By Lina Irawan 
Nonprofits, the very organizations designed to be pillars of community support, have been reeling from these actions. This onslaught comes at a time when demand for their vital services has simultaneously surged, a direct consequence of deep federal cuts to crucial social safety net programs. This creates a harrowing double bind: resources are shrinking dramatically while the needs of vulnerable populations are expanding. Against this turbulent backdrop, a dedicated research team led by Phil Buchanan and Elisha Rhodes from the Center for Effective Philanthropy (CEP) has been diligently monitoring the fallout and tracking the philanthropic response among US foundations, which collectively control a staggering $1.8 trillion in charitable assets. Their recent report, "The State of Nonprofits 2026," paints a grim picture, concluding with an unequivocal statement: the overall foundation response has been woefully insufficient.
The Trump administration’s offensive against the nonprofit sector marks a significant departure from historical norms. While previous administrations have engaged with the sector in varying capacities, none have embarked on such a systematic campaign to undermine its operational capacity and independence. The freezing of federal funds, for instance, has instantly severed lifelines for organizations heavily reliant on government contracts for essential services like housing assistance, mental health support, and public health initiatives. Terminating existing grants, often without clear justification, has left organizations scrambling, forced to lay off staff and cease critical programs overnight. The specter of politically motivated investigations and the public censure of "specific causes"—which often target advocacy groups working on issues like climate change, racial justice, or reproductive rights—have created a chilling effect, deterring organizations from engaging in constitutionally protected speech and advocacy. Furthermore, the threat of revoking tax-exempt status, the very foundation of a nonprofit’s ability to operate, represents an unprecedented escalation, injecting profound uncertainty and fear into a sector already operating on thin margins. The explicit linking of federal funding to political priorities, as documented by WBUR, transforms non-partisan service delivery into a potential tool for political leverage, compromising the integrity and neutrality of charitable work. This politicization not only jeopardizes immediate funding but also erodes public trust in the sector’s impartiality.
The human cost of these governmental actions is exacerbated by concurrent cuts to social safety net programs. Programs like the Supplemental Nutrition Assistance Program (SNAP), housing vouchers, Medicaid, and child care subsidies have seen significant reductions in federal allocations. These cuts directly increase the burden on local nonprofits, which suddenly find themselves as the last resort for families struggling to put food on the table, keep a roof over their heads, or access basic healthcare. Food banks, once a supplementary resource, are now critical lifelines, yet they are simultaneously facing decreased donations due to economic uncertainty and increased operational costs. Domestic violence shelters, already stretched thin, are being forced to turn away victims. Organizations dedicated to helping low-income families secure housing are paring back services, leaving more individuals and families vulnerable to homelessness. Even environmental organizations, vital for protecting natural resources and combating climate change, are shutting down, highlighting the broad reach of this crisis beyond direct human services. The consequences are far-reaching, affecting the health, stability, and overall well-being of communities nationwide.
The philanthropic sector, particularly the large, endowed foundations, holds immense power and responsibility in this crisis. With $1.8 trillion in charitable assets under their control, and having contributed $117 billion out of a total $617 billion in charitable giving in 2025 (nearly one in five charitable dollars, according to Giving USA), foundations are uniquely positioned to act as a stabilizing force. Unlike individual donors or corporations, many foundations are structured to exist in perpetuity, granting them a long-term perspective and the financial resilience to respond to sustained crises. Their significant endowments provide a buffer against economic fluctuations, theoretically enabling them to increase their giving during times of heightened need without jeopardizing their long-term viability.
The historical precedent for such a response exists. In 2020, at the onset of the COVID-19 pandemic, foundations demonstrated their capacity to step up, increasing their giving by an impressive 15.6 percent in inflation-adjusted dollars over the previous year. This rapid and substantial increase provided a crucial lifeline to nonprofits struggling with the immediate impacts of the pandemic, demonstrating philanthropy’s potential as a critical responder in times of national emergency. Federal funding, in parallel, also flowed into nonprofits through programs like the Paycheck Protection Program (PPP), offering a dual layer of support.
