President Trump’s newly released Fiscal Year (FY) 2026 “skinny” budget outlines sweeping federal spending cuts that would deeply impact public services and nonprofit organizations. The proposal calls for a 22.6% ($163 billion) reduction in domestic discretionary spending, while increasing defense funding by 13%. The budget slashes critical programs in education, housing, environmental protection, public health, and more, while openly targeting nonprofit institutions as “wasteful” and ideologically driven. If enacted, these cuts could have severe consequences for vulnerable communities across the country.

Key Highlights from the Budget Proposal

President Trump’s FY2026 “skinny” budget proposes:

  • 22.6% cut ($163 billion) to domestic discretionary spending
  • 13% increase in defense spending
  • Increased funding for homeland security

OMB Director Russ Vought explained that the administration believes federal spending is “laden with spending contrary to the needs of ordinary working Americans” and criticized funding for nonprofit organizations and institutions of higher education as advancing “radical gender and climate ideologies.”

The budget identifies and denigrates specific nonprofit organizations as “wasteful,” “liberal,” and pushing a “leftist agenda.”

Proposed Cuts to Programs and Services

The following departments and programs would be among the most severely affected:

  • Education, HUD, Labor, Interior, EPA, USAID
  • Infrastructure Investment and Jobs Act: cut by $15.2 billion
  • Energy efficiency programs: cut by $2.6 billion
  • FEMA preparedness grants: cut by $646 million
  • Substance use disorder programs (SAMHSA): cut by $1.06 billion
  • EPA clean and drinking water support: cut by $2.46 billion
  • Refugee assistance: cut by $650 million
  • Fair housing enforcement: cut by $60 million
  • Low-income heating assistance (LIHEAP): cut by $4 billion
  • Community Services Block Grants: cut by $770 million
  • Rental assistance & affordable housing: cut by over $30 billion
  • AmeriCorps and other workforce programs: proposed elimination

Escalating Tensions with the Nonprofit Sector

The budget continues a trend of executive actions aimed at weakening the nonprofit sector:

  • In January 2025, the White House attempted to freeze all federal financial assistance, prompting the National Council of Nonprofits (NCN) to file litigation.
  • The administration has terminated contracts, rescinded grants, and refused to allocate congressionally approved funding.
  • President Trump threatened to revoke Harvard University’s nonprofit status.
  • DOGE staff were assigned to oversee the Vera Institute, an independent nonprofit receiving federal funding.

What’s Next?

While the skinny budget signals the administration’s funding priorities, Congress holds the power of the purse. A more detailed budget is expected later this month, followed by the start of the FY2026 appropriations process in the House and Senate.

Congress must pass final spending bills or a continuing resolution (CR) by October 1 to avoid a government shutdown.

Call to Action

As federal funding decisions take shape, nonprofit leaders, advocates, and community members must:

  • Stay informed
  • Connect with partners and coalitions
  • Engage with elected officials

Our collective voice is critical in protecting the programs and institutions that ensure equity, safety, and opportunity in communities across the country.