Layoffs are illustrated by an oversized pair of scissors, that looms over seven workers sitting in office chairs suspended by strings. Employees use their laptop computers and mobile devices, but some of their jobs could be cut at any time, as they are shown hanging by a thread. Their jobs are on the line. Conceptual illustration uses a flat, limited color palette over a dark blue background, presented in isometric view on a 16x9 artboard.

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Nonprofit organizations and the social sector at-large is America’s third-largest employer at 10% of the workforce, comprising 5.2% of GDP and contributing $1.4 trillion to the economy. Nearly a year into federal budget cuts eliminating social safety net programs, closure of USAID and the downstream impact of philanthropy quietly pulling back funding – the sector faces a gathering storm.

A survey and conversations with long-term unemployed social sector workers highlights an employment crisis that threatens not just individual livelihoods, but the sector’s foundational capacity to serve communities.

An Invisible Crisis

While federal government and technology sector layoffs consistently make headlines, the unfolding jobs crisis within the social sector has received little public attention even as tens of thousands of sector employees have lost jobs in the past year, many due to reorganization or closure of nonprofits.

17 conversations and 86 survey responses from long-term unemployed (unemployed longer than 26 weeks) shows significant sector volatility: systemic organizational instability driving widespread layoffs, an experience paradox where expertise becomes a barrier rather than an asset, accelerating brain drain as talented professionals exit the sector, broken hiring processes that dehumanize candidates, and devastating personal impacts that extend far beyond employment status.

Building Movement Project Director of Research, Dr. Janaé Bonsu-Love seconded these insights, sharing preliminary findings from BMP’s 2025 Race to Lead survey–a national study tracking race, leadership, and nonprofit workplace experiences. "What we’re seeing in our research aligns with these experiences of long-term unemployed workers—it’s a perfect storm of organizational fragility, inconsistent funder support, and a political climate that’s making people feel unsafe," Dr. Bonsu-Love explained. ‘’

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She noted that nearly one in three Race to Lead respondents reported taking a new job in the past year, with many citing layoffs, role eliminations, or organizational restructuring as the cause–not growth or ambition. “When you combine that with the brain drain of people considering leaving the sector entirely, we’re looking at a crisis that threatens the fundamental capacity of nonprofits to do their work. The sector is hemorrhaging the very people who have the institutional knowledge and mission commitment we desperately need."

A Crisis Rooted In Systemic Instability

In my independent survey, 50% of respondents lost jobs due to organizational layoffs, making it the leading cause of unemployment, while 19% were impacted by federal budget cuts to their organizations. These factors highlight financial fragility that has left even high-performers vulnerable to forces beyond their control. Since January 2025, an estimated 140,000 federal employees have lost their jobs through agency closures, program eliminations, and budget reductions, with cascading effects on nonprofit contractors and grantees dependent on federal funding.

Leaders at organizations operating in the current environment are struggling to strike a balance between survival and stated values and mission, as the federal government has taken a stance against missions aligned with equity, inclusion and justice.

"We stopped advertising programming for houseless youth and LGBTQIA+ individuals. We still do the programming, although we ensure there isn’t public advertising," noted one respondent, showing how organizations are having to hide their work to survive.

"We’ve had to significantly invest in physical security due to death threats and beef up our digital security due to cybersecurity threats”, shared one respondent whose organization experienced reputational attacks alongside funding losses that lead to layoffs.

"As a long-standing nonprofit in Texas that has a social justice advocacy history, we are alarmed by the aggressive stance Texas is taking. We feel at risk of losing funding if our positions are not aligned with the state leadership," reported another respondent, reflecting how political polarization compounds financial instability.

The Experience Paradox: When Expertise Becomes A Liability

62% of respondents reported being overqualified for available roles, caught in a cruel bind: too experienced for entry positions, yet lacking narrow specializations for senior roles. Mid-career professionals face the sharpest edge of this paradox. Meanwhile, emerging professionals with coordinator-level experience struggle against sector saturation, with 78% noting too many qualified candidates competing for shrinking opportunities.

"Looking for a candidate who has a particular specialization or preexisting experience with a specific title means missing out on a lot of well-qualified hard workers," explained Sarah, who has been searching for over nine months despite strong credentials.

"I feel like my experience and age are disqualifying me for some roles. I’m willing to take on more junior positions, but it seems my background works against me," shared David, reflecting a common frustration among mid-career professionals.

