The Nonprofit Data Divide: How Small Charities Are Left Out of Cybersecurity Funding

When a Pennsylvania food bank fell victim to a malware attack last spring, its volunteers were stunned. The organization had served the community for decades but had never considered itself a target for hackers.

“We’re not a bank or a big company,” said its director. “We help families put food on the table. Why would anyone attack us?”

Within hours, donor data and payment records were encrypted and their operations came to a halt for
nearly a week.

Stories like this are becoming more common across the nonprofit sector. Despite handling sensitive financial and personal data, many small charities operate on razor-thin margins that leave cybersecurity out of reach. While government agencies and corporations receive billions in federal and state cybersecurity funding, community-based organizations rarely qualify. Experts are calling it the “nonprofit data divide.”

A report from the Cyber Readiness Institute (CRI) found that small to medium-sized businesses (including nonprofit organizations) face significant cybersecurity challenges due to “limited budgets, expertise, and time”. In addition to this, research shows that nearly 45% of nonprofits admit to not spending enough money on technology or investing in their cybersecurity infrastructure. Few have full-time staff dedicating to data privacy operations.

“These organizations aren’t just underfunded; they’re digitally abandoned,” says a cybersecurity researcher at the University of Maryland. “They manage sensitive donor information, but they’re excluded from most funding programs designed to protect critical infrastructure.”

The federal government’s State and Local Cybersecurity Grant Program, which distributes hundreds of millions each year to strengthen digital defenses, primarily benefits municipal and state agencies. Nonprofits, unless explicitly tied to government contracts, often don’t qualify.

“There’s an assumption that charities don’t face the same level of threat,” says the researcher. “That’s outdated thinking because hackers go where the data is easiest to steal.”

The consequences go beyond financial loss. Breaches in the nonprofit world erode public confidence and undermine missions built on trust. Donors expect their information to be safe; when it’s not, the damage reverberates. In one 2023 case, cybersecurity experts found an unsecured database belonging to DonorView, a platform used by many nonprofit organizations. The breach unfortunately revealed over a million records containing donors’ personally identifiable information (PII) such as their names, payment details, and contact information.

In another 2023 case, news reported incidents of hackers and threat agents targeting animal rescue organizations by hijacking their social media pages. Scammers posted fake donation appeals intended for these charities in an effort to entice donors to give to their scams.

Larger nonprofits are beginning to recognize the risk and act accordingly. Organizations like the Red Cross and Habitat for Humanity have invested in dedicated cybersecurity teams and data compliance protocols. But smaller charities often rely on free antivirus tools and volunteer IT support. Many assume that cloud-based systems automatically provide adequate protection which is a dangerous misconception.

“Cloud vendors are secure,” the researcher explains, “but if nonprofits don’t configure them correctly, they’re still vulnerable.”

Advocates argue that the solution lies in policy reform and resource sharing. Some states, including Maryland and Colorado, have begun pilot programs to help nonprofits access training and shared cybersecurity infrastructure. Others are calling for federal grant carveouts specifically for small charities.

“Cybersecurity should be viewed as part of operational overhead, just like accounting or insurance,” the researcher adds on. “Without it, the risk is systemic.”

For now, organizations like the food bank remain caught between goodwill and vulnerability. Their mission depends on public trust which is a fragile resource that, once broken, takes years to rebuild. As cyber threats evolve, so too must the definition of community care. Protecting donors, beneficiaries, and data isn’t just a technical necessity, it’s an ethical one.

Anne Woappi
Independent Author & Investigative Journalist

The Hidden Costs of Data Breaches in Small Charities

For small charities, a data breach can feel like a lightning strike. These breaches can feel sudden, confusing, and devastating. But unlike the immediate shock of the event, the damage they leave behind lingers for years. Lost donor trust, regulatory fines, and reputational harm often outlast the initial incident. In the nonprofit sector, where relationships are built on transparency and goodwill, those consequences can be existential.

When a Baltimore-based youth services charity fell victim to a ransomware attack in 2023, the organization didn’t just lose access to donor files. They lost credibility.

“We spent months rebuilding our database,” said the director, who requested anonymity due to ongoing legal negotiations. “But the real loss was confidence from our funders and from the families we serve.”

Financial losses are only part of the picture. A 2023 report of Geneva-based NGOs found that 41% had been a victim of a cyberattack. In addition, the 2024 State of SMB Cyber Readiness Report by the Cyber Readiness Institute highlighted the urgent need for proactive measures to be implemented in data controls by small and medium-sized businesses (SMBs) in order to build cyber resilience.

