San Diego Nonprofits Struggle with Funding Despite Rising Demand

Report finds 93% of San Diegans believe nonprofits are important, but 81% of organizations face funding cuts

Published on Feb. 11, 2026

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A new report from the University of San Diego's Nonprofit Institute found that demand for nonprofit services in San Diego County is increasing, even as the financial health of these organizations is rapidly deteriorating. The data shows that 93% of surveyed San Diegans believe nonprofits are important to their communities, and 82% have benefited from them in the past year. However, 81% of the county's 13,000 nonprofits reported reductions in funding from government, corporate sponsors, foundations, and individual donors.

Why it matters

Nonprofits play a crucial role in San Diego's civic infrastructure, providing essential services and community support. The funding challenges they face threaten their ability to meet the growing demand, potentially leaving vulnerable populations without access to critical resources.

The details

The report found that 68% of San Diego nonprofits saw an increase in demand for services, but 81% reported reductions in funding. Only around 25% of the county's nonprofits have paid employees, with the rest relying on volunteers. Additionally, about 30% of the nonprofit sector's funding comes from government sources, with 25% from grants. The lack of funding is evident, with 31% of San Diego nonprofits reporting their financial health as "very weak" or "somewhat weak" in 2025, compared to 13% in 2023.

  • The University of San Diego's Nonprofit Institute released the 2025 State of Nonprofits and Philanthropy Report on February 12, 2026.

The players

The Nonprofit Institute at USD

A research center at the University of San Diego that focuses on the nonprofit sector and philanthropy.

Laura Deitrick

The executive director of The Nonprofit Institute at the University of San Diego.

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What they’re saying

“When communities face uncertainty, nonprofits are often where people turn, not only for services, but for connection, creativity and shared civic life. Our data show that San Diegans continue to trust and rely on nonprofits across the sector even as funding conditions erode, with real implications for those doing the work and for the communities they serve.”

— Laura Deitrick, Executive Director, The Nonprofit Institute (nbcsandiego.com)

“Taken together, these patterns raise important questions about how well nonprofit civic infrastructure is positioned to absorb continued change. Reduced public sector investment does not eliminate need; it shifts costs into other systems and weakens the frame that holds communities together. Strengthening nonprofit capacity is not a matter of generosity. It is a matter of responsible stewardship of the systems San Diegans depend on.”

— Laura Deitrick, Executive Director, The Nonprofit Institute (nbcsandiego.com)

What’s next

The Nonprofit Institute plans to release further analysis and recommendations to address the funding challenges facing San Diego's nonprofit sector.

The takeaway

The report highlights the critical role nonprofits play in San Diego's communities and the need for increased funding and support to ensure they can continue to meet the growing demand for their services. Addressing the nonprofit sector's financial challenges is essential for maintaining the civic infrastructure that San Diegans rely on.