There are about 80,000 nonprofits in Illinois that, in total, employ one million people. And on Chicago’s West Side, nonprofits make up about 25% of the economy.

But those numbers could change as the recently created United States Department of Government Efficiency has laid off thousands of government employees, claimed over $50 billion in budget cuts and shifted policy. Such developments are likely to disproportionately affect nonprofits, which depend on federal funding and partnerships. 

The welcome screen for Nonprofit Utopia's Zoom discussion "Nonprofit Fork in the Road"

Valerie Leonard, founder of Nonprofit Utopia – a West Side organization that helps other nonprofits build capacity – hosted a Zoom meeting at the end of last month, when Rep. Danny Davis, local experts and community members discussed how nonprofits will likely be impacted and strategies to navigate a new presidential administration. 

“The state has identified $1.88 billion in federal grants that have not been dispersed,” Ralph Martire, executive director at the Center for Budget and Tax Accountability, said on the Zoom call. That money “covers everything from supporting small business and solar development to veterans, AIDS prevention and help, mental health, developmental disabilities, support for senior citizens, support for children.”

“This is just a snapshot of what could be coming our way,” Martire added. “All of it will create significant negative economic multipliers that will reduce our private sector growth in the next few years.”

Marc J. Lane, president of the Law Offices of Marc J. Lane, is an expert on government and nonprofit structures and has helped write legislation to support nonprofits.

“In Illinois, 67% of 990-filers that get government grants would be at risk without them,” Lane said on the Zoom call. 

And while government funding is vital to most nonprofits, federal policies are also affecting these organizations. President Donald Trump has issued executive orders to prohibit programs that advance diversity, equity and inclusion.

“That’s the hallmark of many nonprofits,” Lane said. “The populations they serve are marginalized populations in disinvested communities, in many cases.” 

“My congressional district has more nonprofits on average than many other places because of who the people are who live here,” agreed Davis, who represents the 7th District that covers part of Chicago’s Austin neighborhood, Oak Park and Forest Park.

What can nonprofits do? 

Within the U.S. House of Representatives, Democrats are actively working to address the current stall in federal funding. 

“We keep preparing and working every day, pushing back,” Davis said. He is a member of the House’s Ways and Means Committee, which influences tax policy. “Democrats have a strategy. We are unified. The one thing we have been pleased about has been the unification of our group, of our party.” 

Working together could transcend House Democrats, spilling into the local nonprofit community. 

“In this country, as it was evolving into a country, people would form things and do things themselves, and not wait for the government to do them,” Davis said. 

Others on the Zoom call agreed, suggesting that nonprofits mobilize and form coalitions.

“Nonprofits are increasingly backing away from advocacy for fear of retaliation, for fear of being conspicuous,” Lane said. But, he added, existing laws allow public charities to lobby, and for private foundations to fund such charities.

“There are ample opportunities for nonprofits to coalesce, do that which is in their collective best interest, and secure funding from foundations and individuals and others who care about this stuff and see the nonprofit community as the vanguard of change,” Lane said. 

Nonprofits can also increase earned revenue by emphasizing their core competencies and underutilized assets, diversifying funding sources so they can depend less on federal dollars.

“There are techniques and structures and designs that allow you to [leverage] those businesses and different entities that are not dependent upon tax deductible or tax exemption, where the revenue would drive your programming or be reinvested in the growth of that social enterprise,” Lane said. 

Lane, Davis and Martire also suggest that nonprofits engage with the private sector for funding and, above all, remaining confident. 

“We need to have hope,” Lane said. “We also need to plan for things that may not go in a better direction.” 

Nonprofits that are looking to network with each other and learn more about getting local support can attend a symposium next month that is hosted by the Cook County Commission of Social Innovation – which creates actionable social policy recommendations for the county board – and the nonprofit, Social Enterprise Chicago.

The symposium will be held at UIC, 750 S. Halsted St., on April 4 from 8 a.m. to noon. It is free to attend and those who are interested can register at eventbrite .