Private Foundations Boost Giving In Response to Federal Grant Cuts

As the Trump administration slashes federal funding for nonprofits, private foundations across the U.S. are drawing from their endowments to cover philanthropy’s growing gaps. The sector is “in a time of crisis,” according to the Chicago-based MacArthur Foundation, which plans to significantly ramp up its grant giving over the next two years.

For nearly half a century, private foundations in the U.S. have been required by law to distribute at least 5 percent of their assets to charity each year. But in 2025 and 2026, the MacArthur Foundation will raise its yearly payout to 6 percent—and is urging others to do the same. “The need for a surge in funding is plain,” said John Palfrey, the foundation’s president, in a Feb. 25 blog post. “Philanthropy needs to step up.”

The future of billions of dollars in federal grants remains largely up in the air as the Trump administration assesses whether they align with government priorities. But one thing is for sure: the impact of such cuts will be widespread. Nearly a third of nonprofits rely on government grants, according to research group Candid, which noted that $303 billion in government funding is awarded to some 100,000 nonprofits annually.

Grantees of the MacArthur Foundation on average receive 12 percent of their funding from the government. “The cliff of funding from federal programs has sent budgets underwater in field after field, and people and communities in the U.S. and abroad will suffer,” said Palfrey. The foundation, which supports organizations focused on causes like climate change and criminal justice reform and is well known for its $800,000 “genius grants,” gave some $318 million in 2023 and had $8.6 billion in assets at the end of that year. The foundation’s new payout commitment of 6 percent is “a floor, not a ceiling,” Palfrey stressed.

Some foundations are boosting givings even higher. The New York City-based Freedom Together Foundation, formerly known as the JPB Foundation, recently unveiled plans to spend 10 percent of more of its endowment. Focused on areas like gender and racial justice, worker power and reproductive health, the foundation reportedly had $4.2 billion in assets as of last March. Rapid response grants and support for groups defending democratic norms will be key priorities for the organization, according to its president Deepak Bhargava, who noted in a letter that today’s times demand “an extraordinary response from philanthropy.”

Much of the philanthropic world, however, has shied away from such proclamations. Only 35 percent of social sector organizations have issued public statements regarding the new administration’s change of direction, according to a recent study from the Communications Network that surveyed 350 nonprofit and foundation communication professionals. More than 53 percent of respondents said they feared advocacy would be met with government retaliation or loss of funding. While around one quarter have reaffirmed or strengthened a commitment to their core mission, 16 percent have shifted their public statements to be more cautious or reserved, while another 16 percent have decreased their communication on politically sensitive issues.

Despite facing a fearful environment, some notable charitable figures have directly criticized the government’s funding cuts in recent weeks. Earlier this month, the Elton John AIDS Foundation, criticized President Trump’s decision to gut more than 90 percent of contracts held by the U.S. Agency for International Development (USAID). “This abrupt action could have devastating effects on the HIV response and put years of progress in jeopardy,” said the foundation, founded by musician Elton John in 1992, in a statement where it outlined plans to launch a new response fund.

Behind USAID, the Bill and Melinda Gates Foundation is one of the world’s largest funders of global health, having reportedly budgeted $1.86 billion for the sector in 2023. Bill Gates himself has also denounced Trump’s cuts to the federal agency. “Getting those people out there in their depth of experience, that’s an asset that would be very hard to recreate,” he said of USAID in an interview with NBC’s TODAY show in February.

One of the first philanthropists to address funding gaps under Trump was Michael Bloomberg. In January, Trump withdrew the U.S. from the Paris climate agreement and halted its international climate funding. Days later, Bloomberg Philanthropies announced that it would honor the country’s previous funding commitments to the UNFCCC, which oversees the agreement. The charitable organization previously did the same between 2017 and 2020—contributing more than $15 million in total—when Trump withdrew from the agreement under his first presidential term, noted Bloomberg in the announcement. “Now, philanthropy’s role in driving local, state and private sector action is more crucial than ever—and we’re committed to leading the way,” he said.