(Illustration by Peter Grant)
Nonprofits are facing a crisis, and many in the charitable sector are fearful. As government funding for social good is slashed, even if temporarily, it will have waterfall effects for years to come. Meanwhile, our freedoms to give, to invest, and to speak freely—freedoms that are foundational to our democratic society—are under assault.
Many nonprofits have already gone underwater, and more will. Talented and visionary leaders have left and will leave the sector: An estimated 14,430 full-time jobs in nonprofits were lost as of the end of April. We also see this happening, to our peril, in setbacks to scientific progress. As France Córdova points out in this collection, “Proposed changes to the 2026 US federal budget would mean $30.5 billion in cuts across four of the nation’s major science agencies alone. … By comparison, philanthropy provided an estimated $16.7 billion for science in 2022.”
A pipeline of future nonprofit leaders will choose to pursue different career paths. The consequences will be felt by everyone, in rural, suburban, and urban communities in every state in America—in our access to arts, in the scientific research that improves our lives, in the community safety nets we depend on.
Whether they are speaking about it publicly or not, many in the philanthropic sector want to do something to address the dramatic circumstances in which we find ourselves. We still have a great deal of freedom of action as individuals and as charitable foundations. How can we lean into that flexibility and do the most good in this time of great need?
Increase Funding and Flexibility
This question, in my view, has a straightforward answer for starters: We can all give away more money. We can begin simply by being more generous ourselves and by asking less of others.
On average, MacArthur Foundation grantees get 12 percent of their funding from government grants. A concentrated number are highly vulnerable, receiving 25 percent or more of their funding from government sources. This is not a shortfall they can absorb or that we can accept.
On our best days, charitable foundations function as society’s risk capital. When risk levels are high for society at large, even in a man-made crisis like this one, we have a role to be responsive. We tend to spend more when our endowments go up. Why don’t we spend more when the need is greatest? We should be countercyclical when the situation calls on us to do so. We believe this one certainly does. As Michelle Morales notes in her essay, “Giving must be driven by the needs of the moment—not by the performance of our assets.”
And so, earlier this year, MacArthur responded by increasing our charitable payout from our target of 5.25 percent to 6 percent or more for 2025 and 2026. This commitment is to a higher floor, not a ceiling. This increase amounts to probably $150 million or more in additional giving than what we had planned for this period. We are directing it to organizations that are most vulnerable to these cuts in funding and with whom we are already working on long-standing strategies. Organizations can use these additional, flexible funds to fortify, to pivot, to meet emergent needs, or to seize unexpected opportunities that may arise amid the challenges. Our goal is to lessen negative impacts and risks of the current, man-made emergency and to help our grantees deliver on their mission.
We shared with our colleagues writing for this package some of the questions we discussed that led us to land on that level of giving. We have a commitment to perpetuity in our founding documents, and we determined that we could meet our fiduciary duties with a modest payout increase without violating that commitment. We discussed whether we should prioritize this moment or future crises, but if this is not the proverbial “rainy day,” what is? We also asked if a 6 percent floor was enough to meet the current urgency and the possibility that our endowment would still grow significantly in this time. Based on our scenario planning, we set 6 percent as our floor, with flexibility to go higher.
We also thought about how we might assess institutional and sector-wide transformation coming out of this period. Many of our discussions were rooted in the fundamentals of fiduciary duty and alignment with our mission. It was helpful for us to reframe some of the questions toward the risk of inaction: “If we spend less now, will we have to spend more later to get the same or greater social results?”
I appreciate Jacob Harold’s contribution on this issue: “The cost of inaction is not simply time lost—it is impact foregone.”
Amplifying Impact Through Scale
But can one foundation really make that much of a difference?
Fundamentally, philanthropy is made up of mission- and values-driven organizations. We do not exist to generate revenue or to manage assets; we exist to stand up for our stated values and to support individuals and organizations that can help meet our missions. At MacArthur, we are steadfast in our support to organizations that advance our mission to bring about a more just, verdant, and peaceful world. None of us should bend a knee in compromise to preserve our bank accounts when our freedom to pursue our mission is threatened and when our grantee and investee partners face such peril.
