding, increased expenses, and increased demand for services. 70 percent of respondents reported that they have seen an increase in demand for services over the past year.
Increasing capacity becomes difficult with expenses rising and decreased or stagnant funding. A record 82 percent of respondents reported that their business expenses have increased. While 53 percent of respondents reported a decrease in grants from foundations, 46 percent of respondents reported a decrease in government funds, and 35 percent of respondents reported a decrease in individual giving.
Navigating Uncertainty Within the Organization and the Broader Community: Many organizations discussed the impact of navigating uncertainty due to recent federal actions, including funding disruptions, attacks on DEI, and increased ICE raids. Due to the chaotic landscape, 50 percent of respondents are reporting a decrease in staff morale.
Respondents also acknowledge the feelings of uncertainty within the communities they serve. Nonprofits that work with targeted communities, like immigrants and refugees, reported that community members are more hesitant to seek their services because of fears of deportation.
Mounting Tensions on Government’s Oversight of the Nonprofit Sector: Some respondents stated their organization has been negatively impacted because of the Feeding Our Future fraud case and actions taken by the legislation.
Nationally, there are mounting tensions on what the government’s role should be in civil society, and the nonprofit sector has been entangled in these tensions. Within Minnesota, there has been a recent focus on “fraud, waste, and abuse” and many legislative proposals at the state Capitol have painted all nonprofits with the same brush, rather than focusing on targeted, effective oversight.
Despite these heavy key points, we also acknowledge that nonprofits are not backing down and staying grounded in their missions.
In the past year, nonprofit leaders have increased their consultation with their board of directors (46 percent of respondents), increased public policy work and/or lobbying (40 percent), and increased or maintained their work towards diversity, equity, and inclusion (92 percent).
Are nonprofits closing?
There are mounting concerns that the pressures and challenges nonprofits face are going to result in imminent mass closures of organizations. While that may be true for some, the financial health of the sector as a whole doesn’t foreshadow such an event:
- Roughly one-third of respondents to the 2025 survey indicated they anticipate ending fiscal year 2025 in a deficit, which is about the same percentage of groups who reported ending 2024 in a deficit.
- Data from the MN Attorney General’s Office shows a stable number of nonprofit dissolving year over year.
- In 2024, an alarming 79 percent of respondents indicated they had less than 12 months before exhibiting financial distress. In 2025, this percentage dropped to 67 percent. Primary drivers of operating deficits and financial distress continue to be increased expenses, stagnated charitable giving, increased demand for services, and now significant disruptions in government funding.
Looking forward
While the impacts of federal funding disruptions are, for the most part, yet to be seen, most respondents expect to continue operations in the next year.
Only 4 percent indicated an intent to sunset, and 5 percent indicated an intent to merge with another nonprofit organization.
The three most common actions organizations anticipate taking in the next year are putting an expansion plan on hold (35 percent), implementing a hiring or salary freeze (33 percent), and/or eliminating staff positions (28 percent). In the long answer responses of our survey, these three actions were not concrete plans for most nonprofit leaders. Rather, they would be possible actions if funding were cut from the organization.
About the report
This report shares results from a survey the Minnesota Council of Nonprofits (MCN) conducted in 2025 from May to June (313 responses), to gauge current conditions for nonprofits.
The primary goal of surveying nonprofit leaders is to provide a broader context for organizations to place their individual situation in perspective for decision-making and communications with their boards of directors, supporters, and staff.
MCN shares this information with nonprofits, policymakers, funders, media, and the general public to help them understand how the current environment has affected the nonprofit sector and actions these organizations have taken. Findings continue to underscore the crucial importance of multi-year general operating support from donors, providing flexible resources for nonprofits to creatively respond to the needs and priorities of their communities.
This report is the ninth edition of the Nonprofit Current Conditions Report MCN has published since the onset of the COVID-19 pandemic. Between March 2020 and June 2025, 2,658 nonprofit leaders have participated in MCN’s nine Current Conditions surveys and reports to help everyone understand how current environments affect the nonprofit sector and actions they have been taking.