A Sector Brain Drain

Among those unemployed over 12 months, 64% of respondents are considering leaving the social sector entirely, while 36% have already taken work outside it.

"The sector talks about equity and supporting communities, but when it comes to supporting their own workers, that commitment disappears. I’m considering leaving because I can’t keep working for organizations that don’t live their values," expressed Angela, unemployed for 10 months after her organization closed.

"I’ve had to take contract work outside the nonprofit sector just to pay my bills. I never thought I’d be doing corporate consulting, but I can’t afford to wait for the ‘right’ mission-aligned opportunity anymore," explained Daniel, unemployed for 14 months.

The sector is hemorrhaging institutional knowledge and mission-driven talent.

Hiring Process As A Barrier

When asked about barriers to finding employment, 85% of respondents cited lack of employer response as their primary challenge. The irony is stark: a sector built on human dignity subjects job seekers to dehumanizing "digital hiring mazes" where qualified candidates are ghosted after final-round interviews. The disconnect between mission and practice erodes the sector’s moral authority.

"It is fine if our timelines and senses of urgency do not match, but I would love for employers to not waste so much of the precious resource of time during a search process," said Lisa, who experienced multiple instances of being ghosted after extensive interview rounds.

"I want to be seen and recognized as a human. The lack of communication and impersonal nature of the hiring process is demoralizing and makes job seekers feel devalued," expressed Thomas, echoing widespread frustration with current recruitment practices.

Recent research reveals the scale of dysfunction in hiring processes across sectors: applicant tracking systems (ATS) reject up to 75% of qualified candidates with a 6-month or longer career gap. A 2024 study by Greenhouse found that 43% of job seekers reported being ghosted by recruiters after interviews, while research reveals “one in three open roles never materialize into real employment opportunities,” creating "phantom jobs" that waste applicants’ time and erode trust.

Impact On Individuals

The extended job search has had profound and multifaceted impacts on individuals beyond employment status alone.

Financial Devastation And Economic Insecurity

93% of respondents reported financial strain as a direct impact of extended unemployment. This financial pressure forces impossible choices, having to choose between healthcare, housing stability, and basic needs with professional development investments that might improve job prospects. For those unemployed over 12 months, financial reserves have often been exhausted, creating acute crisis situations including homelessness.

One respondent shared, “I have no savings, my family is already struggling so I can’t ask parents or siblings. I’m depending on loans from friends so I don’t go into more debt. Unemployment covers rent, groceries and a bill and it’s leaving me struggling for anything else I need.”

As documented in the Building Movement Project’s research on nonprofits in polarized climates, 22% of nonprofit workers already fall below the ALICE threshold (Asset Limited, Income Constrained, Employed), meaning they earn more than the federal poverty level but less than what it costs to survive in their communities. Unemployment pushes many previously barely-stable professionals into severe financial hardship.

"We are facing homelessness and levels of vulnerability and insecurity I had never imagined being in," one respondent shared anonymously.

Identity Crisis And Purpose Erosion

85% of respondents reported questioning their career path and purpose due to extended job searches. For mission-driven professionals who define themselves through their work advancing social good, prolonged unemployment represents more than lost income - it’s a crisis of identity and meaning.

"I have spent my career building relationships, skills, investing in making myself a better leader and none of that seems to matter now. Because the job market is saturated, no-one is willing to talk about how my many skills are so transferable. I don’t have to be the perfect match, but I can do it! 7 months of looking with a person who has a master’s degree and multiple graduate level certificates."

The social sector attracts individuals for whom work is vocation rather than merely occupation, making joblessness particularly psychologically destabilizing. This existential dimension distinguishes social sector unemployment from job loss in other industries.

“We have dedicated our lives to this work and to not be valued, needed, seen, anymore so devastating.”

Mental Health Deterioration And Social Isolation

The vast majority of respondents (81%) reported mental health challenges resulting from extended unemployment, including anxiety, depression, demoralization, and decreased self-worth from repeated rejections. The Independent Sector’s workforce research shows that nonprofit employees already experience high rates of burnout due to mission-intensity and under-resourcing. Job loss compounds this pre-existing vulnerability.

The "sting of rejection" that respondents described accumulates with each unanswered application and ghosted interview, creating psychological trauma that persists even after reemployment. Additionally, professional networks—often a primary source of social connection for nonprofit workers—become painful reminders of exclusion, leading to social withdrawal precisely when support is most needed.

