Report on the Impact of Federal Funding Reductions on Nonprofits and Sustainable Development Goals

Introduction: A Shift in Public-Private Partnership

Recent policy changes by the federal administration, involving the freezing and reduction of grant funding, have significantly impacted nonprofit organizations across the United States. These actions disrupt a long-standing, bipartisan model of public-private partnership where the government funds nonprofits to deliver essential social services. This report analyzes the consequences of these funding shifts, with a particular focus on their direct and indirect effects on the nation’s progress toward achieving the United Nations Sustainable Development Goals (SDGs).

Impact on Key Sustainable Development Goals

The reduction in federal support for the nonprofit sector poses a direct threat to the advancement of several critical SDGs. The interconnected nature of these goals means that failure in one area can cascade, causing setbacks in others.

SDG 1: No Poverty & SDG 11: Sustainable Cities and Communities

Efforts to eradicate poverty and ensure safe, inclusive communities are severely undermined by the funding cuts. Housing assistance programs are a primary example.

• Organizations like Friendship Shelter in Laguna Beach, which provides housing for dozens of individuals, faced an immediate cut-off of federal funds used for rent subsidies.
• This jeopardizes housing stability for the most vulnerable, directly contravening the targets of SDG 1 (ending poverty in all its forms) and SDG 11 (making cities and human settlements inclusive, safe, resilient and sustainable).
• The potential for individuals to be returned to homelessness represents a catastrophic failure in social support systems and a significant regression on these goals.

SDG 2: Zero Hunger, SDG 3: Good Health and Well-being, & SDG 4: Quality Education

The administration’s policies have targeted a wide range of social services that are fundamental to achieving goals related to health, nutrition, and education.

• SDG 2: Cuts to food assistance programs threaten initiatives aimed at ending hunger and ensuring food security.
• SDG 3: The financial stability of programs serving seriously disabled individuals with complex health issues is at risk. The disruption of services like Meals on Wheels also negatively impacts the well-being of vulnerable populations.
• SDG 4: Reductions in funding for early childhood education and after-school tutoring programs directly impede progress toward providing inclusive and equitable quality education for all.

SDG 10: Reduced Inequalities & SDG 16: Peace, Justice and Strong Institutions

The funding cuts disproportionately affect marginalized communities and weaken the institutional frameworks designed to support them.

• Services for refugee resettlement and other programs aimed at vulnerable populations have been curtailed, exacerbating existing inequalities in direct opposition to SDG 10.
• The rapid and hostile dismantling of established funding mechanisms weakens the strong institutions required by SDG 16. The move breaks with a legacy of bipartisan support for the nonprofit sector, creating instability and undermining trust in public-private collaborations.

Financial and Operational Implications

The Scale of Government Dependency

The financial health of the American nonprofit sector is deeply intertwined with government support. The sudden withdrawal of this funding creates an existential crisis for many organizations.

1. According to a 2021 Urban Institute analysis, nonprofits received $267 billion in grants from all levels of government.
2. In the vast majority of congressional districts, the typical nonprofit would operate at a financial deficit without this public grant funding.
3. Organizations report that government grants often fail to cover the full cost of services. Friendship Shelter, for instance, stated that federal funds cover only 69% of actual program costs, requiring private donations to subsidize government-contracted work.

The Insufficiency of Private Philanthropy

The administration’s assertion that private generosity can replace federal funding is not supported by evidence from the sector.

• Experts and nonprofit leaders contend that private donations are incapable of matching the scale of federal support.
• The demand for private funding far outstrips supply. The Samueli Foundation, for example, received over $250 million in requests for a $10 million grant fund, illustrating the profound need.
• While private foundations like Samueli have provided emergency gap funding in some cases, this is not a sustainable, long-term solution for systemic services like permanent supportive housing, which requires a “forever commitment.”

Conclusion: A Threat to SDG 17 (Partnerships for the Goals)

The federal government’s actions represent a fundamental threat to SDG 17, which emphasizes the importance of partnerships between government, the private sector, and civil society to achieve sustainable development. For over 50 years, the U.S. has relied on this partnership model to deliver critical social services. The current disruption jeopardizes this entire framework.

