Nonprofit Guide 2026: Nonprofits remain vital as challenges grow

A new analysis from the Nonprofit Institute at the University of San Diego demonstrates both the enduring strength and growing challenges of San Diego’s nonprofit sector. From hospitals and after-school programs to arts organizations and food banks, nonprofits remain vital to the region’s health and well-being, providing services that touch every resident’s life.

The annual State of Nonprofits and Philanthropy report draws from a variety of data sources, including quarterly polls of San Diego residents, an annual survey of nonprofit leaders, a survey of local foundation leaders, the most recently available IRS tax filings from nonprofits and philanthropic organizations, and data on nonprofit wages and job postings.

Nonprofit Guide 2026: More on all the sectors 

The full report will be released in January, but early glimpses point to several trends in San Diego’s nonprofit sector, including how deeply San Diegans value nonprofits.

For instance, the institute’s 2025 public opinion poll shows San Diegans overwhelmingly believe that nonprofits are essential to their communities. Nearly two-thirds of residents reported that nonprofits are very important to their community and 78% reported having benefited from a nonprofit in the past 12 months.

Residents not only recognized the importance of nonprofits but reported trusting them more than any other sector to act on the public’s behalf and deliver quality services. This confidence reflects the deep relationships nonprofits have built over decades of service, often extending into neighborhoods and populations that other institutions cannot easily reach.

Yet behind this strong foundation lies growing concern. Eighty-four percent of San Diegans expressed concern about losing access to critical nonprofit-provided services such as healthcare, after-school programs, childcare and food assistance — especially as many of the organizations providing these essential supports face financial uncertainty.

“Nonprofits continue to do what they’ve always done — care for our communities,” said Laura Deitrick, executive director of The Nonprofit Institute. “But we are entering a period where the need has not diminished, while the funding that sustains this work is under increasing pressure.”

A growing sector in a time of strain

The institute’s review of the most recent IRS data (2023) shows that the local nonprofit sector continues to expand in number, assets and employment, signaling strong public demand and organizational resilience. Philanthropic assets have also grown, reflecting continued generosity across the region.

However, this growth masks an emerging crisis. Nonprofits that rely heavily on government funding are experiencing significant cuts and funding uncertainty at the federal, state and local levels. Moreover, these shifts in government funding priorities have led to funding uncertainties across other nonprofit revenue sources as well, including foundation grants, individual donations and corporate sponsorships.

In an institute survey of nonprofit leaders administered in May, the majority of respondents reported anticipating funding cuts across all revenue streams.

“While community needs remain the same or, in many cases have intensified, funding streams are becoming less predictable. That makes it harder for nonprofits to plan ahead and sustain the level of service our region depends on,” said Tessa Tinkler, director of research at The Nonprofit Institute.

Community trust, shared responsibility

The institute’s research has long documented the nonprofit sector’s critical role as both an economic driver and a social safety net. Nonprofits employ tens of thousands of San Diegans and generate billions in local economic activity, while also filling essential service gaps.

As government resources tighten, community giving becomes more vital than ever. The data show that residents already view nonprofits as trusted, community-based problem solvers.

Now, that trust must translate into tangible support — through donations, volunteerism and advocacy — to ensure these organizations can continue meeting community needs, institute officials said.

“Every San Diegan has a connection to a nonprofit, whether they realize it or not,” said Deitrick. “The arts we enjoy, the parks we visit, the healthcare we receive, the shelters and food programs that sustain families — all of these rely on the nonprofit infrastructure that holds our region together.”

Overall, the annual State of Nonprofits and Philanthropy Report paints a picture of a sector that is both resilient and at a crossroads — growing in scope and significance but facing a narrowing financial path.

“Nonprofits have always been there for San Diego,” said Tinkler. “Now, San Diego needs to be there for them.”