Surviving the Trumpocalypse
In the wake of President Trump's return to office and the establishment of Elon Musk’s Department of Government Efficiency (DOGE), nonprofits need to plan for impending disaster. I’m calling it the Trumpocalypse (apologies to David Frum), but you don’t need to have a particular political ideology to believe it’s coming.
The Trumpocalypse has nothing to do with politics; rather, it’s a perfect storm of financial challenges. The combination of an anticipated economic slowdown and potentially significant reductions in government funding threatens community benefit organizations already operating on thin margins, with many (especially in the arts) still reeling from the 2020 pandemic.
Economic Warning Signs
You just need to look at key economic indicators to see turbulence ahead:
Inflation unexpectedly rose in January 2025.
The Conference Board’s Leading Economic Index for the US fell in January, reversing most of the gains from the previous two months.
Consumer sentiment turned more pessimistic in January, which could impact spending and economic activity.
Consumer credit got worse, with credit card delinquencies remaining near historic highs. Serious consumer credit delinquencies have increased across most loan categories, including mortgages, auto loans, and credit cards. Meanwhile, he share of credit card holders making only minimum payments has reached a record high.
So we’re already headed for a potential economic contraction in 2025, just as the DOGE begins implementing its promised 10% across-the-board federal budget reductions. And stalled progress in curbing inflation may get worse with tariffs, leading the Federal Reserve to face problems in lowering interest rates to stimulate the economy.
In short, if I’m right, donors will get squeezed, arts audiences will get squeezed, and service recipients will need more support.
Learning From History: The Early Eighties
We've seen this movie before. When President Reagan took office in 1981, his administration implemented dramatic cuts to social service programs. The impact on nonprofits was devastating.
Federal funding for many nonprofit sectors decreased dramatically, with some areas facing reductions of up to 62%. Simultaneously, demand for nonprofit services increased.The Reagan administration believed that reduced government support would naturally lead to increased volunteerism and stronger charities. Mostly, in the short term, it didn’t.
This time is bound to be worse because the number of out of work public sector employees may worsen economic conditions, while the chaotic changes at the federal level force businesses to become more conservative with investments.
Hunkering Down for the Coming Storm
What might this environment mean for the nonprofit sector?
For organizations heavily dependent on government contracts and grants, the math is sobering, with potential funding gaps of 20% or more. But don’t think you’re out of the woods if you focus on other areas. A receding tide leaves all boats aground. Donor financial pain, major donor business pullbacks, a shift in giving towards much needed social services, and cutbacks in government programs that affect nonprofits indirectly could damage everyone in this sector.
So how do you avoid forced program reductions just as community needs increase? Staff layoffs and burnout among remaining employees? Increased competition for foundation and individual donor dollars? Possible mission drift as your organization chases available funding rather than staying true to its core purpose?
You need strategy and execution.
Umbrellas for the Trumpocalypse
Fortunately, there are important steps you can take now.
The first and foremost is to look carefully at your strategy. Are there non-core activities you should be jettisoning? Now would be a good time to do so. Can you make a more compelling case to supporters by refocusing on a core mission? This is the time to refocus. If you narrow your focus, can your daily operational activities better reinforce each other? You can at least try.
Fortunately, now is also a great time to improve how well you execute on your mission. AI to the rescue! (Or at least to the wound care.)
Artificial intelligence offers community benefit organizations powerful tools to weather this storm through both cost cutting and revenue increases. AI can reduce administrative overhead through automated donor and volunteer communications, streamlined grant writing and reporting, enhanced program evaluation, more efficient case management and more.
On the revenue side, AI can improve donor targeting to identify high-potential prospects, make communication faster and more personalized, provide predictive analytics that identify donors at risk of lapsing, create custom content about your impact with fewer staff resources, and identify additional grant opportunities you may not have previously considered.
All of these changes will require staff resilience, serious culture change improvement and change management. Organizations that will survive and even thrive during this challenging period will be those that think ahead, plan for various economic outcomes, invest strategically in AI, develop staff skills to leverage new technologies effectively, and communicate early and often with stakeholders about challenges and plans to address them.
If there is any silver lining, nonprofits that embrace technological innovation while remaining true to their missions will emerge from this period stronger and more effective than before. It won’t make the Trumpocalypse any more pleasant, but it will hopefully, eventually help the people you serve.