Nonprofits have not been the only entities adjusting since significant federal funding cuts began in early 2025. Funders are watching and responding to the same landscape.
According to the Center for Effective Philanthropy’s 2025 report A Sector in Crisis, nearly two thirds of foundations responded with emergency rapid-response grants in 2025. Many also increased unrestricted giving and streamlined their application processes.
But, it wasn’t enough. Government dollars outpace foundation funding by three to one across the sector.
A survey by Urban Institute found that one third of service-providing nonprofits experienced funding disruptions in early 2025.
At the end of 2025, 68% of nonprofits expected demand for their services to increase in 2026. In our work with local nonprofits we have seen demand spike as high as 300%.
The encouraging news is that donors have shown up regardless, and in a big way.
Nationally, U.S. charitable giving reached $617.2 billion in 2025, surpassing the $600 billion mark for the first time.
Here in Idaho, the Idaho Community Foundation alone granted, distributed, and helped raise $21.2 million for Idaho communities in 2025 (an approximately 10% increase from 2024) with early 2026 data showing continued momentum.
What has changed most tangibly in foundation giving is competition.
Since January 2025, 87% of foundations report seeing increased demand for funding requests while 82% of nonprofits are pursuing more private and corporate grants as their primary adaptive strategy. We know that well at PSI having walked many nonprofits through that strategy over the last 18 months.
In 2026, funders are making sharper distinctions based on proposal quality, outcome evidence, and strategic alignment.
A one-time request is far less competitive than it was two years ago. Funders want to see a relationship investment in a sustainable organization.
Your case for support needs to address the moment directly. Your financials should reflect that you understand your organization’s risk exposure, and your program/project budgets should capture all expenses and revenue that enable that work to take place.
The funding landscape is always changing. More than ever, funder-recipient connections need to be relational rather than transactional. PSI can help you write those stories and grow key funder relationships that weather any uncertain season.