Behind the Numbers: The Hidden Risks in Nonprofits' 2026 Growth Spurt

CHICAGO, IL – October 26, 2026

In my years as a market analyst before transitioning to a full-time mom, I learned a fundamental truth about corporate reports: the most compelling stories rarely live in the headline figures. They hide in the cross-tabs, the footnotes, and the contradictions between different data points. Today, I bring that same lens to the nonprofit sector, a space where passion often collides with hard economic realities.

This week, BDO USA released its 10th annual 2026 Nonprofit Standards Benchmarking Report. Based on a survey of 250 nonprofit leaders across health, human services, higher education, and public charities, the top-line summary paints a picture of resilient optimism. According to the data, 90 percent of nonprofits anticipate growth over the next 12 months, and nearly three-quarters expect to introduce new programs without eliminating existing ones.

“Nonprofit leaders are making critical decisions about how to sustain their missions, invest in their organizations, and meet growing needs amid continued economic pressures, a changing funding landscape, and an evolving policy landscape,” said Robby Vanrijkel, National Nonprofit & Education Practice Co-Leader at BDO USA.

Vanrijkel is right about the pressures, but when we look closer at the underlying data—and cross-reference it with broader macroeconomic indicators—a more complex, and somewhat precarious, narrative emerges. The sector is pivoting aggressively toward operational maturity and technological integration, yet it remains haunted by impact measurement deficits and significant governance blind spots.

The Program Paradox: Growth at the Expense of Measurement?

One of the most striking statistics in the BDO report is that 74 percent of organizations plan to roll out new programs over the next year without sunsetting old initiatives. On the surface, this looks like a triumph of capacity and ambition. The report also notes that the share of nonprofits holding seven to 12 months of operating reserves grew from 24 percent to 32 percent.

However, this expansionary zeal masks a critical operational strain. The same report reveals that 59 percent of nonprofits say inadequate technology poses a challenge to gathering information on program impact, and half cite insufficient staff to actually collect that data. Furthermore, 49 percent identify the lack of a consistent measurement and reporting framework as a major hurdle.

This creates what we might call the "Program Paradox." Organizations are widening their nets, but they lack the internal infrastructure to prove that these new initiatives are actually working. As one sector analyst recently observed, donor retention rates have been hovering near 32 percent, and philanthropic grantmakers are increasingly demanding verifiable returns on investment.

When we contextualize BDO's sample—250 leaders—against the broader U.S. landscape of over 1.6 million active 501(c)(3) organizations, the optimism feels a bit top-heavy. Data from independent sector researchers shows that last year, 81 percent of organizations struggled to raise enough funds to cover all costs, and 36 percent ended their fiscal year with an operating deficit. While the organizations in BDO's survey may be padding their reserves, the broader reality is that expanding services without the ability to measure their impact is a high-risk gamble in a climate where inflation-adjusted charitable giving is under immense pressure.

The AI Blind Spot: When IT Operates in a Silo

Perhaps the most fascinating—and alarming—finding in the report relates to artificial intelligence. A staggering 70 percent of surveyed nonprofits have formally adopted AI in at least one area of their operations, with 27 percent integrating it across multiple departments.

Technology adoption is generally a positive indicator of modernization. But the devil is in the governance. The BDO data reveals that 58 percent of these organizations manage AI oversight strictly within their IT departments.

From a risk management perspective, relegating AI oversight solely to IT is a massive blind spot. AI is not just a software implementation issue; it is a cross-functional web of ethical, legal, and operational liabilities. When IT drives the bus without a dedicated, multi-disciplinary committee, organizations expose themselves to profound vulnerabilities.

Legal experts within the nonprofit space have repeatedly warned about the compliance liabilities associated with AI. Automated systems that process donor information or beneficiary data must navigate a complex web of privacy laws, such as the CCPA or GDPR. Furthermore, AI models are infamous for inherent biases. If a health and human services organization uses an algorithm to determine resource allocation, and that algorithm has not been vetted by program directors and ethical advisors, the nonprofit risks perpetuating the very inequities it exists to fight.

While 52 percent of nonprofits are increasing spending on risk management and compliance, the siloed approach to AI suggests that executive boards have not yet grasped the unique, enterprise-wide threats posed by generative technologies.

Higher Education's Demographic Reckoning

Alongside the main benchmarking report, BDO released a companion snapshot examining higher education institutions. Here, the numbers tell a story of an industry bracing for impact.

While most colleges and universities report revenue growth, the percentage has visibly declined—dropping from 92 percent in 2025 to 82 percent this year. Economic uncertainty and budget constraints are the top cited challenges, weighing in at 40 percent and 38 percent, respectively.

As someone who tracks long-term demographic trends, this slowdown is not a surprise; it is the early tremor of the much-discussed "demographic cliff." Following the 2008 financial crisis, U.S. birth rates plummeted. Now, nearly two decades later, that drop translates directly into a shrinking pool of traditional college-aged students.

To cushion this blow, higher education is being forced into a rapid digital pivot. The BDO snapshot indicates that 44 percent of institutions are expanding online and remote learning to encourage enrollment, while 52 percent are expanding digital and mobile giving platforms to reach younger, digitally native donors. Technology remains a spending priority for 72 percent of these institutions, with the primary goal being improved operational efficiency.

Yet, much like the broader nonprofit sector, this digital pivot comes with growing pains. Universities are heavily reliant on tuition and state funding, both of which are volatile. Expanding online learning requires massive upfront capital for technology infrastructure and faculty retraining, expenditures that must be made precisely when revenue growth is cooling.

The 2026 Nonprofit Standards Benchmarking Report ultimately reveals a sector at a critical transition point. The data shows that nonprofits and universities are no longer just surviving; they are actively attempting to innovate their way out of economic uncertainty. But as the numbers clearly show, true resilience requires more than just launching new programs or buying new software. It requires the unglamorous, behind-the-scenes work of building robust measurement frameworks, breaking down departmental silos, and ensuring that technological ambition never outpaces ethical and operational governance.