As the Trump administration slashes federal funding for nonprofits, private foundations' giving has increased as foundations across the U.S. are drawing from their endowments to cover philanthropy’s growing gaps. The sector is “in a time of crisis,” according to the Chicago-based MacArthur Foundation, which plans to significantly ramp up its grant giving over the next two years.

For nearly half a century, private foundations in the U.S. have been required by law to distribute at least 5 percent of their assets to charity each year. But in 2025 and 2026, the MacArthur Foundation will raise its yearly payout to 6 percent—and is urging others to do the same. “The need for a surge in funding is plain,” said John Palfrey, the foundation’s president, in a Feb. 25 blog post about private foundations' giving targets increasing. “Philanthropy needs to step up.”

The future of billions of dollars in federal grants remains largely up in the air as the Trump administration assesses whether they align with government priorities. But one thing is for sure: the impact of such cuts will be widespread. Nearly a third of nonprofits rely on government grants, according to research group Candid, which noted that $303 billion in government funding is awarded to some 100,000 nonprofits annually.

Grantees of the MacArthur Foundation on average receive 12 percent of their funding from the government. “The cliff of funding from federal programs has sent budgets underwater in field after field, and people and communities in the U.S. and abroad will suffer,” said Palfrey. The foundation, which supports organizations focused on causes like climate change and criminal justice reform and is well known for its $800,000 “genius grants,” gave some $318 million in 2023 and had $8.6 billion in assets at the end of that year. The foundation’s new payout commitment of 6 percent is “a floor, not a ceiling,” Palfrey stressed.

Some foundations are boosting givings even higher. The New York City-based Freedom Together Foundation, formerly known as the JPB Foundation, recently unveiled plans to spend 10 percent of more of its endowment. Focused on areas like gender and racial justice, worker power and reproductive health, the foundation reportedly had $4.2 billion in assets as of last March. Rapid response grants and support for groups defending democratic norms will be key priorities for the organization, according to its president Deepak Bhargava, who noted in a letter that today’s times demand “an extraordinary response from philanthropy.”

Read the full article about private foundations boosting giving by Alexandra Tremayne-Pengelly at Observer.