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Over the last year, I have heard program officials complain far too often about the pace of funding applications. Some feel guilty for turning away the majority of potential grant recipients, and yet far too many seem genuinely upset about overflowing inboxes.
Imagine the image of a disgruntled philanthropy executive while understanding the reality of working under the current administration.
Since January 2025, the Trump administration has waged what can only be described as a coordinated campaign against the nonprofit sector: a federal funding freeze, DOGE-driven grant cancellations, specific-purpose executive orders, federal investigations, congressional hearings, and threats to revoke tax-exempt status.
Benjamin Soskis, historian of the nonprofit sector at the Urban Institute, calls this moment historic in two ways: an open, brazen target for political opponents and an indiscriminate attack on the entire nonprofit infrastructure.
Published in May by the Center for Effective Philanthropy State of Nonprofit Organizations 2026 Report – the fourth annual survey of its kind highlighted the impact of this moment and quantified what many in the industry have already felt in their bodies.
Recruiting has been the top operational challenge for nonprofits for three years. CEO burnout has increased from nearly 30% to 46% in a single year. To stay afloat, companies are freezing hiring, delaying pay raises, dipping into reserves and cutting programs. Employees face homelessness and a level of precarity they never imagined possible. Against this backdrop, the challenge for philanthropy is not only that the demand for funding has increased, but also whether philanthropic institutions are ready to be true partners of the sector and act with the urgency that this moment demands.
In our interview, Elisha Smith Arrillaga, vice president of research at the Center for Effective Philanthropy, noted that nearly 90% of foundations are receiving increased funding requests, and yet only about 30% of foundations have increased their disbursement in 2025. They know the crisis is real, she said. You see it in the desperate requests in their inboxes.
What prevents these institutions, which are committed to the common good, from fulfilling their own tasks?
Table of Contents
Whose money is it?
In Control: Why large donations are neglectedasks Glen Galaich: Isn’t that really the donor’s money? And if so, shouldn’t they be able to control it?
To my surprise, his answer is no. He cites the facts that are conveniently ignored: Once a donor contributes assets to a private foundation or donor-advised fund (DAF), those assets no longer legally or ethically belong to him. In return for this gift to the public, they received a significant public tax subsidy.
And yet modern philanthropy has developed a set of traditions, advisory relationships, and institutional habits based on the belief that a donor’s wishes matter most and guided by the belief that the people “who have the most resources in society know best…”
Currently, foundations across the United States have approximately $2 trillion in assets. Projections suggest that charitable assets could reach $18 trillion by 2050. That’s twice the current annual federal budget – and sits largely undisturbed in tax-advantaged structures that are legally required to serve the common good.
When foundations expand their endowments instead of disbursing funds, when they pause grantmaking for a year of “strategic refreshes,” when their program officers process grant applications with frustration rather than urgency, they are not behaving like stewards of public resources. They behave like private asset managers who happen to publish a social mission statement on their website.
The Giving Pledge – a much-lauded mechanism by which the super-rich commit to giving away at least half of their wealth – has lost momentum. Peter Thiel has actively worked to convince the signatories to abandon their commitments, calling it an “Epstein-adjacent fake boomer club” in a recent interview with The New York Times. In 2024, only four people signed up. In 2025, the country’s wealthiest donated $22.4 billion — a 35% increase from 2024, but still less than the peak of $38.9 billion in 2021, according to the Chronicle of Philanthropy. The veil is lifting at both ends: billionaires are feeling less compelled to donate to bolster the social safety net and democracy efforts, and the public is developing a sharper perspective on what the donations that are actually taking place actually look like.
The class problem of philanthropy
The thing about foundation employees and foundation managers is that many are paid very well. You have all the advantages. You have the flexibility to work from home depending on the time of year – with Fridays in the summer and increasingly four-day work weeks. These are humane working conditions and I will not argue against them. People deserve to work without being worn down.
