Responding to Fragility and Fear: What’s Required of Funders Right Now

The U.S. political-socio-economic context and its broader impact on nonprofits and foundations continue to evolve. As such, relationships between nonprofits and funders must also keep evolving. In the Center for Effective Philanthropy’s (CEP) recent publication, “A Sector in Crisis: How U.S. Nonprofits and Foundations Are Responding to Threats,” “65% of nonprofits reported increased demand for services in 2025 as a result of the current context.”

In 2026, nonprofits will see an even larger demand as current private sector layoffs at U.S. companies mirror levels experienced during the Great Recession of 2009. The public sector is faring no better as it faces the fiscal cliff associated with pandemic relief funds and, in many states, legislative efforts at abolishing or reducing property taxes that would leave many communities in dire financial straits.   

In all of my years working in community, I have never witnessed this level of fragility, scarcity, and fear. The onset of COVID-19, in many ways, presented a very similar set of circumstances as it relates to resource scarcity and fear, but during that time we knew Congress was working to pass legislation that would ultimately unlock trillions of dollars to help stabilize families and communities. Some could argue that it was easier for foundation leaders to make the case for increasing payout during COVID because the increase was not indefinite. Today, on the other hand, there is absolutely no sign of federal relief in sight. 

While it is true that foundations cannot replace trillions of dollars in government funding cuts, it is also true that funders can and should step up to help mitigate the harm and disruption to our grantee partners and the nonprofit sector at large. However, as a prerequisite to stepping up, it is critically important for funders to exercise great humility, to listen, and to give deference to grantee partners as they are closest to the ground and know what they need best.

Listening to Close the Foundation-Nonprofit Gap

A few weeks ago, I met with a colleague, who runs a large regional organization, to catch up and to garner her thoughts on the challenges facing our sector. One thing in particular continues to sit with me from that conversation. She said, “The last thing I need from philanthropy [during this time] is another diagnostic, consultant, or an analyst to tell me how to do my job.” 

Another colleague of mine, who happens to run a national philanthropy-mobilizing organization, shared a very similar sentiment and perspective on funder support. To that end, a lot of our partners have all the data they need. They know their work and how to run their organizations. Oftentimes what our partners need most from us can be as simple as:

• Clear and timely messaging
• Willingness to take risks
• Commitment to continuous learning and staying up to date
• Creative thought partnership
• Social capital and connections to other funders
• Unrestricted, multi-year funding

In CEP’s report, the disconnect between foundation leaders and nonprofit leaders when it comes to foundations’ responses to the current political-socio-economic environment is absolutely alarming: Only a staggering 54% of nonprofit leaders believe funders have been effective in understanding the challenges nonprofits are experiencing whereas 93% of foundation leaders think otherwise. The disconnect is further illustrated by the fact that 91% of foundation leaders believe their responsiveness has been effective, but only 59% of nonprofit leaders would agree.

Bringing Foundation Boards Into the Conversation

Based on these two data points, one could surmise that there is an even greater disconnect between foundation boards of directors and their understanding of the challenges nonprofit organizations are facing (and CEP will soon release a brief “snapshot” report examining governance dynamics in the current context). 

At The George Gund Foundation, we enjoy the great privilege of having a board of trustees that leads with head and heart. They trust our staff, respect our experience and expertise, provide wise counsel, and encourage us to work strategically, creatively, and both at a systems and grassroots level.

While our staff is deeply connected and is always in lockstep with our partners, nearly 40% of our board is composed of community trustees, all of whom serve or have served in leadership roles at nonprofit organizations in our community.  As such, each of our community trustees brings a unique level of proximity and perspective to our organization and boardroom deliberations that inform our blind spots and help strengthen our effectiveness. We also invite grantee partners to our board meetings where they serve as speakers, panelists, and valued experts.

Whenever our board members, staff, and grantee partners are in the same room, our shared environment creates an energy that spurs vulnerability, creativity, psychological safety, deeper connection, higher learning, and complex problem solving. 

No foundation is “all-knowing,” perfect, or free of criticism, but the only way for us to become better aligned with our partners is to remove the bureaucracy, get out of our own heads, and realize that expertise and innovation do not live exclusively within the walls of our foundations. To that point, there should be no insecurities or apprehension about creating opportunities for our trustees and grantee partners to meaningfully engage with one another. In my opinion, direct conversation is oftentimes the best and most fruitful conversation. 

Some of my foundation leader colleagues may disagree with me on this front. And while I do think trustees should operate at a high level with a focus on their fiduciary duties and organizational strategy, they can also be visionaries and engage in deep, reflective, and open-ended conversations that may lead to an evolution in strategy and/or practices. The accompanying Board Book Insert that CEP published alongside this new report can serve as a key starting point for these vital discussions.

Business as Usual Is Not an Option

My suggestions are, indeed, a great departure from traditional foundation norms, but we find ourselves in a time where collaboration and coordination are vital. Division and isolation are tools of the oppressor. As such, business as usual is not an option. In order to effectively serve and advocate for the people and communities we cherish, foundations and nonprofit organizations must work with each other to build deeper trust and operate more as a cohesive unit and sector. 

The proverbial “us” versus “them” mentality could not have been more apparent than during Congress’ reconciliation process in early 2025. While legislation was moving to effectively hollow out essential federal programs for poor, working poor, and middle-class people and families, some of my foundation leader colleagues appeared to be more concerned about the potential increase in excise taxes and/or the 5% minimum distribution requirement. I still cannot believe the level of protectionism and isolation I saw during that time.

Here we are a year later, and our grantee partners are telling us that some of their funders are:

• Experiencing “crisis fatigue” (i.e., COVID and the current political-socio-economic environment)
• Quietly changing grantmaking priorities without notice to existing grantee partners
• Ending existing funding relationships without notice or tie-down grants
• Not interested in “political issues” and therefore not providing funding for anything related to BIPOC people and communities, democracy building, climate change/sustainability, women, refugees and immigrants, LGBTQ+ communities, or people and families experiencing homelessness

The issues are indeed vast and very complex and, at times, may seem insurmountable. However, working at a foundation affords us great privilege — along with a duty and a vehicle to act. Keep in mind: our values are not illegal!

Tony Richardson is president of the George Gund Foundation. He currently serves as chair of CEP’s Board of Directors.