Federal funding cuts have pitted many of New Mexico’s 8,000 nonprofit organizations against each other in a fight for private foundation funding, but a recent report from a New Mexico consulting firm says that pressure actually presents an opportunity to transform the sector statewide.
New Mexico’s nonprofits employ more than 50,000 people and indirectly contribute roughly $1.4 billion annually to the state’s economy. But spending cuts early in 2025, along with federal requirements aimed at defunding “diversity, equity and inclusion” initiatives, have deprived more than one-third of the state’s nonprofits of much of $300 million in annual federal funding, according to a report publicized Aug. 9 from Prospera Partners, a New Mexico consulting firm for nonprofits and small businesses.
“We’ve had clients from everything from the food economy, regenerative agriculture, sustainability, climate change, education, gender issues, everything — cut, cut, cut, cut,” Prospera Partners CEO Vicki Pozzebon told Source NM.
The cuts, including to organizations like the New Mexico Humanities Council, have affected all of the state’s nonprofits, even those that don’t receive any federal funding. That’s because roughly a dozen major foundations in the state are left inundated with requests.
The report, called “A New Way for New Mexico Nonprofits,” draws on years of research as well as a series of interviews with nonprofit leaders. It argues nonprofits can survive the financial hit by coordinating better to reduce overlaps with fellow organizations and reducing the size and influence of their boards, “which often exert unbalanced power over making decisions that affect staff in the everyday,” the report says.
One major recommendation is that nonprofits need to focus more on implementing solutions instead of talking about them, including through values lists or mission statements that don’t often provide a clear path forward. Report author Eileen Everett told Source NM on Wednesday that nonprofits need to focus on what values like “honesty” and “compassion” mean for an organization’s operations.
“What does that really look like in action? Because until we have those conversations, nothing can change, because then we don’t know what we’re aiming to do,” she said.
The report also calls on private foundations to help organizations plan for the future by offering multi-year grants and simplifying application processes. Removing restrictions on what funding can be used for within a nonprofit would also allow organizations to make a bigger impact, the report recommends.
The report identified national foundations including Kellogg and McArthur as the main funding sources remaining for statewide nonprofits, as well as the local Santa Fe, Taos, Albuquerque and Los Alamos National Laboratory community foundations, among others.
Despite the federal cuts and other challenges, Everett said the report offers a path forward for a more sustainable future for a sector in which roughly one in 13 New Mexicans work.
“There is just such an opportunity for change. It’s maybe our best opportunity we’ve ever had,” she said.
