The President’s Fiscal Year 2027 Budget: Continued Cuts Will Impact Nonprofits
On Friday, April 2, President Trump submitted his Fiscal Year 2027 budget request to Congress. While this document is a formal submission of the administration’s priorities, it does not reflect what Congress may ultimately approve. And the Department of Homeland Security (DHS) Fiscal Year 2026 remains unresolved, which adds another hurdle to a complicated appropriations process during a midterm election year.
Ongoing testimonies before the committees of jurisdiction are happening over the coming weeks. Notably, the Office of Management and Budget (OMB) Director Russ Vought testified before the House Budget Committee on April 15 and reiterated some of the troubling framing around nonprofits and charges of fraud in the sector.
Why Budget Proposals Matter
Many nonprofits rely on federal grants and contracts to deliver essential services, from food assistance and housing support to education and workforce development. The FY27 budget proposal determines the level of funding available for these programs from the administration’s perspective. Increases could mean expanded services and greater reach, while cuts may force organizations to scale back or seek alternative funding sources.
What You Need to Know:
The budget continues cuts to discretionary spending toplines, climate initiatives, higher education grants, DEI programs, and support for homelessness programming, among many other issue areas.
• Defense Spending: The proposal requests total defense funding to $1.5 trillion, an over 40% increase from Fiscal Year 2026.
• 10% Cut to Non-Defense Spending: The proposal calls for an overall 10% reduction in non-defense discretionary spending compared to 2026 levels. This broad reduction affects a wide range of programs that benefit the nonprofit sector.
• The Internal Revenue Service (IRS): A $9.8 billion budget for the IRS is proposed, which is a $1.4 billion cut from current spending levels and may result in a possible 27% cut in staffing.
• Homelessness Support: Some homelessness programming decreased by $400 million from Fiscal Year 2026.
• National Institute of Health: A 12% decrease from Fiscal Year 2026 enacted levels was proposed and it would also cut the agency’s enforcement workforce by 17 percent.
• Environmental Protection Agency (EPA): The proposal cuts 52% of EPA funding from previous funding levels. Priorities for cuts include reducing renewable energy funding, ending electric vehicle (EV) subsidies, and cutting climate research.
• National Institute of Food and Agriculture Formula Grants: The proposal cuts $510 million from current funding levels. This is one example among other cuts to the agricultural sector.
• The Low Income Home Energy Assistance Program (LIHEAP): The proposal includes a $4 billion cut to current funding, potentially impacting nonprofits that help families with energy costs.
While many programs face cuts, the budget also proposes increased funding for certain areas, such as special education and new initiatives in technology, innovation, and preventive healthcare. However, these investments are often paired with reductions elsewhere.
As the Fiscal Year 2027 budget process continues, nonprofit leaders across the country are watching closely. Federal budgets are more than just numbers—they are a reflection of national priorities, and the decisions made in Washington have a direct impact on the work of nonprofits and the communities they serve. The Nonprofit Alliance will continue to help elevate the critical work of the nonprofit sector with our bipartisan Congressional champions.
Author: Ann Hollingsworth
Ann Hollingsworth is the VP, Government Affairs for The Nonprofit Alliance.
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