It’s no secret that federal funding cuts are having a huge effect on nonprofits. Between January 20 and April 30, 2025, nonprofits shed at least 14,400 full-time jobs, often in international and foreign affairs, national security, healthcare and human service organizations.1
Not only have nonprofits had large layoffs, but remaining employees are fearful of losing their jobs. Employee wellbeing — including physical, mental and financial wellbeing — has suffered, resulting in lower productivity, engagement and retention.
Unfortunately, there’s no end in sight to funding woes and subsequent job cuts. For nonprofit leaders in HR and management, those conditions make it important to support employees through effective benefits and wellness initiatives.
Nonprofit employee benefits are needed more than ever
Nonprofits must balance their mission and business management. Upfront compensation in nonprofits usually lags the private sector; to stay competitive in recruiting and retention, nonprofits often will offer rich employee benefits.
But the funding uncertainty has forced difficult management decisions on organizations to stay afloat, much less deliver on their mission. Nonprofits that have already let staff go may need to reduce benefits and increase the employees’ share of benefits costs.
However, cuts in one area may demand improving employee benefits in another. The effect of reduced funding that results in layoffs can leave remaining employees shellshocked, fearful of their futures and unable to work with sufficient levels of engagement.
Three ways to help strengthen nonprofit employee benefits
Nonprofit budgets are tight, but there are ways to support employees despite limited resources. Here are three ways nonprofits can help employees in need through their benefits:
- Improve mental health benefits. Job insecurity and “survivors’ guilt” have resulted in employee disengagement with their jobs. Nearly all (95%) of nonprofit CEOs are concerned about their employees burning out, and more than half of those CEOs are experiencing burnout themselves.2 To keep employees engaged, it’s essential to maintain mental health benefits. An employee assistance program (EAP), for instance, gives employees access to independent professionals for short-term counseling, mental health referrals and training. It’s important to communicate that this benefit is available.
- Emphasize existing and low-cost, creative benefits. Organizations can help employees manage through existing benefits like physical and financial wellbeing programs. In addition, they can consider low-cost, creative benefits and perks, like providing space for meditation or yoga, and encouraging employees to disengage with their phones and the internet to reduce stress and remain present for the job.
- Consider job outplacement services. Providing outplacement for laid-off employees reinforces an organization’s commitment to staff and sends a message that remaining employees are valued. In addition, outplacement services can assist employees in finding new jobs, helping reduce unemployment claims.
Underlying these steps is a transparent, empathetic communication with the entire workforce. Letting employees know you understand their circumstances and the difficulties of uncertainty will help them navigate the current environment.
Contact HUB International’s nonprofit and employee benefits insurance specialists to help navigate turbulent times for your organization and employees.
1 Chronicle of Philanthropy, “10,000 Job Cuts in 70 Days. Introducing the Nonprofit Layoff Tracker,” accessed May 30, 2025.
2 Social Current, “Navigating Workforce Challenges: 2025 Trends and Solutions for the Social Sector,” Feb. 4, 2025.
