A new study released today by The Center for Effective Philanthropy (CEP) reveals that while philanthropic foundations are making changes to support nonprofits that are reeling from attacks made by the Trump administration, most acknowledge they have not been very effective.

Nonprofits have faced an existential crisis since January 2025, when the Trump administration began a series of actions targeting the sector: freezing federal funds, terminating grants, investigating nonprofits, censuring specific causes, holding congressional hearings, and threatening to revoke their tax-exempt status, among others. Previous CEP reports — “A Sector in Crisis” and “State of Nonprofits 2026” — revealed that nonprofits face increasing financial distress as a result, with many pausing operations or closing.

Amid high-profile public calls for increased foundation giving in the face of government cuts, the new study found that the majority of foundations have not increased their payout rate, and just 12% of foundation CEOs assess their response as very effective. Meanwhile, earlier CEP reports reveal that nonprofit leaders are struggling in the face of increased demand for their services and financial uncertainty and are seeking greater support from their funders. CEP's new study also looks at nonmonetary support, revealing that the beyond-the-grant support foundations are offering is frequently not a match to what nonprofits say they need. Further, open communication between funders and grantees is a significant challenge, with only a minority of nonprofit leaders believing they can be completely honest with their funders about the challenges they face.

"Nonprofits lead crucial work — from feeding the hungry to providing afterschool care — and communities are leaning more heavily on these organizations to fulfill basic needs,” said Elisha Smith Arrillaga, Ph.D., vice president, Research, at CEP. “If ever there was a moment for philanthropy to be in deep partnership with communities, it’s now. And although some funders have risen to the challenge, this data makes clear that nonprofits need more open and honest conversations with their funders to meet their communities’ needs."

The study, “Evolving Foundation Responses to a Sector in Crisis,” is based on survey responses from leaders of 183 foundations and 329 nonprofit organizations. The foundation leaders represent independent and community foundations that give $5 million or more annually. The nonprofit leaders participate in CEP’s Nonprofit Voice Project, a nationally representative panel of U.S.-based nonprofits that receive at least some foundation funding.

The data reveals:

• FOUNDATIONS ARE MAKING CHANGES IN RESPONSE TO THE CRISIS. 93% made at least one change to the way they approach their work. The most common changes are concentrating funding in needed areas (62%), collaborating with other funders (53%), and increasing their engagement in policy or advocacy (48%).
• BUT THEY ADMIT THEY HAVE NOT BEEN VERY EFFECTIVE. Despite reporting a range of strategic changes, just 12% of foundation leaders rate their response as very effective, and only 8% say the same of foundation funders broadly. This may be partly a result of a difficult environment.
• MANY FOUNDATIONS REPORT RISK AVERSION. Among those who feel less than very effective, just over half (53%) report feeling constrained by some form of risk aversion. Nonprofit leaders see it too, with only 12% saying their funders were willing to take risks that “very effectively” met their needs.
• DESPITE SIGNIFICANT DEMAND ON NONPROFITS, MOST FOUNDATIONS ARE NOT INCREASING THEIR PAYOUT. Only one-third (33%) reported a higher-than-typical payout rate — a striking contrast to foundation responses during the pandemic.

Foundations cannot fill the funding gap left by the federal government. But the failure to increase the payout rate amidst such dire financial circumstances stands in stark contrast to 2020, when foundations significantly increased their payout during the pandemic. At that time, nonprofits also faced rising demand for services and received increased funding from both government (via forgivable PPP loans) and foundations (via increased payout). Today, nonprofits also face rising demand and have lost significant federal funding. But only one-third of foundations report increasing their payout rate, putting nonprofits — and the communities they serve — in dire straits.

“The communities served by nonprofits need donors to step up in response to this time of extraordinary challenge,” said Phil Buchanan, president of CEP and author of Giving Done Right. “Especially given the investment returns foundation endowments have reaped in recent years, funders can step up their giving levels without jeopardizing their ability to be there in the future for the next crisis. While some have, the overall response has lagged what the moment requires, and I hope that changes in the coming months.”

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Nonprofits have faced an existential crisis since January 2025 — how are foundations responding?