However, the current crisis presents a starkly different, and arguably more dire, scenario. In 2025, despite the compounding pressures of federal attacks and increased demand, foundation giving increased by a mere 3 percent, adjusted for inflation. This anemic response is particularly alarming given the nature of the current threat. Unlike the pandemic, where federal funding provided a temporary boost, the Trump administration’s actions in 2025 and 2026 have actively slashed federal funding for nonprofits. One recent analysis highlighted a nearly 40 percent cut in federal grants to everyday charities—a staggering $14 billion—within just the first eight months of the second Trump Administration. This figure has undoubtedly climbed higher since then, creating an immense funding gap that foundations are demonstrably failing to address.
The CEP’s survey, conducted in May and June of this year, further underscores the inadequacy of the response. A striking 65 percent of independent foundations reported their payout rate as "typical" this year. Many, it appears, are defaulting to the IRS-mandated minimum of 5 percent of their assets spent in charitable distributions. While this 5 percent rule is intended as a floor, it has, for many, become a de facto ceiling, a baseline that is clearly insufficient in a period of unprecedented crisis. Foundation CEOs, when asked to assess their sector’s response, offered only modest marks. Just eight percent believed the overall foundation response to the current context has been "very effective," and only 12 percent graded their own foundations’ responses as "very effective." This self-assessment reveals a troubling awareness of the collective failure to meet the moment, even if individual leaders feel constrained.
The reasons cited for this inaction are varied, yet often reflect a deeper institutional reluctance. A majority of foundation leaders pointed to risk aversion as a primary impediment to more effective action, with many placing the blame on their boards. The desire to protect endowments, ensuring high giving levels in perpetuity, is a frequently voiced concern. While long-term sustainability is a valid consideration, critics argue that the very purpose of an endowment is to serve society, especially during its most challenging periods. What good is a robust endowment if the social fabric it aims to support crumbles in the interim? Some leaders also expressed a sense that there are "insufficient opportunities to make an impact," a perplexing claim given the widespread and urgent needs documented across the country. Others acknowledged that foundation funding "can’t fill all the gaps in federal funding," a true statement, but one that seems to be used as a justification for doing little rather than an impetus to do what can be done. Most disturbingly, a few foundation leaders reportedly expressed hope that this crisis would "weed out the weak nonprofits." This perspective not only betrays a fundamental misunderstanding of the current systemic threats but also demonstrates a troubling detachment from the real-world consequences for essential organizations and the communities they serve.
This "weeding out" mentality is particularly dangerous. The crisis is not selectively impacting only inefficient or ineffective organizations; rather, it is a widespread assault affecting highly effective organizations that have historically been pillars in their regions. These are groups doing essential work to serve the most vulnerable, protect natural habitats, bring arts and culture to communities, and provide a myriad of other critical services. The organizations struggling today are often those with decades of proven impact, deep community roots, and efficient operational models. Their struggles are a direct result of external political and economic pressures, not internal weaknesses. The closure of a domestic violence shelter in a rural area, the rationing of supplies at a food bank, or the shutdown of a popular conservation group represents an irreplaceable loss of vital community infrastructure, not a beneficial culling of the inefficient.
To be clear, there are notable exceptions to this disheartening trend. On the national stage, foundations like Marguerite Casey, MacArthur, and Robert Wood Johnson have admirably stepped up, increasing their giving levels significantly and leveraging their platforms to speak out powerfully in defense of the sector. Regionally, foundations such as Skillman in Detroit and Mary Reynolds Babcock in North Carolina have also demonstrated courageous leadership, providing crucial support to local communities. These foundations exemplify what is possible when philanthropic leaders and their boards prioritize immediate impact and systemic defense over excessive caution or a rigid adherence to "typical" payout rates. They have understood that this moment demands not just financial support, but also moral clarity and advocacy. (It is important to disclose that MacArthur, Robert Wood Johnson Foundation, and Skillman provide grant support to CEP, and Skillman is also a client.)
These examples, however, remain exceptions rather than the rule. The overwhelming evidence suggests that the broader philanthropic sector, despite its vast resources and stated commitment to societal well-being, is largely failing to meet the severity of the current crisis. With record levels of assets in foundation endowments, accumulated often through market gains, there is an undeniable moral imperative and strategic necessity to move more money, and more flexibly, to the nonprofits that are on the front lines of this unprecedented assault. The effects of these organizations’ struggles will become increasingly evident and devastating in the months and years ahead, manifesting as heightened social instability, increased poverty, environmental degradation, and a diminished quality of life for all Americans. It is time for foundation leaders and their boards to reconsider their approach, shed their risk aversion, and unleash the full potential of their charitable assets to protect the vital social sector and the communities that rely on its services.
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