On March 17, law enforcement officials helped Elon Musk’s so-called Department of Government Efficiency gain entry to the headquarters of the US Institute of Peace in what appeared to be a hostile takeover attempt. The Institute, while created and funded by Congress, operates independently and is not a typical charity. Although a court later ruled the move illegal, the confrontation between President Donald Trump’s administration officials and the non-profit marked an extraordinary clash that is likely to resonate.
Incidents such as this, as well as Trump’s attacks on law firms and universities, have unsettled the philanthropic community. Already, the president’s war on climate action and diversity, equity and inclusion has left foundations wondering whether to continue funding non-profits with environmental or race-based programmes. Meanwhile, any changes to the tax code could diminish their financial resources.
While philanthropists are used to rushing in with funding to address the fiscal crises of their grantees, they now find themselves in a new world — one that raises uncertainty over their own ability to give. Grantmakers claim that, by solving social problems, they want to put themselves out of business, but their worry now is that this might come sooner than expected — and not by their choice.
The prospect of philanthropic spending constraints could hardly come at a worse time. In January, Trump froze billions of dollars in federal funding (which contributes roughly three times as much to non-profit budgets as foundation gifts), putting thousands of charities’ survival at risk. Similarly, the shrinking of the US Agency for International Development removed a main source of funding for overseas non-profits.
A major concern for foundations is the prospect of losing their 501(c)(3) status — an exemption that shields them from certain taxes and allows donors to claim tax relief on their contributions. Trump has already proposed removing this from Harvard University because of the school’s refusal to comply with his demands, and while it was ultimately dropped, a proposal was discussed that would have stripped this tax status from organisations deemed to support terrorism. Philanthropists and non-profits were among those who worried would enable the administration to shut down any charitable organisation seen as a political opponent.
Tax rises are another concern. The House version of Trump’s “big, beautiful bill” included a tax hike on large foundations’ endowment income from 1.39 per cent to 10 per cent. (This provision was absent from the Senate finance committee draft but negotiations over the bill continue.) “That’s real money,” says John Palfrey, president of the John D and Catherine T MacArthur Foundation.
The first risk is of pursuing missions that are at odds with presidential priorities. “There’s certainly a threat to foundations that are funding things the president doesn’t like,” says Lisa Pilar Cowan, vice-president of the Robert Sterling Clark Foundation, established by an heir to the Singer sewing machine fortune.
Cowan believes philanthropists will continue to support organisations focused on tackling racial or gender inequality — but quietly. “Everyone is getting their websites audited and looking at their grant contracts and the language their grantees are using,” she says.
An executive order Trump issued in January set the tone. It directed federal agencies to investigate DEI programmes — which the administration deems discriminatory — in large organisations, including non-profits and foundations with $500mn or more in assets. “There’s a question over how much targeting foundations can do with their funding,” says John Harper, chief executive of non-profit consulting firm FSG. “Is race-based grantmaking now somehow illegal?”
“There is definitely a calculation that anyone who wants to speak up must make about the risks of doing so,” says Adam Bendell, who is part of an informal group of individual donors.
This is having a chilling effect on donors, says Melissa Berman, founding president and former chief executive of New York-based consultancy Rockefeller Philanthropy Advisors. “Philanthropists and board members of foundations who need good relations with the Trump administration are voluntarily following its lead and eliminating programmes that could be labelled as DEI and backing away from climate-change work.”
Pushing back against the current policy agenda will not be easy, says Berman. “The foundation sector in the US has for far too long taken for granted that it is accepted as a force for good,” she says. “As a result it has little, if any, political muscle.”
For some, the response to the signals coming from Washington DC has been to shift gears. According to Harper, one growing area of interest for philanthropists is in supporting non-profits that promote democracy.
Liesel Pritzker Simmons, an heir to the Hyatt hotel chain wealth, and her husband Ian Simmons are doubling down on their longtime support for democracy — from election safeguards to training for the next generation of candidates — through Blue Haven Initiative, their impact-focused family office. But Pritzker Simmons says federal-level upheaval, including mass lay-offs of public workers, is prompting a shift. “We have a bit more of a focus on local and state elections,” she says.
And in the wake of Trump’s willingness to challenge the judiciary, Bendell and his group have shifted towards funding groups and initiatives that promote something essential to democracy: respect for the rule of law. “That has resonance across the aisle,” he says.
For philanthropists who want to remain under the radar, one option is to give through a donor-advised fund. This charitable vehicle enables donors to benefit from tax breaks while their gifts remain anonymous.
For others, the strategy has been to write bigger cheques. The Marguerite Casey Foundation recently announced that in response to a “political attack” on the sector it would provide $130mn to non-profits promoting racial and economic justice. And Bill Gates, the world’s richest man, has said the Gates Foundation has accelerated its plan to give away $200bn over the next 20 years.
The Siegel Family Endowment, which funds science and technology research, has made it a priority to keep critical programmes alive. “We’re looking tactically at how we might need to address funding gaps,” says Katy Knight, president of the foundation, which was created by David Siegel, co-founder of Two Sigma, one of the world’s largest hedge funds.
The MacArthur Foundation’s Palfrey worries that in the US, where charitable giving makes up more than 2 per cent of GDP, constraints on grantmaking would strip essential financial resources from education, affordable housing and healthcare — at a time when the administration is planning cuts to those same services.
His foundation is tapping into its endowment to help keep programmes running: it is raising its annual grantmaking in 2025 and 2026 to at least 6 per cent of its endowment (the legal minimum is 5 per cent) and is encouraging others to increase their payout as well. “This is the proverbial rainy day,” says Palfrey. “It’s pouring outside.”
With no shareholder or customer pressure to work together and with some fearing a loss of control, philanthropists are not always known for their willingness to collaborate. But challenges to their freedoms have prompted some to reconsider. “We are seeing more high-net-worth individuals and their philanthropic advisers engaging in coalitions,” says Harper.
Sarah Haacke Byrd believes this is essential. “The threat to the civic fabric of this country requires more than an emergency response but co-ordination, coalition building and cross-sector collaboration,” says Haacke Byrd, chief executive of Women Moving Millions, a 400-member group of female philanthropists.
Some are joining forces to make their voice heard. In April, an effort that the MacArthur Foundation helped launch encouraged philanthropic organisations to “unite in advance” by signing a public statement defending their right to give as they choose. Almost 700 have signed so far.
Palfrey argues that this is a moment when philanthropists must speak out — and in unison. “We’ve seen what happens if one or two institutions are targeted,” he says. “We want to say no, let’s figure out the bright lines that we will not cross and agree to stand there.”
