Nonprofits Enter Federal Fiscal Year 2027 With Deficits Up as Funding Disruptions Mount
St. Louis, United States - November 15, 2026 / FAMCare /
ST. LOUIS, Mo. - Human services agencies that rely on federal grants and state pass-through contracts entered federal fiscal year 2027 on Oct. 1 after more than a year of documented government funding disruptions. Agencies best positioned to replace lost revenue had already built strong outcome data and reporting systems, according to an October analysis by FAMCare, a developer of social work case management software.
A nationally representative survey of 2,737 nonprofits, conducted with Urban Institute researchers, found that about a third of nonprofit service providers experienced a government funding disruption in the first half of 2025. Among disrupted organizations, 29% reduced staff, nearly double the 15% rate across all nonprofits.
The Center for Effective Philanthropy's "State of Nonprofits 2026" report, based on a survey of 380 nonprofit leaders, found that 39% of their organizations ran a deficit in fiscal year 2025, up from 22% in 2022.
"Agency leaders are carrying a lot through this funding cycle. The agencies holding steady didn't predict the cuts. They had outcome data they could stand behind before a funder ever asked for it," said George Ritacco, vice president of business development at Global Vision Technologies Inc., which develops FAMCare.
Private philanthropy is filling part of the gap. Charitable giving reached $617.2 billion in 2025, a record in current dollars, and foundation giving grew 5.7% to about $117.2 billion, according to Giving USA 2026.
Foundation dollars cannot close the gap alone. Writing in The Chronicle of Philanthropy, Urban Institute nonresident fellows Lewis Faulk and Mirae Kim noted that total government funding for nonprofits amounts to around three times total foundation funding.
"Every funder an agency approaches will ask what changed for the people it serves. When that answer comes straight out of the case record, a director can walk into any funding conversation with confidence," Ritacco said.
Foundation relationships often take 12 to 18 months to move from first contact to a funded grant, according to FAMCare's analysis of federal funding uncertainty. That timeline places much of the groundwork for 2027 and 2028 grants inside fiscal year 2027.
The analysis also recommends that agency directors map funding concentration, tracking the share of the operating budget that comes from federal sources, directly or through state pass-through, and from any single funder.
About FAMCare
FAMCare is human services case management software developed by Global Vision Technologies Inc., based in St. Louis. The platform serves government agencies, nonprofits and tribal organizations across North America in child and family services, behavioral health, juvenile justice, aging services, victim services and homeless services. FAMCare is HIPAA-compliant and SOC 2 Type II certified.
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Contact Information:
FAMCare
6642 Clayton Rd, Suite 346
St. Louis, MO 63117
United States
George Ritacco
+1-877-791-4367
https://www.famcare.net
