Most foundations changed course after federal cuts, but few call their response very effective, a survey finds
The Center for Effective Philanthropy surveyed 183 foundation leaders and 329 nonprofit leaders in May. Nearly all funders changed something, 12% rate their own response as very effective, and 41% of nonprofit leaders say they can be completely honest with funders.
Cambridge. Nearly all large foundations have changed how they work since the federal government began cutting grants and contracts to nonprofits in early 2025, but few of their leaders think the response has worked well, according to a report the Center for Effective Philanthropy released on Sept. 29.
The report, Evolving Foundation Responses to a Sector in Crisis, is the third in a series by the Cambridge, Mass., research group on how foundations and nonprofits are responding to what it calls the current context: the budget decisions, legislation and executive orders of the federal government since January 2025. It draws on two surveys taken in May: 183 leaders of independent and community foundations that give at least $5 million a year, and 329 leaders of nonprofits in the center's national panel of organizations that receive foundation funding.
Changes, but little new money
Of the foundation chief executives, 93% reported at least one change in approach. The most common were concentrating funding in areas of greatest need, working with other funders and, for 48%, more engagement in policy or advocacy. More than 60% raised funding in at least one issue area. But only a third of independent foundations said their payout this fiscal year was higher than in earlier years, which the report contrasts with foundations' larger increases during the pandemic in 2020.
Just 12% of foundation leaders rated their own foundation's response as very effective, and 8% said the same of foundations overall. More than half, 53%, named some form of risk aversion as a barrier, including boards wanting to stay neutral and uncertainty about legal or political consequences.
What nonprofits say they need
Nine in ten foundations said they offer help beyond the grant, but the report finds that help often misses. About half of the nonprofit leaders had received such help, and 40% of them found it very useful. Asked what would help most, 60% named fundraising strategy and donor development, which 41% of foundations provide; 47% named help with artificial intelligence and digital tools, which 13% provide; and 45% named legal counsel, which 24% provide. Nearly 80% of nonprofit chief executives said they spend more time on fundraising than before.
Only 41% of nonprofit leaders said they can be completely honest with funders about their challenges. Those who hold back most often cited fear of losing funding or too few chances to talk openly, and leaders who felt they could be candid rated their funders' response more highly.
“If ever there was a moment for philanthropy to be in deep partnership with communities, it's now.”
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