TUCSON, Ariz. (KGUN) — Despite a federal judge blocking a freeze on grant funding last month, nonprofits across Tucson are still feeling the financial strain as crucial funding remains inaccessible.
Organizations that rely on federal grants to support vital community programs say they are facing uncertainty, limiting their ability to plan for the future or respond to immediate needs.
According to Arizona State University’s Lodestar Center for Philanthropy and Nonprofit Innovation, nonprofits make up the sixth largest sector of Arizona’s economy, contributing over 7% of total wages paid in the state.
“We are going to see a major contraction in the nonprofit community if this continues as it is,” said Danny Knee, Executive Director of Community Investment Corporation (CIC). “This is not any way to effectively root out waste, fraud and abuse. You’re actually permanently damaging our social service infrastructure. This is going to eventually be felt in our communities.”
Knee says that decades ago, the government outsourced many of its social services to nonprofits because they are able to be more nimble than a government agency and are closer to issues on the ground. However, he says the freeze makes it more difficult for nonprofits to be nimble as they’re forced to focus on day-to-day operations and keeping the doors open.
Knee also noted that his organization is unsure whether they will be paid for work already rendered under an economic development grant. He says the federal government has frozen grants for 90 days while they’re under review.
“Roughly 12 percent of our budget is currently at risk. It’s frozen and we don’t have access to it,” he said. “And yet, we’re being asked to do that work until the 90 days are up.” He says he’s unsure whether the government will reimburse CIC for the services rendered.
With nonprofits contributing such a large part of the state’s economy, Knee says disruptions to the sector could have wide-reaching economic consequences.
Kimber Lanning, founder and CEO of Local First Arizona, says that problems could persist if grant funding is not unfrozen.
“We haven’t even begun to see the fallout from this,” Lanning said. “If they do continue forward and let the courts sort it out, we’re going to see lots of bankruptcies before we get to any resolution because it will take the courts from a year to three years to sort this out.”
Lanning also criticized the freezing of active grants now frozen by the federal government. “Legally binding contracts are being tossed to the wind,” she said. “You have a small city or town that has spent a million dollars on a project because they were going to be reimbursed and now they’re not. Now they have two crises: They have the immediate impact of not being able to fulfill that project and number two, they have a budget crisis.”
Make Way for Books, a Tucson nonprofit focused on early childhood literacy, is another local organization impacted by the freeze. They work with educators, childcare providers and families, delivering age-appropriate books to develop reading skills for children 0-5 years old.
Their overall goal involves raising reading scores throughout a child’s schooling years and eventually giving them the literacy skills necessary to participate in the larger economy.
The organization spent the past two years decreasing its reliance on federal funding by scaling programs that respond to unique community needs. But with 15% of its budget still coming from federal sources, the group has been forced to scale back programs.
“We had made gains pre-COVID just like lots of states, and then those were lost,” said Yissel Salafsky, CEO of Make Way for Books. “Now we’re trying to play catch-up.”
Salafsky emphasized that the freeze affects more than just individual programs—it limits nonprofits’ ability to adapt to emerging challenges in the community. This includes programs that provide books for children who speak a variety of languages, such as Spanish, Tagalog and Somali.
Salafsky says without consistent funding, organizations must put projects on hold, leaving families and educators without essential services.
“It just puts more strain on the agencies that exist,” she said. “Things will scale down, then they’ll survive and come back up, but meanwhile we’re not able to make an impact on that number of kids who are able to start strong, learn to read, graduate high school and contribute to the economy.”
For now, nonprofits are awaiting further clarification on the status of the grant freeze. On Tuesday, February 25, a federal judge issued an additional injunction against the freeze, blocking the process while a related lawsuit proceeds.
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Joel Foster is a multimedia journalist at KGUN 9 who previously worked as an English teacher in both Boston and the Tucson area. Joel has experience working with web, print and video in the tech, finance, nonprofit and the public sectors. In his off-time, you might catch Joel taking part in Tucson's local comedy scene. Share your story ideas with Joel at joel.foster@kgun9.com, or by connecting on Facebook, Instagram or X.