We can always accomplish more together than in isolation. We can make the biggest difference when we collaborate at scale.
Some back-of-the-napkin math reveals that if foundations collectively increased their $100 billion in annual giving, just as MacArthur is doing, they would raise at least an additional $20 billion for the social sector. That does not even include individual donors and other types of giving. We know that some, like the Marguerite Casey Foundation, Freedom Together, and the Woods Fund, are increasing their payout to the double digits. And we know that others, such as the Gates, Stupski, and McClatchy foundations, are planning to spend down entirely in the coming years.
Together we can unlock billions of dollars in funds from foundations, donor-advised funds, and other charitable sources if we act with creativity. As public discretionary funds used for education, research, arts, and national parks have been cut, private wealth has only increased. That has deepened the pool of funds we could tap in private philanthropy.
The increase of funds, while it cannot replace public funding, can go a long way toward helping communities meet their needs. And, as Ben Soskis points out in his essay, being more transparent can help philanthropies make the case for the funding that supports communities: “making public the urgency and tragedy of the philanthropic triage they are compelled to perform, and leveraging that attention to build public support for those programs and institutions as worthy of future government assistance.”
As Naina Subberwal Batra correctly notes, the United States is not alone in cutting funding. The United Kingdom, France, Germany, Australia, and other countries have reduced aid globally. I appreciate Naina’s perspective that this is an opportunity for philanthropy to build more deeply in community, and for Asian philanthropy to tap into rich traditions and cultures of giving.
Building a Broader Coalition
A related, complex question has arisen alongside the question about spending levels: How can we work together to defend freedom of action for our sector? We need to stand up for the freedom to speak, freedom to give, and freedom to invest. I believe one answer to that is to collaborate broadly and strategically.
Increased funding alone will prove insufficient. As circumstances have rapidly developed, it has become clear that we need a systematic approach. We all need to take concrete actions to defend our democracy, our sector, our grantees, and those they serve.
We must do a better job at expanding our worldview and broadening our coalitions. In the philanthropic sector, though we may not share the same beliefs or perspectives, we are prepared to defend core freedoms across ideological divides, to speak up loudly and together.
When more people and organizations contribute their talent, their ideas, and their resources, ripple effects follow. As Olivia Leland points out in her contribution, investing in locally rooted leadership—people who know the challenges communities face the best—is one important way to include a wide range of voices. We can and should lean into the creativity and diversity of approaches and ideas in our sector.
By showing a united front and rooting ourselves in fundamental civic values—values, I would emphasize, that are encoded in the US Constitution—we philanthropists can better defend the nonprofits we support and the communities they serve.
To be sure, those who work for the social good have not built a big enough tent. We have not brought enough perspectives into our coalition, and we suffer the consequences of division.
But we can counter division with unity. To build a strong coalition to defend civil society, we need to bridge differences and find where we have alignment. The more than 700 signatories to “A Public Statement from Philanthropy,” published in April, represent the full range of communities across the United States. And we agree: “We don’t all share the same beliefs or priorities. Neither do our donors or the communities we serve. But as charitable giving institutions, we are united behind our First Amendment right to give as an expression of our own distinct values.”
Brian Hooks emphasizes this point in his essay: “Whether you’re a fan of community-led solutions that prioritize underrepresented people, a dyed-in-the-wool limited government advocate, or both, philanthropy plays a big role in achieving your goal.”
Threats to nonprofits and charitable foundations do not discriminate based on perspective. We cannot afford to act in isolation. We must move together to support the common good.
And it is true: Every charitable institution—a church, a foundation, a library, a hospital—and every individual who wants to live according to their values depends on the freedom to give, to speak, to invest. When we defend the freedom to give, we are defending the right of everyone to support the institutions and issues they care about, regardless of who is in power.
We know we are not going at it alone. Let’s hear more from our peers about what other organizations are doing. What can we be doing better? What new ideas for transformation are most exciting?
I believe that courage is contagious. When we use our voice to stand up for our beliefs and values, we help inspire others to do the same.
This series appeared in SSIR’s Fall 2025 Issue, including a new follow-up essay from MacArthur Foundation President John Palfrey.
Read more stories by John Palfrey.