Data research indicates that while some nonprofits may spend nearly $50,000 recovering from cyber incidents, not including the cost of rebuilding public trust, other studies place the cost of recovery for nonprofits or small businesses to be much higher. For organizations with annual budgets under $500,000, that can mean diverting funds from programs directly serving vulnerable populations.

Beyond the balance sheet, reputational damage carries a quiet, long-term cost. Donors often
hesitate to reengage with breached organizations, even after security improvements.

“Trust is a delicate currency,” says a Maryland-based donor and cybersecurity researcher at the University of Maryland. “Once it’s broken, no amount of compliance paperwork can repair it quickly.”

Small charities face a unique challenge: they’re required to protect sensitive donor and beneficiary information under the same legal frameworks that govern larger institutions, but they lack comparable resources. Many rely on volunteers or part-time staff to manage databases, leaving room for human error such as a misplaced laptop, a weak password, or a forgotten cloud backup.

Even with insurance, recovery can be slow. Cyber liability policies often exclude social engineering attacks or phishing-based incidents which are the very tactics that most often target smaller organizations. Legal costs, forensic investigations, and mandatory notifications add up quickly. And while large corporations can absorb those expenses, small nonprofits often face operational paralysis.

Experts recommend three critical steps for prevention: staff training, encryption of donor data, and incident response planning.

“You don’t need a six-figure budget,” the director notes. “You need awareness, discipline, and policies that make security everyone’s job.”

Some nonprofits have begun pooling resources through state-level coalitions, sharing threat intelligence and vendor contracts to cut costs.

Ultimately, the hidden cost of a breach isn’t measured only in dollars. It’s in diminished trust, lost partnerships, and the emotional toll on teams working to make a difference. For small charities, cybersecurity isn’t just a technical safeguard, it’s an ethical obligation to the people and causes they serve.

Anne Woappi
Independent Author & Investigative Journalist

How Nonprofits Handle Donor Cybersecurity

In the nonprofit world, trust is currency. Donors give not only their money but also their
personal information including their names, emails, payment details, and sometimes even social security numbers for tax purposes. Yet, many small and midsize nonprofits operate without the robust cybersecurity frameworks that protect corporate or government systems. This investigative look examines how nonprofits handle donor cybersecurity and where they fall short.

When a Maryland utility-assistance organization suffered a suspected phishing attack in 2020, staff
discovered how thin their cyber defenses really were.

“We relied on goodwill and basic antivirus software,” admits one former employee. “Once a donor reported suspicious emails, we realized how vulnerable we were.”

Their experience is far from unique. According to the Nonprofit Technology Network (NTEN), nearly 60% of nonprofits lack a dedicated IT security budget.

The problem often begins with underfunding. Nonprofits prioritize program delivery over digital infrastructure. But with donor data becoming a target for cybercriminals, experts warn that ignorance is no longer an excuse.

“Hackers see nonprofits as soft targets,” says a cybersecurity researcher at the University of Maryland. “They hold valuable financial and personal data, but lack resources to defend it.”

Some nonprofits are taking proactive steps. Organizations like the Red Cross and Save the Children have invested in threat monitoring and zero-trust architecture. Smaller groups, however, rely on cloud-based CRMs and third-party vendors like Salesforce, Raiser’s Edge, or Classy and assume that these vendors handle all security needs. But this creates blind spots: misconfigured databases, weak passwords, and untrained staff can still lead to data leaks.

A 2024 report by CyberPeace Institute found that nonprofits experienced a 30% year-over-year increase in weekly cyberattacks in 2024.

“Human error remains the number one threat,” suggests a donor with a background in data privacy. “You can’t secure data if your staff doesn’t know how to recognize a phishing email.”

Experts recommend that nonprofits adopt the NIST Cybersecurity Framework, require
multi-factor authentication, and provide annual security training for staff. Donors, meanwhile, can take their own precautions by verifying website legitimacy, donating through secure gateways, and asking how their data will be used and stored.

As cyber threats evolve, the nonprofit sector faces a crossroads: treat donor data as sacred trust or risk reputational damage and financial loss. In an era where giving depends on confidence, cybersecurity is no longer a technical issue, it’s a moral one.

Anne Woappi
Independent Author & Investigative Journalist