Funding Cuts Threaten Washington Nonprofits Amid Economic Downturn

Nonprofit organizations in Washington state are facing significant financial challenges in 2025 due to cuts in state and federal grants, a sluggish economy, and reduced charitable giving, pushing many groups to the brink of closure. For instance, Pushing Boundaries, an intensive exercise therapy center for individuals with paralysis, was saved from shutting down only after supporters raised $200,000 in four days. Meanwhile, on the federal legislative front, the House of Representatives passed H.R. 1, the "One Big Beautiful Bill," which proposes substantial changes affecting tax-exempt organizations, including increased excise tax rates on endowments of private colleges and universities and tiered excise taxes on private foundations. The bill also aims to expand excise taxes on executive compensation over $1 million and alters rules regarding unrelated business taxable income. Concurrently, a heated House hearing titled "Public Funds, Private Agendas: NGOs Gone Wild" revealed partisan divisions over the nonprofit sector's role and funding, with Democrats highlighting the detrimental impact of federal funding cuts on services like food banks and health clinics, while Republicans criticized certain nonprofits for alleged misuse of funds and political activity. These developments illustrate the complex and precarious environment for nonprofits amid shifting political, economic, and legislative landscapes under President Trump’s administration.