Nonprofits prepare for Trump policies, plan for uncertain impact

As the Trump administration begins its term, nonprofit organizations across the country, particularly those relying on federal funding, are carefully monitoring potential regulatory changes while taking proactive steps to demonstrate their value.

While the sector maintains a measured approach to potential policy shifts, nonprofit industry leaders should pay attention to and prepare for several immediate developments.

Early indicators of change are emerging in states like California and Ohio, where funding mechanisms for Medicare and Medicaid programs are shifting from traditional grant models to reimbursement-based systems. Could this transition signal broader changes in how federally funded programs operate nationwide?

To prepare for potential changes, nonprofits can:

• Quantify and communicate economic impact, including specific data on job creation, tax base contributions and poverty reduction outcomes.
• Strengthen performance measurement systems with clear KPIs at organizational, program and individual levels.
• Review and enhance data privacy and security practices.
• Develop diverse revenue strategies to reduce dependence on single funding sources.
• Invest in leadership development focusing on business acumen and financial management.
• Build relationships with elected officials through strategic site visits and impact demonstrations.
• Document program outcomes using both quantitative metrics and compelling community impact narratives.

DEI executive order causes immediate regulatory impact

President Trump’s January 21, 2025, executive order affecting diversity, equity and inclusion (DEI) initiatives titled, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” directs federal agencies to discourage DEI preferences in both public and private sectors, including nonprofits.

For organizations whose missions directly involve DEI principles, this may make programming, hiring and core mission activities more challenging. The order’s broad scope extends beyond employment matters to potentially affect program delivery and service models.

Human services organizations can respond by showing their economic impact through on-site program visits with elected officials. These visits show how agencies provide employment, reduce poverty in their communities and help families work and pay taxes.

While the recent DEI executive order signals a shift in social policy, nonprofits can also respond by strengthening their merit-based assessment frameworks while continuing to demonstrate community-wide economic impact through data-driven outcomes.

Preparing for potential changes across operations

Performance measurement systems could become more critical as organizations prepare for potential outcome-based funding requirements. Nonprofits should implement clearer frameworks for tracking and communicating impact, focusing on both organizational and program-level metrics. Data-driven operations should include developing sophisticated key performance indicators (KPIs) that align with both mission objectives and potential future reporting requirements.

The anticipated regulatory environment may bring enhanced oversight across several nonprofit operational dimensions. Financial reporting requirements could become more stringent, with greater emphasis on transparent tracking of revenue sources and how nonprofits use their funds. These financial reporting requirements include:

• Quarterly financial statements.
• Detailed breakdowns of revenue sources and expenditures.
• Executive compensation disclosure.
• Reports on the use of restricted funds.

Early signals could suggest enhanced scrutiny of nonprofit fundraising practices. The administration’s focus on transparency in other sectors could extend to fundraising oversight, potentially requiring more rigorous documentation of costs and donation allocation.

Nonprofits could see new regulations governing relationships between nonprofits and fundraising consultants, including mandatory written agreements and regular audits. These changes align with broader shifts toward reimbursement-based systems seen in states like California and Ohio.

Data privacy and security standards may also tighten, particularly for organizations handling sensitive beneficiary information. Nonprofits should:

• Proactively review and enhance their data management practices.
• Enact stricter data encryption standards.
• Mandate data breach reporting.
• Ask for explicit consent from donors and beneficiaries for data use.
• Conduct regular data protection practice audits.

Tax policy developments could impact charitable giving patterns. The likely extension of higher standard deductions under the Tax Cuts and Jobs Act means fewer taxpayers may be eligible to deduct charitable donations.

Additionally, if high gift and estate tax exemptions continue (approaching $14 million per individual in 2025), wealthy donors may have reduced incentives for charitable giving. Potential changes to capital gains tax rates could also affect donation strategies, particularly for highly appreciated assets that currently offer dual tax advantages.

Priorities for nonprofit leaders

Leadership development and business acumen should be key priorities in this environment of anticipated change. Organizations are moving beyond traditional grant management toward more sophisticated financial planning and revenue generation strategies. This includes developing comprehensive budgeting frameworks, revenue forecasting capabilities and diversified funding streams.

Training opportunities should evolve to meet emerging challenges. Nonprofits should invest in programs focused on growth mindset development, outward mindset approaches and data storytelling. They should also establish and measure a performance culture that extends to comprehensive KPIs at organizational, program and individual levels.

To maintain governance and accountability standards, nonprofits should:

• Mandate board member training and certification.
• Conduct regular board member and executive performance evaluations.
• Delineate roles and responsibilities within the organization.
• Institute enhanced conflict of interest policies.

The sector should also increase succession planning and leadership development. Nonprofits that recognize that potential regulatory changes require a deep bench of talented leaders who understand both mission delivery and operational excellence will see more success. This includes developing expertise in areas like financial management, technology adoption and strategic planning.

For community action agencies and other federally funded organizations, the focus should remain on demonstrating impact through both quantitative metrics and compelling narratives. These nonprofits should develop more sophisticated approaches to showcasing their role in poverty reduction, workforce development and community economic stability.

How Wipfli can help

Wipfli’s nonprofit experience can help organizations navigate emerging regulatory requirements while staying focused on mission impact. Our team can support you in strengthening performance measurement systems, enhancing data security, developing sustainable funding strategies and improving financial management practices.

Visit our nonprofit services page to contact us or learn more. Visit our special page where we’re tracking all regulatory, policy and tax changes to get the latest updates.