Community Development Voice is an initiative of the Community Opportunity Alliance, a national nonprofit that builds the community development field. Local community developers speak out on key issues affecting their work and the communities they serve. We share their insights with decision makers and the media.

FEDERAL FUNDING UNCERTAINTY

Impact on Nonprofit Community Development Organizations

SUMMARY: We asked Community Development Voice representatives to share the current and upcoming effects of unstable federal funding streams on their organizations in July 2025. Their responses provided the following insights.

SURVEY FINDINGS

Federal funding shortfalls are affecting organizations’ ability to provide additional critical services like school lunches, WiFi, and senior programming. Withdrawn funding and fear of future federal funding cuts are undermining their capacity to sustain services to their communities.

Development organizations are bracing for longer-term challenges, particularly because funding uncertainty threatens their ability to plan and build new properties. This reflects a unique dynamic of nonprofit real estate developers, who operate on longer timelines than most other types of nonprofits.

Community development organizations are actively preparing for a reduction in their capacity. A few organizations reported having to delay hiring and create staff reduction plans.

Communication from the private funder to their grantees and partners has been uneven at a time when funding uncertainty is shaping strategic decisions across the sector.

ABOUT THE COMMUNITY DEVELOPMENT FIELD
More than 6,200 community development organizations employ 271,000 staff members who are dedicated to serving low-income communities across the United States, according to a 2023 census report from the Community Opportunity Alliance. Government funding represents the largest source of support, with government resources accounting for 43% — or $9.4 billion — of total sector revenue. Between 2019 and 2021, 90% of these organizations received $50,000 or more in federal funding.

INDIVIDUAL RESPONSES

Liz Gutierrez, Enterprising Latinas, Inc. — Wimauma, FL

Enterprising Latinas, Inc. is a nonprofit organization in Wimauma, Florida creating pathways of opportunities for women by providing them with business development training, technical assistance, capital access, and entrepreneurship support.

Immediate Impact

Enterprising Latinas, Inc. adjusted their programmatic priorities in response to uncertainty around federal funding. They decided not to pursue certain federal funding opportunities, including the Women in Apprenticeship and Nontraditional Occupations program, the Community Development Block Grant (CDBG) program, the Community Economic Development Program, and other programs offered by the U.S. Department of Health and Human Services.

The organization had to eliminate workforce development initiatives due to the lack of funding sources and transition out of its workforce programming. Federal funding that they anticipated would support their Wifi project was withdrawn, hindering their ability to provide free internet access to over 500 households. Projected partnerships and funding tied to the rescinded Greenhouse Gas Reduction Fund, may not be recoverable.

Federal funding uncertainty has caused Enterprising Latinas, Inc. to seriously question their multi-year financial forecasting and made it significantly more difficult to plan programming. They had to restructure their staffing and create staff reduction plans. Over the past three years, over $1.5 million in CDBG funding has been withdrawn, representing about 15% of their budget. This funding loss has impeded improvements to the Wimauma Opportunity Center, a resource hub serving a community with a history of disinvestment. A pending $150,000 technical assistance grant from the Community Development Financial Institution (CDFI) fund, is also at risk.

Quotes

• “We had to significantly reduce the scale of the real estate project to ensure its viability without federal grant subsidies.The expansion of the real estate project is related to the Wimauma Opportunity Center which involves the building of a childcare facility in a community that is a childcare desert, creating a food business incubator to support food, the thriving food entrepreneurial community in south Hillsborough County, and building expanded workforce training facilities.”

• “We realize that we need to pivot our entire funding plan away from federal sources and build our own individual donor base and begin exploring revenue generating options.”

Mike C Nguyen, VN TeamWork — Houston, TX

VN TeamWork is nonprofit community-based organization enhancing the health, education, and social well-being of low-income and underserved people in the greater Houston metropolitan area. Their services include, health care programs, training programs and community service programs, including the provision of safe, decent and affordable housing for low-income families.

Immediate Impact

Between $60,000 and $100,000 of VN TeamWorks federal funding was withdrawn, and an additional $200,000 to $300,000 is under threat — including federal funds that they have consistently received in the past. As a result, they are refocusing on programs that they consider to be more financially stable.

Quotes

• “It has been increasingly difficult to make numbers work for a real estate project deal.”

• “We had an SBA Community Navigator grant that was helping small business owners all over Houston gain training, secure financing, and grow their businesses. Now without that help, community businesses will have to navigate biased advice from agents and other actors, instead of working with a community organization to help give non-bias advice for consumers to choose freely.”

