Health of entities serving low- and moderate-income communities

By Nishesh Chalise, Violeta Gutkowski, Steven Howland, Becky Kropf

August 19, 2025

This two-part report provides an overview of economic conditions in low- and moderate-income (LMI) communities and among the entities serving them based on a national survey conducted by the Federal Reserve during April and May 2025. This information is intended to help equip decision-makers with key insights for developing approaches to foster economic security in LMI communities.

Part 1 of this report addresses economic conditions in LMI communities, while part 2 focuses on the health of the organizations that work in them. Throughout, we offer quotes from those serving LMI communities to provide additional context to the survey results.

The survey asked respondents to provide self-assessment on various factors, including demand for services, ability to provide services, revenue, and expenses which are likely to impact their organization’s health. Overall, respondents indicated that they are able to serve their communities well, but that challenges with funding and lack of staffing are putting pressure on their ability to fully meet demand. Additionally, adapting to uncertainty is a new challenge that entities brought up in this survey.

Main findings for entities serving LMI communities

Overall, entities responded positively in terms of their ability to serve their communities; however, they also reported considerable challenges. When asked about the entity’s current situation compared with last year, 80% reported an increase in demand for their services, while 83% reported increased expenses. Additionally, entities noted that funding and fundraising were their top challenges. These challenges have hampered entities’ ability to fully meet their demand for services; only about one-third of respondents reported being able to do so.

Ability to serve

A majority of entities (76%) reported they are able to serve their communities well. Forty percent of respondents indicated that their ability to provide services has improved since 2024, and a similar percentage expect their ability to serve LMI communities to continue improving in the year ahead (Figure 1).

Financial health

Entities’ financial health was mixed. About half of respondents indicated that their organizations are facing at least some stress, while the other half responded that they are doing fine. Specifically, 39% indicated that they are facing some stress and are trying to find efficiencies to save money; another 11% of entities reported being under a lot of stress and having to cut positions or programs (Figure 2). On the other hand, 34% of respondents described their financial health as steady with no changes expected for the year ahead, and another 14% indicated they are very healthy and are expanding services.

Figure 2: Organizations’ Financial Health

(N=319)

Demand for services

In April 2025, almost 80% of respondents reported that demand for services had increased over the preceding year, with 35% stating that demand had increased significantly (Figure 3). Higher demand places additional pressure on entities’ ability to meet the needs of LMI communities. Figure 4 shows that only about 10% of respondents were able to meet most (75%-100%) of their demand in 2024. While 30% of entities indicate that at the time of the survey, they could meet most of their demand. Only 15% of entities expect to meet most of their demand in the coming year.

Respondents noted that they expect a combination of a lack of funding, a lack of staff and/or volunteers, and an increase in demand to have an adverse impact on their ability to meet demand going forward.

“Federal uncertainty/changes are creating a huge drag on the organization—taking time, attention, and resources away from meeting demand/need for services.”

Staffing

Changes in staffing levels over the preceding year were mixed across respondents. Some entities (29%) reported an increase in their staffing levels, while others reported a decrease (27%) or no change (43%) since 2024. (Figure 5). Nearly twice as many respondents indicated staffing did not change as compared to either decreases or increases in staffing.

Expenses

During the survey period, 83% of respondents indicated that their entities had experienced increased expenses in the preceding year (Figure 6).

Sources of funding

The responses for changes in revenue compared with those of the preceding year were mixed across respondents. Figure 7 shows that 31% of respondents indicated that revenue had increased, 27% reported that revenue had remained unchanged, and 40% reported that it had decreased.

Government funds represented the top source of revenue for 35% of respondents, followed by fees for services (20%) and foundation funds (14%).

The following section (Figures 8 to 13) highlights how revenue from six different sources changed over the past year. Note that only entities identifying a particular source of revenue as one of their top three sources were asked about changes in that source. For example, if an organization did not include government funds as one of its top three sources of revenue, then the organization was not asked about changes in government funds.

More entities reported a decrease in funds than those reporting an increase across all sources except fees for services and credit/loans. Over 35% of the organizations relying on fees for services reported an increase in funding from this source over the past year. However, the organizations that saw the biggest increase in funding were those that relied on credit and loans, reporting a 41% increase.

Respondents did note a significant decrease in government funds. About 63% of entities for whom government funding was their top source of revenue reported experiencing a decrease compared to the previous year. Nearly a quarter of organizations relying on government funding reported their funding significantly decreased—the largest share for any funding source by a large margin.

“Our main fee-for-service contract has been dependent on the federal budget, and much of our funding has felt uncertain”

Respondent profiles

Endnote

1. Percentages are the share of respondents ranking the item as the No. 1 factor. Overall ranking is based on a weighted ranking of the top three factors.

About the survey

The Federal Reserve System performs five key functions that serve all Americans and promote the health and stability of the U.S. economy and financial system. Understanding the obstacles that may hinder lower-income and under-resourced communities’ greater participation in the economy offers the Federal Reserve valuable insight into the challenges they, and the entities that serve them, face. To that end, from 2020 to 2023, the Federal Reserve System conducted surveys, called “Perspectives from Main Street,” to better identify the range of challenges facing LMI communities as an effect of the COVID19 pandemic. In 2024, the survey was renamed “Community Perspectives,” and it continues as a national survey aimed at reporting the economic conditions of LMI communities and the health of entities serving them. This survey has two objectives: 

1. Monitor the economic conditions of LMI communities
2. Understand the needs and capacity of organizations serving LMI communities 

The most recent survey was open from April 14, 2025, to May 23, 2025. Responses were collected through a convenience sampling method that relied on contact databases to identify representatives of nonprofit organizations, financial institutions, government agencies and other community organizations. These representatives were invited to participate in the survey via emails, newsletters and social media posts. The survey had a total of 440 responses from entities that serve LMI communities. However, the total number of responses across sectors could differ since not all entities serve in all areas. Respondents were asked to select a topic area based on their entities’ top programming areas and to answer questions related to that sector specifically and not others.