Philanthropy in Flux | A Call to Action for Family Philanthropists

I have been in the business of philanthropy for 24 years and I have never observed such seismic shifts in the sector. Some shifts we have seen coming for a long time, like the Great Wealth Transfer and passing of the baton of family leadership from Baby Boomers to Gen X and Millennials. Other shifts have felt abrupt – like changes to federal funding and policies impacting nonprofits. Two things are clear: government funding will continue to lessen and solid philanthropic approaches to community needs are more important now than they have been in decades.

The swings are wide and the impacts continue to unfold. Adaptation to the new landscape can be tough. For family philanthropists and their advisors, understanding these evolving dynamics is essential for positioning your giving for effectiveness.

The Ripple Effect of Federal Funding Changes and the Nonprofit Sector

Federal funding has long been a cornerstone for the nonprofit sector, particularly in human services, public health, and education. At least 30% of nonprofits rely on government grants. The arts and humanities, organizations touting DEI programs, environmental justice – it seems every nonprofit sector is experiencing volatility related to federal changes. Private philanthropy has a role in stepping into the conversation to advocate for the nonprofit sector; philanthropists must be judicious in knowing how and when to effectively offer support. Proper due diligence is a must. 

• Food Security: The Big Beautiful Bill enacts the largest cuts to the Supplemental Nutrition Assistance Program (SNAP) in history, shifting significant costs onto states and counties and ultimately nonprofits. Foodbanks, food pantries, after school programs have never been a more important safety net now that funding will begin shifting away from SNAP and there will be an immense strain on these systems. Foodbanks are reporting they’re already seeing a spike in demand for their services. In truth, food banks, while vital, cannot alone replace the scale and economic impact of SNAP. SNAP provides nine times more food assistance than all 200 Feeding America food banks combined.
• Medicaid Funding and Vulnerable Populations: The bill includes provisions that could lead to significant cuts in Medicaid spending, potentially by as much as $1.02 trillion over the next decade. While not immediate, these cuts will have devastating impacts on social sectors. This means more uninsured individuals, increased demand on free clinics and community health centers, and potentially rural hospital closures that disproportionately affect vulnerable populations. Family philanthropists focused on health equity or disability rights are now critically needed to fund safety-net services, advocacy for sustained coverage, and innovative community-based care models.
• Education Funding Shifts: Nonprofits involved in educational support, from early childhood literacy to after-school programs, face challenges when federal grants shift or diminish. Specifically, a portion of federal funding for after-school programs, English-language learning, teacher training, and other services finally distributed after being withheld for three weeks in July, leaving nonprofit leaders scrambling to retool budgets and programs. Future funding is in question. 
• Environmental and Climate Programs: The federal landscape for environmental and climate initiatives has shifted significantly, including a roll back of environmental regulations; promotion of fossil fuels; the cancellation of many clean technology tax credits; and dismantling of environmental justice initiatives. In the absence of strong federal leadership, nonprofits – big and small – will become even more important stewards for environmental and climate progress. With anticipated increases in negative environmental impacts due to federal policy shifts, private philanthropy for community resilience, adaptation, and direct aid to vulnerable populations will become increasingly important. Private philanthropy and advocacy are critical muscles to flex in this space right now.

The Big Beautiful Bill’s Nuances Related to Philanthropy

The bill represents a substantial overhaul of the tax code with both direct and indirect implications for philanthropy. 

• The Reinstated “Above-the-Line” Charitable Deduction for Non-Itemizers: This provision allows individuals who don’t itemize their deductions to claim a deduction for charitable contributions, up to a certain limit ($1,000 for single filers, $2,000 for joint filers, with temporary increases in 2025 and 2026 before reverting to $1,000 in 2030).
• New Excise Taxes on Endowments: The bill introduces a tiered excise tax on the net investment income of large private colleges and universities. 
• Corporate Giving Incentives with a “Floor”: The bill introduces a 1% floor for charitable contribution deductions made by corporations, meaning companies must give at least 1% of their taxable income to qualify for deductions. 

Increasing Trend of Foundations Accelerating Their Spending

It seems that news headlines are full of stories of foundations choosing to sunset. In the last 6 months alone, The Gates Foundation, Leon Levine Foundation, Ray C. Anderson Foundation all announced their strategy to accelerate their spending and named their end date. 

• Motivations: Families choosing this route are driven by urgency of issues, geographic dispersion in the family or a desire to protect donor intent.
• Growing Attention: The National Center for Family Philanthropy’s 2025 Trends report highlights that somewhere between a quarter to a third of grantmakers are now considering spending out. Additionally, 71% of family foundations surveyed are now exceeding the required 5% payout rate, with one-third reporting increases in payout rates over the past five years. 

As nonprofits are retooling in this current environment, the trend of accelerated spending brings an excitement as grants are increasing in size and frequency. It also suggests the need for more philanthropists to follow in these sunsetting foundations’ footsteps with transformational philanthropy.

Evolving Trends In Philanthropic Giving in the US

• Total giving is increasing in current dollars: U.S. charitable giving reached an estimated $592.5 billion in 2024, a new high, and grew by 6.3% in current dollars. Giving has dipped in recent years, but now it’s back on the rise. 
• Corporate giving is also on the rise, reaching historical highs in both current and inflation-adjusted dollars, and is the fastest-growing nonprofit revenue source over the past five years.
• Fewer donors, more dollars: A concerning trend is the continued decline in donor participation (e.g., a 4.5% drop from 2023 to 2024), meaning fewer, wealthier donors are contributing a larger proportion of the total charitable dollars.This raises questions about broad civic engagement and the pipeline for future donors. Less than half of households in the US give; a precipitous decline from ⅔ a few decades ago. Despite the rise of numerous billionaire philanthropists and the establishment of foundations by wealthy families over the past few decades, charitable donations as a percentage of GDP have remained consistently around 2%.
• Rise of Donor Advised Funds (DAFs): DAFs are playing an increasingly important role in giving, expanding beyond ultra-wealthy donors to everyday supporters.

Looking Ahead

The philanthropic landscape is complex, but also brimming with opportunity. For family philanthropists and their advisors, staying informed and communicating with their nonprofit communities, embracing innovative approaches, and fostering intergenerational family collaboration are key to navigating these shifts successfully. By doing so, they can ensure their philanthropy continues to drive meaningful change. 

Stay tuned for our next piece in this series. We’ll be discussing more action steps and ways that philanthropists can make a difference beyond traditional methods.

About Grant Philanthropic Advisors:
We’re an independent, Charleston-based firm helping clients to focus and maximize their philanthropy—in turn, strengthening the fabric of our communities. Founded in 2019, we help donors move from responsive patterns of giving by assisting clients to identify values and become more strategic in their philanthropy. Our goal is to help donors to become more effective as change-makers.

We work with foundations (large and small staff teams), donor advised fund holders, multi generational families, individuals, philanthropy supporting organizations and corporations to design philanthropic strategies. We work with philanthropies that grant $1 million to $40 million annually.