Nonprofit Leaders Warn of Dire Consequences from Federal Cuts Under DOGE
CHICAGO, IL – March 6, 2025– Nonprofit leaders, policy experts, and elected officials convened for a virtual town hall, “The Nonprofit Fork in the Road,” hosted by Nonprofit Utopia founder Valerie Leonard, to address what many are calling an existential threat to the nonprofit sector stemming from actions taken by the U.S. Department of Government Efficiency (DOGE).
The forum featured an esteemed panel including U.S. Congressman Danny K. Davis (IL-7), Marc J. Lane, President of The Law Offices of Marc J. Lane, and Ralph Martire, Executive Director of the Center for Tax and Budget Accountability. The speakers unpacked the devastating implications of mass federal layoffs, funding freezes, and policy reversals under the current administration, led by President Donald Trump and his unofficial advisor Elon Musk.
“We are witnessing an unprecedented assault on our nation’s civil society infrastructure,” said Leonard, noting that nonprofits—especially those dependent on federal funding and partnerships—are facing operational collapse. “When the nation catches a cold, our communities get pneumonia. These cuts could push entire sectors into recession or worse.”
A Sector on the Brink
Rep. Davis described the ideological shift in stark terms: “We are a nation at war—an ideological war against equity, economic justice, and the institutions that bind our democracy together.” He noted that more than 1 million nonprofit jobs are at stake in Illinois alone, where nonprofits make up 11% of the state economy—and 25% in some communities, like Chicago’s West Side.
“This isn’t about efficiency,” Davis added. “It’s about dismantling government as we know it and redistributing power and wealth upward.”
Marc Lane echoed the congressman’s concerns, characterizing the federal government’s actions as “chaotic and cruel.” He highlighted the targeted rollback of diversity, equity, and inclusion (DEI) programs, threats to tax-exempt status, and the chilling effect these policies have had on nonprofit advocacy.
“Nonprofits are operating in fear,” Lane warned. “Fear of donor backlash. Fear of government retaliation. Many are retreating from advocacy—precisely when we need them to step up.”
Catastrophic Cuts and Cascading Effects
Ralph Martire brought sobering fiscal data to the discussion, outlining the federal workforce reductions and their ripple effect on state budgets and services. He revealed that thousands of employees have already been cut from key agencies, including:
- Health and Human Services: -5,200 employees
- IRS: -6,700
- EPA: extensive reductions
- National Nuclear Security Administration: -350
Martire warned that these cuts could destabilize core safety nets such as Medicaid, Medicare, and Social Security. He also reported that nearly $1.88 billion in federal funds awarded to Illinois agencies—including Education, Health, and Transportation—are now frozen or unfulfilled.
“We’re talking about real lives, not just spreadsheets,” said Martire. “These aren’t hypothetical scenarios—this is already happening.”
The Path Forward: Advocacy, Innovation, and Coalition
Panelists agreed that now is the time for nonprofit leaders to unify, educate themselves on what is legally permissible, and engage in bold, collective action. Lane pointed to the often-overlooked 501(h) election that allows public charities to legally engage in robust lobbying efforts.
“Know the law. Use the law,” said Lane. “Advocacy is not only legal—it is necessary for our survival.”
Participants also discussed innovative survival strategies, including earned-income ventures, reframing DEI-aligned missions under broader categories such as workforce development, and leveraging catalytic funding from private foundations.
The forum closed with a call to action for nonprofit leaders to organize coalitions, hold elected officials accountable, and participate in upcoming events like the Social Enterprise 2025 Symposium on April 4th at the University of Illinois at Chicago.
Contact:
Valerie Leonard
Founder, Nonprofit Utopia
valerie@nonprofitutopia.com
Media Assets:
- Full Event Transcript Available Upon Request
- Event Recording Available on Facebook Live
- Contact for Interviews and Commentary
