The nonprofit funding landscape changed dramatically in 2025. Organizations submitted more applications and leaned more heavily into AI tools than ever before. At the same time, the government funding environment faced an unprecedented shift: a funding freeze, the dismantling of USAID, and major shifts in federal priorities forced nonprofits to adapt quickly and explore new funding strategies.
Below, we explore the five most significant trends that shaped grant writing and grant strategy this year, and how these trends shape the landscape for the year to come.
1. Prepared organizations maintained higher application volume and saw stronger outcomes
GrantStation’s 2025 State of Grantseeking Report, an analysis of the grantseeking landscape based on responses from 1,258 organizations, shows a strong correlation between application volume and overall funding success. Nonprofits that submitted more applications were more likely to secure funding: 95% of organizations submitting six or more applications received at least one award, and all organizations submitting 31 or more applications received funding.
However, this does not suggest that applying to more grants alone guarantees success. Rather, these organizations were likely more prepared: they had clearly defined programs, stronger internal systems, and the capacity to identify and pursue opportunities that were a good fit. In this context, higher application volume is better understood as an outcome of readiness, not a strategy in itself.
In 2026, readiness will increasingly depend on how efficiently organizations discover and qualify opportunities. AI can support this shift by helping teams surface more relevant grants earlier, assess fit before investing time in writing, and reduce the administrative burden of discovery. By strengthening grant discovery, prepared organizations can increase application volume without chasing poor-fit opportunities, applying at scale while maintaining quality.
2. Government funding became highly unpredictable
Federal funding volatility defined 2025. The year began with a sudden freeze on federal grants and loans that, although reversed within 24 hours, created lingering delays, loss of funding, and uncertainty for nonprofits relying on federal dollars. In response to the shift in government funding, GrantStation released the 2025 State of Grantseeking Government Update Report, based on responses between January and July 2025, to understand the shift in the funding landscape. According to the report, nearly one-third of nonprofits experienced reductions or cancellations, losing a median of $150,000.
Organizations responded by shifting strategies in real time: 76.5% increased private or corporate submissions, 57.7% expanded individual donor outreach, and 63.1% reduced or eliminated programs to compensate for stalled funding. At the same time, federal priorities narrowed, steering dollars toward infrastructure, economic development, technology, and domestic community needs.
Government funding remains a high-value opportunity, but nonprofits must now plan for longer grant cycles, more competition, and greater uncertainty. Strengthening internal capacity, diversifying revenue, and closely tracking agency updates will be essential in 2026.
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3. Emergency response grants surged in response to instability
Federal volatility in 2025 exposed how fragile community supports become when major safety-net programs are threatened. Proposed reductions of nearly $1 trillion to Medicaid and $186 billion to SNAP drove immediate spikes in demand for food, housing, and health services, especially among low-income families and immigrants. Community foundations and donors launched rapid-response funds to alleviate the gap.
Funders formalized these approaches as part of their 2025 strategy. The Meyer Foundation, for example, expanded its rapid-response program to offer simplified, fast-turnaround grants of $10,000–$20,000 to partners facing urgent organizing, legal, or community-defense needs. Similar models emerged nationwide as institutions prioritized speed, flexibility, and low administrative burden, a shift many nonprofit leaders have been advocating for years.
Across the sector, emergency grants helped nonprofits absorb short-term shocks, but funders also acknowledged their limits. Private foundations award a higher volume of grants, but government funders offer fewer awards at significantly higher dollar amounts. Government awards had a median value of about $300,000 this year, compared to $55,000 from non-government funders. Philanthropy can provide temporary relief, but not the long-term scale of federal investment.
The takeaway for 2026: nonprofits will need diversified revenue strategies, stronger scenario planning, and the ability to apply quickly for flexible grant opportunities if uncertainty resurfaces.
4. AI became a workforce multiplier
In 2025, artificial intelligence shifted from an emerging tool to an essential part of nonprofit operations. New data from the Center for Effective Philanthropy shows that nearly two-thirds of nonprofits now use AI.
The trend is driven by a simple reality: teams are small and expectations are high. According to the 2025 State of Grantseeking Government Report, 64.9% of organizations have just 1–2 people working on grants, and lack of time or staff remains the top barrier to success. With federal delays, increased reporting requirements, and growing documentation needs, the workload has intensified without corresponding increases in capacity.
AI became a practical solution. The Center for Effective Philanthropy (CEP)’s AI with Purpose report found that 90% of nonprofits and 94% of foundations want to expand their use of AI in the coming year, not to replace staff, but to relieve pressure. As one nonprofit leader shared, “AI could assist in data analysis to identify community needs, measure program impact, and support grant writing — ultimately allowing staff to focus more on direct community engagement.”
In 2026, think of AI tools as your assistant. For lean teams, AI is emerging as a force multiplier that helps organizations:
- respond to more opportunities
- analyze data faster
- streamline narrative creation
- reduce time spent on administrative tasks
- refocus effort on mission-driven work
5. Project-based funding continues to outpace general support
In 2025, funders continued to award project-based support more frequently than any other type of grant. Project/program support accounted for 41.6% of all awards, significantly outpacing general operating support at 24.2%.
At the same time, there’s a strong philanthropic movement calling for more unrestricted, trust-based funding, and many foundations publicly support that shift. But the data shows that most dollars awarded in 2025 still came with specific program requirements attached, meaning nonprofits must be able to articulate concrete project plans in their grant proposals.
In 2026, strong proposals will need to clearly demonstrate:
- A rigorously developed project design with a feasible implementation plan and clear timelines
- Specific, measurable outcomes supported by an evaluation framework that evidences anticipated impact
- Explicit alignment between proposed activities, organizational mission, and strategic priorities
- Documented organizational capacity, including staffing, systems, and infrastructure, to execute and sustain the project
2025 was defined by innovation, uncertainty, and the resilience of nonprofit leaders committed to their missions.
The most successful teams are now blending expert grant writing with efficiency tools and strategic foresight. As we look ahead, the nonprofits that stay mission-centered, adaptable, and proactive will be best positioned to thrive in 2026.
Grant Assistant delivers a full, end-to-end grant writing experience—covering research, narrative drafting, and compliance checks—built specifically for nonprofit workflows. If you're working AI into your 2026 strategy, consider how Grant Assistant can help your team apply and win more grants, faster.
Or, keep exploring with these additional resources about trends shaping the grants landscape:
- Five steps to diversify your nonprofit's funding in uncertain times
- Supporting nonprofits through uncertainty with flexibility, collaboration, and data
- This Year’s Federal Funding Freezes Offer Lessons on Emergency Grant Making
- How to use AI for grant writing: A nonprofit playbook
- How Government Funding Disruptions Affected Nonprofits in Early 2025