Terri L Murray, Neighborhood Renaissance, Inc. — West Palm Beach, FL

Neighborhood Renaissance, Inc. is a nonprofit community-based organization that addresses affordable housing needs in Palm Beach County and across Florida through affordable housing development, financial literacy training, homebuyer counseling, property preservation, and property management of affordable homes.

Projected Impact

Neighborhood Renaissance, Inc. characterized the impact of federal funding uncertainty on their organization as a future threat, noting that it takes two to five years to begin and implement an affordable housing development.

Quotes

• “The already high cost of land, materials, and labor makes it difficult to develop a home at a price point that a first time buyer can afford. In the last year we experienced an added cost increase due to labor shortage and material cost increases. Coupled with federal funding cuts needed to make the homes affordable, we can no longer offer homeownership as an opportunity for the low and moderate-income workforce in Palm Beach County.”

• “There is an affordable rental housing crisis in Palm Beach County. Most working families and households earn a living in the service sector (retail trade, leisure and hospitality, and educational and health services). The majority (57%) of these low-wage service sector occupations have hourly wages that translate to workers earning 40-60% of the County’s median household income. The FIU Affordable Housing Needs Assessment found more than 65% of owners and 90% of renters in these income categories pay more for housing than they can afford. 

• “Without HOME and CDBG, Neighborhood Renaissance cannot pursue 4% LIHTC opportunities without HOME and CDBG gap funding in order to address the critical rental need and there is an insufficient allocation of 9% LIHTC to meet the need. Our organization’s mission and business model is dependent upon the availability of these resources.” 

Larry Fisher, Appalachian Center for Economic Networks — Athens, Ohio

The Appalachian Center for Economic Networks (ACEnet) is a community-based economic development organization serving the 32 counties of Appalachia in Ohio. They support entrepreneurs with business planning, marketing, financial management, and incubator space, while also strengthening the local economy through services such as healthy food access and reentry programs.

Immediate Impact

ACEnet lost $500,000 per year for the next two years, representing 30% of its budget and does not know whether they will receive federal funding from additional applications that they submitted. These funds were targeted at supporting small food businesses and small family farms as they were trying to grow and hire more employees. Related funds were intended to provide equipment grants to these operations to increase their production capacity. 

Federal funding uncertainty forced mid-year budget revisions, complicating program planning and requiring ACEnet to devote capacity to identifying replacement funding sources. They had to restructure staffing, create staff reduction plans, and freeze hiring for open positions.

Quotes

• “The canceling of the Regional Food Business Centers through USDA and other program uncertainty has really strained our clients. We don’t know when or if we’ll have resources to serve small businesses, family farms, and their families.”

• “Small businesses and family farms in our region had anticipated financial assistance to be in place through USDA Business Builder grants. They’ve been cancelled and now those businesses are scrambling.”

JohnDre Jennings, Druid Heights Community Development Corporation — Baltimore, MD

Druid Heights CDC is a community development corporation that provides affordable housing development, housing counseling, reentry, and employment services to the Druid Heights neighborhood.

Immediate Impact

Federal funding uncertainty prompted Druid Heights CDC to call urgent governance meetings and make mid-year budget revisions. Approximately 25% of their funding had already been withdrawn, with an additional 25% at risk. In response, they changed their programmatic priorities, restructured staffing, and shifted hiring plans. 

Quotes

• “Currently real estate projects for affordable homeownership have been impacted and funding for housing counseling staff has been reduced.”

• “Federal funding disruption significantly impacts smaller organizations that serve the hardest to reach communities. We rely on that funding to provide resources for low to moderate income families.”
  

• “Federal funding uncertainty has impacted our workforce development programs, housing counseling services and green space projects.”

Sandy Deters, Embarras River Basin Agency — Greenup, IL

Immediate Impact

Federal funding uncertainty affected financial planning for ERBA’s housing counseling work, making it significantly more difficult to plan programming and preventing them from hiring replacement staff.

$100,000 of ERBA’s federal dollars are under threat, representing 20% of their budget, with many of their grants tied to this funding.

Quotes

• “With the government shutdown, our families no longer have access to the USDA home repair program. This means families may go without heat and the roof will not be replaced before winter.”

• “We are pursuing new HUD and foundation grant opportunities and developing partnerships with health insurers and renewable energy companies to expand mortgage and property tax assistance and deliver essential home repairs.”

• “Staff is uncertain about their future. It's hard to hire anyone.”