Philanthropy’s tepid response fuels the US nonprofit crisis

Nonprofit crisis: foundations’ muted response

The nonprofit crisis that erupted in early 2025 has pushed service providers across the United States toward a breaking point. After the administration froze federal grants, launched investigations and tied aid to political goals, demand for charitable services surged while funding evaporated.

Our team has tracked the fallout, focusing on the $1.8 trillion in assets held by U.S. foundations. In 2025 they contributed $117 billion out of a total $617 billion of charitable giving, roughly one in five dollars. That share barely moved from the previous year, rising ↓ 3% after a ↑ 15.6% jump during the pandemic surge, according to Reuters.

Leaders report staff exhaustion, layoffs and, in some locales, outright closures. Food banks ration supplies, domestic‑violence shelters shutter doors, and housing agencies cut back services.

“We are seeing burnout at unprecedented levels,” said a director of a regional food bank.

While a handful of endowments – notably the Marguerite Casey, MacArthur and Robert Wood Johnson foundations – have lifted grantmaking and spoken out, most peers cling to the statutory 5 % payout floor. In a May‑June survey, 65 % of independent foundations described their disbursement rate as “typical,” and only 8 % rated their response as “very effective.”

Risk aversion, board inertia and fears of depleting endowments dominate boardroom discussions, according to interviews. Some executives even suggested the turmoil might weed out weaker charities.

Given record endowment balances and the widening service gap, the sector needs a decisive infusion of capital. Time is running out for the nation’s social safety net.

For further analysis see Bloomberg.

Reported by: Eleanor Cross

Chief Washington Correspondent