Are Funders Doing Enough to Help Beleaguered Nonprofits?

Nationwide, leaders of private and community foundations and charitable health-care foundations say that the turmoil of this year — including federal funding cuts and the Trump administration’s efforts to investigate progressive groups — has led to a surge in requests from grantees for additional support. 

It’s been a rough few months for the sector. About one-third of U.S. nonprofit service providers lost government funding in early 2025, according to research from the Urban Institute. And in a new report from the Center for Effective Philanthropy, which produces data on the sector, foundations say there is mounting pressure from grantees to step in and fill some of the funding gaps left by federal funding losses.

About 87 percent of 227 foundation leaders surveyed by CEP said they have seen increased demand for funding since January. And while 30 percent of foundation leaders said that they had raised their annual payout in response, some worry that it won’t be sufficient to sustain the nonprofits’ work, according to CEP. 

“We have increased our annual payout and still there simply isn’t enough to make up for the significant federal and other funding losses,” one foundation leader told CEP. The center did not disclose the names of respondents.  

CEP presented these new findings at its annual conference in Los Angeles Monday to shed light on the challenges nonprofits face and the ways funders have helped.

“There were a lot of stories about different foundations increasing their payout, and folks really wanted an understanding of how widespread that was,” said Elisha Smith Arrillaga, vice president for research at the Center for Effective Philanthropy. Those requests for information came from both nonprofits and funders, she added.

Along with raising payout rates, CEP’s research showed several other trends among funders seeking to support cash-strapped nonprofits. They included a surge in emergency and rapid response grants, which the Chronicle of Philanthropy has been tracking since earlier this year. Sixty-four percent of foundations have provided emergency grants, and an additional 15 percent are considering doing so in the coming months, CEP said. Also, 42 percent of foundations provided more unrestricted grants than in previous years, with 28 percent also distributing more multiyear grants. 

The findings are representative of the sector broadly. CEP said it surveyed 408 nonprofit leaders and 227 foundation leaders across the country in August and September. A full report on the data will be published in early 2026 and will include details from interviews CEP conducted with 27 nonprofit and 31 foundation leaders, Smith Arrillaga said. All of the funders included in the study give at least $5 million annually to various nonprofits. And all of the nonprofit respondents receive funding from at least one foundation that meets that $5 million threshold.

Researching the Moment

The Center for Effective Philanthropy has focused much of its recent research on the effects of political polarization and federal funding policies. In a survey published in March, more than 60 percent of nonprofit leaders told CEP that changes at the federal level were affecting their future state and local funding levels. Those perceptions about future funding — as well as concerns about reductions in staff and the safety and well-being of staff and the communities they serve — were echoed in this latest survey. Many groups described pressure to change public messaging about their work, legal challenges related to the cause or community they support, and backlash to their missions. 

“Trying to stay on top of all these constantly changing threats is a full-time job in itself, and I still have my regular full-time job as executive director,” one nonprofit leader said. 

In an effort to lift some of the burdens from nonprofits, more than half of foundations said that they had or were considering streamlining their application and reporting processes. For example, the Houston Endowment, one of the funders of CEP’s research, has been piloting a streamlined oral grant reporting process that uses AI to record and transcribe virtual meetings between program officers and grantees. 

Still, in interviews both foundation and nonprofit leaders frequently compared the current strains on the sector to what it experienced during the pandemic, with some wondering if today is markedly different.

“I think what the data shows us is that, sure, there have been other moments that have been really difficult for the sector, ” Smith Arrillaga said. “But we have not seen the overall sector attacked consistently in such a way where over half of nonprofits say they’re concerned about their ability to continue to operate.”

When CEP started gathering survey information in February, most nonprofits said they had not heard from many of their private funders about how they planned to respond to the political environment. The center said that in recent months it has also heard from funders curious about what others were doing. 

Over all, foundation leaders rated philanthropy’s response to the current environment much higher than did their counterparts at nonprofits. About 91 percent of foundation leaders had a favorable view of funders’ responsiveness while just 59 percent of nonprofit leaders shared that opinion. 

Nonprofits typically rate foundation’s responsiveness lower than the foundations rate themselves, but in past years the numbers were closer together, Smith Arrillaga said. This year there seems to be a bigger divide in how the two groups perceive what is happening and what is at stake, she said. 

In some cases, nonprofits have started taking matters into their own hands. Around 60 percent of groups said they had launched a partnership or collaboration with other nonprofits, and 49 percent said they had diversified their revenue streams this year, according to CEP’s data.