Dear Reader,

One thing is abundantly clear, we are living in the middle of major economic and policy disruption affecting the nonprofit sector which ties directly into the philanthropic community. Everyday, I look at the news and learn about new policy changes impacting our sector and corresponding legal action. How do you make sense of it all without overreacting? I like to start with the facts.

What do we know to be true today?

• Federal funding flowing to nonprofits is uncertain. Nonprofits across the sector are affected - those that are addressing critical needs and catalyzing innovative solutions in public health, medical research, sustainability + climate, domestic violence and food insecurity, to name a few.
• With this uncertainty, nonprofit executives are making hard choices and are eliminating positions and furloughing employees. Essential expertise on critical social and environmental issues is being sidelined.
• While these funding decisions are made on a federal level, the effects play out in unique ways on a local level. For instance, some nonprofits have a pool of local partners who are less dependent on federal funding to help fill the gaps. Others may be able to pull on state and regional resources in the interim.
• Nonprofit executives are resilient and adaptable; COVID strengthened this muscle. At the same time, these leaders are tired and burned out after years of adapting in the pandemic era.

The nonprofit economy and its connection to government funding

• There are approximately 1.29M public charities in the US. Nonprofits employ 10% of the US work force and the sector spends $2 trillion annually. (Nonprofit Council)
• Government funding makes up 30% of the funding in the nonprofit sector annually. The funding comes in forms of government contracts and grants from local, state and federal sources (Candid). 68% of nonprofits received government grants or contracts. (Nonprofit Council)
• Philanthropy from individuals, foundations and corporations comprises about 15% of the revenue flowing into the nonprofit sector.
• Percentage of nonprofit sub sectors receiving the government grants and contracts (Urban Institute):
• Arts, Culture, Humanities (84%)
• Education (76%)
• Human Services (73%)
• Health (54%)
• Other (51%)
• According to the Dorothy A. Johnson Center for Philanthropy, the total value of private foundations and community foundations assets are $1.46 trillion. The federal government spends $6.75 trillion annually. “While philanthropy plays a vital role in supporting communities across the globe, the scale of federal funding is simply unmatchable. Even if all private and community foundations were to convert all their assets – even the furniture – into cash today and start spending, it wouldn’t come anywhere close to replacing public investments in healthcare, education, infrastructure, and social services. The money would last about 79 days.” 

Where does that leave the economy of the nonprofit sector? Philanthropy cannot go it alone to fulfill these vital services to our communities across the country. How does civil society adapt its economy?

What are we seeing from the philanthropic community at this moment?

Philanthropists are…. 

• Reaching out to their nonprofit partners asking how changes on a federal level are impacting their mission + programs and those of their community partners. 
• Listening with empathy and thinking creatively with nonprofit executives and boards.
• Offering to host gatherings for their grant partners to share information and problem solve together.
• Choosing to respond with thoughtful support, not overreacting. Some foundations are making out of cycle, emergency grants to those nonprofits in particular peril.
• Adjusting their strategies based on what they’re hearing from community partners.

Our advice for philanthropists is to seek out community.

• Call up your nonprofit partners. Understand how they are adapting and what their greatest needs are. Consider hosting an informal gathering where nonprofit executives can connect and brainstorm ideas.
• Call up peer philanthropists and swap notes and ideas. What are they seeing and hearing? How are they responding?
• Reach out to your elected officials at all levels of government and both sides of the aisle. What do they know about policy changes and how local communities are adapting? How can philanthropists use their resources to leverage adaptation at the local level and/or in their issue area?

Gathering in your community can be a powerful antidote to anxiety and uncertainty. When people come together and share ideas, empathy catalyzes new energy and ideas. When we exchange new ideas and inspire each other, we start to test out solutions and approaches to adapt in this new moment. 

I do not hold a crystal ball to predict the future of the nonprofit sector’s economy and adaptability, nor can I predict policy changes coming from Washington, DC. I hold fast to the power of community and connection and believe in our nonprofit and philanthropic leaders’ creative thinking and resilient nature.

Client Spotlight

SeamonWhiteside (SW+) recently launched their community engagement focused Green Square initiative, centered around three core pillars: Education, Wellness, and Vibrancy. Through Green Square, SW+ reaffirms its deep commitment to building powerful communities and driving impactful engagement among their employees. Check out SW+'s post for a visual on their passion for giving back.

What We've Been Up To

What's Inspiring Us

Advocating for the Nonprofit Sector

How Funders Can Respond to an Unprecedented Threat to Nonprofits - The Center for Effective Philanthropy (10 minute read)

"We all have a role here...We need to stand up for this sector in all its great diversity — and remind people what it is and who it serves: everyone." Phil Buchanan's call to action motivates readers to defend the nonprofit sector, emphasizing the vital role it plays in so many lives and communities.

A Study on Large, Impactful Gifts

In the final report in a three-year study, nonprofits report continued positive impact of Scott’s gifts and improved financial stability. - The Center for Effective Philanthropy (5 minute read)

This final report unpacks the implications for Scott's large, unrestricted gifts by studying financial sustainability of the recipients, capacity building of organizational leadership, and community impact. Some findings are as expected and some are surprising. It is worth a read to understand how this philanthropic pioneer is shaping the nonprofit sector.

Gen Z and Millennials Reshape Philanthropy

Next Generation donors' charitable giving interests and approaches examined in new study - Lilly Family School of Philanthropy (3 minute read)

Younger donors are increasingly issue-driven, want to roll up their sleeves to volunteer and want to be involved with a cause long term. They also lean on technology to give, vet an organization and understand impact. Read the full report here: The Next Generation of Philanthropy

As the nonprofit landscape continues to evolve, we remain committed to providing thoughtful guidance and rigorous due diligence to help you navigate these uncertainties with confidence. 

Thank you for reading—we look forward to supporting your philanthropic journey and strengthening communities together.

Gratefully,

Kaky + The GPA Team