But I have a serious question: What does it mean to have these working conditions while managing resources that are supposed to flow to organizations whose employees are increasingly unable to meet basic needs like food and shelter?
CEP and United for ALICE data show that a significant portion of nonprofit employees cannot afford to live in the communities they serve. Managers in a bind who say “losing a single employee would be devastating” and pay wages so low that it is impossible to fill vacancies. Nearly half of nonprofit CEOs cite staffing as their organization’s biggest challenge—not one of several, but the biggest, for three years in a row. And it’s not because nonprofits are mismanaged; after all, more than 60% of the approximately 1.9 million registered nonprofits in the United States have annual revenue of $50,000 or less, barely enough to be mismanaged. It ends up there because funders continue to prioritize restricted, invitation-only, program-specific grants over general operating support that actually covers salaries.
Foundation employees are not billionaires. Presumably they came to this work because they believe in promoting social good. They have more in common with the executive director couch surfing in the city where she’s holding a conference than with the family whose name is on the foundation’s letterhead. Gates has more in common with Bezos than with anyone who works at a grantmaking organization or his namesake foundation. The class interests of ultra-wealthy donors do not align with the class interests of the people they use to distribute their wealth—and who certainly do not align with the class interests of the communities these organizations are intended to serve.
So why don’t foundation employees stick their heads in the air?
Program leaders, who often want to move money, face struggles internally. But there’s another level to this story—the one where the material comforts of foundation employment make it easier to conform to institutional norms than to advocate loudly and urgently for them. Where a good salary, stable benefits and a professional reputation become protection while grantee organizations take the risk.
Added to this is the gap in proximity between foundation boards and executives and grantees. Arrillaga notes that many foundation boards are several steps removed from the daily realities that nonprofits deal with—increasing demand for services, legal uncertainty, financial instability and staff burnout. This distance can make it more difficult to engage with the urgency of the moment. “There are some boardrooms where people say, ‘Is there a crisis? My investments are fine.’ Arrillaga said.
Arrillaga adds: “The current climate presents philanthropy with a difficult balancing act. Many foundations are responding to legal and policy uncertainties by taking steps to protect their institutions. However, when that caution translates into additional reporting or compliance requirements, the burden is often borne by nonprofits operating with far fewer resources. The question is not whether risk should be managed, but where that risk – and the work required to manage it – will ultimately be placed.”
What a different orientation would look like
There are foundations that do it differently. Arrillaga named Carmen Rojas of the Marguerite Casey Foundation, Rich Besser of Robert Wood Johnson and the Kate B. Reynolds Charitable Trust of North Carolina, which increased its grants by $10 million in 2025. Those breaking away from the status quo are not silent – they are led by named individuals who make a different calculation about whose risk is more important.
The orientation that this moment requires is not complicated, even if countless publications may try to convince you of it. It looks like foundations are asking their grantees what they need and committing capital to it. It looks like general operating support rather than limited funding that covers programs but not the people who run them. It looks like patience to measure the results of a program cycle rather than a fiscal year. It looks like multi-year commitments rather than the humiliating ritual of having organizations prove their needs every year. It looks like foundation officials are ready to bring the urgency to their own boardrooms, knowing full well that the institutional risks they protect against are categorically different from the risks their grantees take on every day.
Every conversation I’ve had with a nonprofit executive director over the last year shows that the industry doesn’t look to foundations to be saviors. It requires them to be partners – present partners with a service orientation that meets the moment. The organizations that know how to do this work have already built relationships, earned community trust, and developed the institutional knowledge that no foundation can replicate. What they can’t do is carry on without money.
No one who chose to spend their professional life in this sector – be it at foundations or non-profit organizations – came here because they didn’t care about what happened to people. So let’s take that as a given and work from there.
What would it look like to actually act on it?
https://www.forbes.com/sites/aparnarae/2026/07/09/whose-money-are-foundations-sitting-on–and-why-it-matters/