By dismantling this collaborative system, the administration not only halts progress but actively reverses gains made on core SDGs related to poverty, hunger, health, education, and inequality. The uncertainty and financial instability forced upon the nonprofit sector risk a widespread collapse of services, with severe and lasting consequences for the nation’s most vulnerable communities.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 1: No Poverty – The article’s central theme is the provision of basic services like housing to vulnerable populations, which is fundamental to poverty eradication. The potential cuts in funding directly threaten the financial security and housing of individuals living in poverty.
• SDG 2: Zero Hunger – The text explicitly mentions that funding for “food assistance” and “school lunch” programs was threatened or cut, which directly relates to ensuring people have access to sufficient food.
• SDG 4: Quality Education – The article notes that “early childhood education” programs were among those facing funding cuts, which impacts access to quality education from a young age.
• SDG 10: Reduced Inequalities – The services discussed are for vulnerable and marginalized groups, including “seriously disabled people,” those in poverty, and individuals benefiting from “refugee resettlement” programs. The funding cuts exacerbate inequalities by removing support systems for these groups.
• SDG 11: Sustainable Cities and Communities – The primary example in the article is Friendship Shelter, a non-profit that provides housing. The core issue is ensuring “access for all to adequate, safe and affordable housing and basic services,” a key component of this goal.
• SDG 16: Peace, Justice and Strong Institutions – The article mentions cuts to “public safety,” “civil rights,” and services for “domestic abuse.” These areas are crucial for building peaceful, just, and inclusive societies. The disruption of established government-non-profit partnerships also weakens the institutional framework for delivering social services.
• SDG 17: Partnerships for the Goals – The entire article is a case study on the importance and fragility of partnerships between the public sector (federal government) and civil society (non-profits). It highlights how “decades of partnerships the federal government has built with nonprofits” are being upended, threatening the delivery of essential services.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. SDG 1: No Poverty
   • Target 1.3: Implement nationally appropriate social protection systems and measures for all. The article discusses the dismantling of such systems, which are funded by federal grants and delivered by non-profits like Friendship Shelter, which helps house “seriously disabled people with multiple issues.”
   • Target 1.4: Ensure that all men and women, in particular the poor and the vulnerable, have access to basic services. The housing assistance provided by Friendship Shelter is a clear example of a basic service that is at risk due to funding cuts.
2. SDG 2: Zero Hunger
   • Target 2.1: End hunger and ensure access by all people… to safe, nutritious and sufficient food. The mention of cuts to “food assistance” and “school lunch” programs directly jeopardizes this target.
3. SDG 4: Quality Education
   • Target 4.2: Ensure that all girls and boys have access to quality early childhood development, care and pre-primary education. The article explicitly states that “early childhood education” programs faced funding freezes and cuts.
4. SDG 10: Reduced Inequalities
   • Target 10.2: Empower and promote the social, economic and political inclusion of all, irrespective of… disability… or other status. The support for “seriously disabled people” and other vulnerable groups is a direct effort towards inclusion, which is threatened by the loss of funding.
   • Target 10.7: Facilitate orderly, safe, regular and responsible migration and mobility of people. The mention of cuts to services for “refugee resettlement” directly relates to this target.
5. SDG 11: Sustainable Cities and Communities
   • Target 11.1: Ensure access for all to adequate, safe and affordable housing and basic services. The work of Friendship Shelter, which “helps house… 79 people” and faces the prospect of having to “put people out of housing back on to the streets,” is a direct reflection of this target.
6. SDG 16: Peace, Justice and Strong Institutions
   • Target 16.1: Significantly reduce all forms of violence. Services for “domestic abuse” victims, which are mentioned as being impacted, are critical for achieving this target.
   • Target 16.3: Promote the rule of law at the national and international levels and ensure equal access to justice for all. The mention of “civil rights” organizations being affected by funding cuts relates to ensuring access to justice.
7. SDG 17: Partnerships for the Goals
   • Target 17.17: Encourage and promote effective public, public-private and civil society partnerships. The article’s core narrative is about the breakdown of the “historic — and, until now, solid — relationship between the public sector and nonprofits,” which is the exact type of partnership this target aims to promote.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Yes, the article contains several quantitative and qualitative indicators that can be used to measure progress or regression.

• Indicator for Target 11.1 / 1.4 (Access to Housing/Basic Services):
  • Number of people provided with housing assistance by a single non-profit: “79 people that her nonprofit helps house.”
  • The cost of providing this service: “rent checks worth about $160,000 every month.”
  • The potential increase in homelessness: The prospect of having to “put people out of housing back on to the streets.”
• Indicator for Target 17.17 (Partnerships):
  • Total government grant funding to non-profits: “$267 billion was granted to nonprofits from all levels of government” in 2021.
  • Proportion of a non-profit’s budget from government sources: Friendship Shelter’s budget is “$15 million, $11.5 million of which comes from government sources.”
  • The financial dependency of non-profits on government funding: “In the vast majority of the country, the typical nonprofit would run a deficit without government funding.”
  • The scale of budget cuts faced by non-profits: “They are seeing their budgets getting slashed by 50% or 40%.”
  • The gap between community needs and available private funding: A foundation offered “$10 million in potential awards” and received “1,242 applications for more than $250 million.”
• Indicator for Target 10.2 (Inclusion):
  • The article implies a count of vulnerable individuals served, such as “seriously disabled people with multiple issues” and those needing “refugee resettlement” services.

4. Summary Table of SDGs, Targets, and Indicators

Source: abcnews.go.com