The Nonprofit Workforce Faces Compounding Challenges. What Does That Mean for Communities?
The nonprofit workforce powers essential services in every community, from animal shelters and substance use treatment programs to employment assistance and support for at-risk young people. But the staff who make these programs and services possible are under strain.
Nonprofits accounted for 12.8 million jobs in the US in 2022 (the most recent year of available data). That represents a significant portion (9.9 percent) of the country’s private workforce. Yet staff vacancies, employee burnout, and rising demand threaten to destabilize the nonprofit workforce—and communities’ access to vital programs and services.
Funders and policymakers are well positioned to address these challenges. To help them do so, this article explores national and state-level data on the nonprofit workforce, explains the connection between nonprofits and communities, and offers potential solutions that leaders of the nonprofit sector support.
What workforce challenges are nonprofits facing?
Nonprofits are navigating compounding challenges that make it hard to maintain adequate staffing and satisfy their missions. The National Survey of Nonprofit Trends and Impacts—which includes nonprofits that engage in activities ranging from direct service provision to community building and advocacy and excludes certain types of nonprofits, such as universities and hospitals—offers nationally representative data that shine a light on these challenges. In 2025, the survey found that 46 percent of staffed nonprofits (with at least one full- or part-time paid employee) had employee vacancies.
According to the National Council of Nonprofits, staffing shortages are often the result of three barriers nonprofits commonly face when trying to recruit and retain employees.
- Salary competition. Some nonprofits can’t offer wages that allow employees to cover their basic needs. According to United for ALICE, more than one in five nonprofit workers in the United States faces financial hardship, meaning they can’t afford the minimum costs of household necessities. When wages fail to provide financial security, employees may be forced to seek work elsewhere, regardless of their commitment to the organization’s mission.
- Budget constraints and insufficient funding. Limited funding often leaves nonprofits with little room to raise salaries or expand teams. According to the Nonprofit Finance Fund, more than half of nonprofits reported having three months or less of cash on hand in 2024, and more than one-third ended 2024 with an operating deficit. These financial pressures can make it hard or impossible for nonprofits to invest in staff compensation and capacity.
- Stress and burnout. When understaffing and low salaries are combined with high demand for services, nonprofit employees can face unsustainable pressures that lead to burnout. In turn, staff burnout and stress make it harder for nonprofits to serve communities. The share of nonprofit leaders who reported in the National Survey of Nonprofit Trends and Impacts that staff burnout was their top concern for their organization doubled from 2024 to 2025, and deeper analysis shows that funding challenges and increasing demand for services drive leaders’ concerns.
What do these challenges look like at the state level?
Examining National Survey of Nonprofit Trends and Impacts data for Tennessee offers valuable insights into nonprofit workers’ experiences on the ground. The data show that, similar to nonprofits nationwide, 44 percent of staffed Tennessee nonprofits reported having employee vacancies in 2025. Open-ended survey responses from nonprofit leaders in the state suggest vacancies could owe to the compounding challenges of livable wages, budget limitations, and staff burnout. One leader reported that “maintaining staff wages at the level necessary to keep good talent” was a top concern. Another shared the following:
“We are anticipating a decrease in funding. We are on the verge of adding a new staff position, but this now seems unlikely. We may also need to cut operational hours.”
The survey data also show that, as of late spring/early summer 2025, 80 percent of Tennessee nonprofits anticipated demand for their services to increase in the next 12 months. That’s significantly higher than the national share of nonprofits expecting demand increases: 68 percent.
When increases in demand coincide with staff vacancies, it can worsen burnout among nonprofit workers. In written survey responses, Tennessee nonprofit leaders described concerns about uncertain staffing capacity and rising needs for services. One leader said, “We are a smaller nonprofit providing rent and mortgage assistance. We’re going to have more need with fewer resources.” Another leader offered the following:
“[I am concerned about ensuring] that we will have the increased funding needed to meet the increased needs of those losing jobs in the private and public sectors.”
Why nonprofit workforce challenges are community challenges
Nonprofit staffing shortages, employee burnout, and increased demand for services have real consequences for communities. In 2025, 72 percent of staffed nonprofits across the country reported that employee vacancies negatively affected their ability to pursue their missions, according to the National Survey of Nonprofit Trends and Impacts. This can result in community members facing longer wait times for nonprofits’ services and nonprofits having to serve fewer people.
A Tennessee nonprofit leader responding to the National Survey of Nonprofit Trends and Impacts explained how staffing cuts could directly affect vulnerable populations, saying:
“Most likely we’ll have a small reduction in staff, which could result in a reduction in the number of older adults we serve as their needs escalate.”
Another Tennessee leader’s response highlighted how workforce instability could stall progress on urgent public health issues: “I think we will lose staff and lose momentum to address things like suicide rates and overdoses.”
The strains on nonprofits affect communities so acutely because most nonprofits operate locally. The National Survey of Nonprofit Trends and Impacts found that in 2025, 79 percent of nonprofits across the country operated or provided services locally. Far fewer organizations reported working statewide (16 percent), across multiple states (11 percent), nationally (9 percent), or internationally (9 percent).
How funders and policymakers can better support the nonprofit workforce
Sector leaders have pointed to several actions funders and policymakers could take to address the current strains on nonprofit workers and organizations:
- Fund the People encourages funders to invest in their grantees’ workers by supporting staff and leadership development, fair compensation, strong human resources capacity, and healthy organizational cultures.
- The Nonprofit Finance Fund suggests funders talk to their grantees about benefits; provide full-cost, multiyear, and unrestricted funding; support programs and research focused on well-being; and create spaces for nonprofits to learn from and advocate with one another.
- Independent Sector suggests policymakers can enact tax credits to make it more accessible for nonprofits to offer their employees good benefits. Independent Sector notes several critical tax credits, such as the Employer Credit for Paid Family and Medical Leave, are available to for-profit organizations but not nonprofits.
- To ensure all nonprofit workers have options for student loan forgiveness, the National Council of Nonprofits (PDF) recommends that federal policymakers revisit a 2025 regulation that could limit access to the Public Service Loan Forgiveness Program for some nonprofit employees.
Strengthening the nonprofit workforce can deliver broad benefits not just for employees and nonprofits but also for the communities they serve. When nonprofit employees are supported, organizations are better positioned to sustain programs and meet rising demand.