"These themes—the instability, the experience paradox, the exodus of talent, the broken hiring processes—they’re all interconnected symptoms of a sector in crisis," Dr. Bonsu-Love noted. "And what’s particularly concerning is that this harm isn’t distributed evenly. BIPOC workers, women, and non-binary individuals are bearing the brunt of this instability. They’re more likely to experience retaliation, more likely to see their organizations close or restructure, and they’re being asked to do more with less while the sector claims to value equity. We’re not just losing people—we’re losing the very diversity and perspective that makes this sector effective."

“We need funders to invest in necessary experimentation—supporting multi-entity structures, trauma-informed HR practices, and asking the fundamental question: How do we survive and sustain? Very few technical assistance providers truly understand this work.”

How does a fragmented sector respond to rapid job loss and the drain of talent? The challenge requires coordinated action across multiple levels of the nonprofit ecosystem.

The Potential Stabilizing Role Of Large Philanthropy

Major foundations, institutional funders and UHNI (ultra high net worth individuals) philanthropists bear particular responsibility given their resource concentration and influence. According to the Building Movement Project’s Sounding the Alarm report, funding losses are most frequently attributed to individual donors (17% of organizations experiencing cuts) and foundations (11%), setting an alarming trend.

Rather than retreating during polarization - as 47% of organizations with a stance on DEI, immigrant rights, LGBTQIA+ rights, and expressions of support for Palestinian rights anticipate - large funders must provide countercyclical support. This means multi-year general operating grants that allow organizations to maintain workforce capacity during political and economic turbulence, funding for organizational resilience infrastructure (legal support, security, communications capacity), and explicit commitments to continue funding organizations facing political backlash for mission-aligned work.

The Independent Sector’s research emphasizes that "philanthropic institutions and donors must double down on their funding of groups on the frontlines, rather than pulling back at this vital moment." Large foundations have both the financial capacity and positional authority to stabilize the sector - their participation should not be optional.

Investment In Workforce Reskilling And Upskilling

The experience paradox—where 62% report being overqualified yet struggle to find positions reveals a longstanding mismatch between existing expertise and evolving sector needs. As documented in both the job search survey and Independent Sector’s workforce analysis, over 70% of nonprofit workers have college degrees, yet many lack specific technical competencies increasingly required for impact.

The sector needs coordinated investment in: skills-based training programs that help professionals pivot between issue areas and organizational types; bridge programs that help corporate professionals transition into social sector roles while helping nonprofit professionals develop business skills; cohort-based learning communities that combat isolation while building capabilities; and credentialing systems that validate competencies beyond traditional degree requirements. Such reskilling infrastructure serves dual purposes: helping unemployed professionals become competitive while strengthening the sector’s overall capacity.

Efforts by TechSoup, Nonprofit Ready, and other emerging initiatives exist, but these remain fragmented and under-resourced relative to need.

Regional Safety Nets Through Community Foundations and Networks

While large national foundations can provide capital, regional intermediaries are best positioned to create immediate support systems for displaced workers. Community foundations, regional associations of nonprofits, and local funder collaboratives can and should establish: emergency financial assistance funds for unemployed sector workers (modeled on artist relief funds established during COVID-19); peer support networks and job-search cohorts that reduce isolation while providing practical assistance; connections to pro-bono professional services (legal, financial planning, mental health support); and formalized job-sharing and project-based work arrangements that maintain connection and income during full-time job searches.

The Building Movement Project research emphasizes that "organizations cannot do the hard work of addressing pressing issues in today’s climate without a strong ecosystem of support and solidarity." This principle applies equally to individual workers—the same networks and coalitions that sustain organizations must extend support to displaced professionals who remain committed to the mission. Regional infrastructure is particularly critical given that 37% of surveyed organizations work locally, making place-based support systems appropriate scale for intervention.

Upset stressed young Asian business man in suit with hands on head sitting on stairs. Unemployment and layoff concept.

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This nonprofit organizational crisis is not self-correcting.

Without intervention, the feedback loops will only intensify: organizational fragility leads to layoffs, which floods the job market with qualified candidates, which enables exploitative hiring practices, which drives talent out of the sector permanently, which weakens organizations further.

And those with the power to stabilize the nonprofit sector—major funders, boards, intermediaries—must act with the urgency the moment demands. The question is no longer whether a crisis exists, but whether those who claim to care about social impact will respond before it’s too late.