The Philanthropic Imperative: Why Foundations and Donors Must Rise to Meet This Moment
Jul 9, 2025
A follow-up to our analysis of the One Big Beautiful Bill Act's impact on nonprofits
Most conversations about the One Big Beautiful Bill Act have focused on immigration enforcement and healthcare policy. But as we outlined in our previous analysis, the legislation creates an unprecedented crisis for America's nonprofit sector—one that demands an equally unprecedented response from philanthropic leaders.
The math is stark: 16+ million Americans will lose government services while nonprofit resources shrink by $7 billion over ten years. This isn't a temporary budget shortfall that organizations can weather through careful management. It's a fundamental reshaping of America's social safety net that places impossible demands on charitable organizations at precisely the moment their funding faces new restrictions.
For foundations and major donors, this represents more than a funding crisis—it's a defining test of philanthropic leadership. The question isn't whether they should respond, but whether they'll respond with the urgency and scale the moment demands.
The Uncomfortable Truth About Philanthropic Responsibility
Here's what most foundation boards and philanthropy advisors won't tell you: when government retreats from social service provision at this scale, the assumption that "private philanthropy will fill the gap" is mathematically impossible without dramatic changes in giving patterns.
The $1.3 trillion in cuts to Medicaid and SNAP over ten years cannot be replaced by the $74 billion in new charitable giving the universal deduction might generate. That's not pessimism—it's arithmetic. Even if every penny of increased charitable giving went to health and food programs (which it won't), we're talking about replacing $130 billion annually with $7.4 billion in new donations.
This means philanthropy faces a choice: dramatically increase their giving to prevent community collapse, or accept that vulnerable populations will simply go without services. There's no middle ground where modest increases in traditional grantmaking solve this crisis.
The moral imperative is clear. Organizations serving the most vulnerable—federally qualified health centers treating the uninsured, food banks feeding families cut from SNAP, legal aid organizations helping asylum seekers—face impossible choices between maintaining services and organizational survival. These aren't abstract policy debates; they're decisions that will determine whether real people receive healthcare, food, and legal protection.
But there's also a practical imperative that should concern every foundation board member and major donor: the community stability that enables prosperity and philanthropy to flourish depends on functional social infrastructure. Hospital closures destabilize regional economies. Increased food insecurity reduces educational outcomes and workforce productivity. Legal aid cuts create immigration chaos that affects entire industries.
You can't build wealth in a society that's falling apart. And that's exactly what happens when safety net organizations fail while demand for their services skyrockets.
Of course, this also means that traditional “feel good philanthropy” and “best intentions” don’t cut it anymore. As nonprofits must evolve to rely on data to increase their efficiency and effectiveness, philanthropy must follow suit and focus their investments on the highest impact programs and organizations, with the most effective solutions, most aligned with the needs of their community. Unprecedented urgency demands unprecedented rigor. Or, to put it simply, it’s gut-check time.
Why Traditional Philanthropic Approaches Won't Work
Most foundations and major donors are still operating like it's 2019, when government programs provided a stable foundation and charitable giving could focus on innovation and enhancement. That world no longer exists.
The typical foundation response to crisis—forming a committee to study the issue, issuing an RFP for innovative solutions, requiring detailed proposals—takes months or years while people lose healthcare coverage immediately. The Ford Foundation's BUILD program took two years to launch. The Robert Wood Johnson Foundation's Crisis Response Fund, one of the faster institutional responses, still required six months from conception to first grants.
Meanwhile, community health centers are treating patients who lost Medicaid coverage this month. Food banks are seeing 30-40% increases in demand from SNAP cuts. Immigration legal services organizations are turning away asylum seekers who can't afford the new $925 in fees required for basic protection.
Traditional risk-averse grantmaking becomes actively harmful when communities face existential threats. The foundation that refuses to fund general operating support because it "can't measure outcomes" is measuring the wrong thing. The outcome that matters is whether organizations can keep their doors open to serve people who have nowhere else to go.
Individual donors face similar temptations to maintain traditional approaches. The donor-advised fund holder who keeps optimizing their giving strategy while $250 billion sits in charitable accounts is prioritizing portfolio management over people's lives. The family foundation that sticks to 5% annual distributions because "we want to exist in perpetuity" is choosing theoretical future impact over immediate crisis response.
Strategic Actions for Foundations: Moving from Incremental to Transformational
Institutional foundations possess resources and credibility that make them uniquely positioned to lead crisis response—if they're willing to abandon business-as-usual approaches.
Emergency Operating Support Pools
Establish 15-20% of annual grantmaking for immediate deployment to organizations facing increased demand from safety net cuts. This isn't charity; it's crisis management. The Robert Wood Johnson Foundation's emergency response work shows that foundations providing rapid, flexible funding during crises achieve significantly better community outcomes than those maintaining traditional processes.
Structure these pools for 72-hour decision-making. If your foundation can't approve emergency funding faster than it takes to process a credit card application, your processes are part of the problem. Organizations like Feeding America and Partners in Health have demonstrated that rapid-response funding during crises saves more lives per dollar than carefully planned initiatives during stable periods.
Collaborative Crisis Funding
Join or create foundation collaboratives specifically addressing One Big Beautiful Bill Act impacts. The COVID-19 philanthropic response proved that foundation collaboratives can deploy resources faster and more effectively than individual institutional processes.
But don't spend six months planning the collaborative while organizations fail. Use platforms like Altruous to identify the most effective organizations with the most aligned and impactful solutions. Leverage existing networks like Grantmakers in Health, the Council on Foundations, or regional associations to coordinate immediate response while building longer-term partnerships.
Multi-Year General Operating Support
Convert existing program grants to 3-5 year general operating commitments. This provides organizational stability during policy transitions and allows nonprofits to focus on service delivery rather than constant fundraising.
The Packard Foundation's research shows that general operating support produces better outcomes than project funding, particularly during crisis periods when organizations need maximum flexibility. Stop requiring nonprofits to predict exactly how they'll use money in an unpredictable environment.
Capacity Building for Crisis Response
Fund technology systems, leadership development, and financial management improvements that enable nonprofits to serve more people efficiently. But focus on practical capacity building that improves service delivery, not theoretical organizational development.
This means funding CRM systems that help food banks track inventory and distributions, not strategic planning consultants. It means supporting leadership development for health center executives managing increased patient loads, not retreat facilitators running visioning exercises.
Policy Advocacy Investment
Support nonprofit advocacy efforts and policy research organizations working to mitigate harmful provisions or advance protective policies. Foundation funding for organizations like the Center on Budget and Policy Priorities, National Immigration Forum, and Center for Budget and Policy Priorities provides crucial analysis that influences policy debates.
But don't hide behind "non-partisan" restrictions. Policy advocacy that protects vulnerable populations isn't partisan—it's moral. Use the full extent of your legal authority to support advocacy that advances your mission.
Strategic Actions for Individual Philanthropists: Deploying Resources at Speed
Individual philanthropists—particularly those with donor-advised funds and family foundations—possess unique advantages for rapid response that institutional foundations lack. You don't need board approval, committee reviews, or bureaucratic processes. You can move as fast as you can make decisions.
Accelerated DAF Distributions
If you have a donor-advised fund, commit to distributing 15-20% of your balance annually rather than the typical 5-7%. Focus on organizations serving populations affected by safety net cuts: community health centers, food banks, immigration legal services, and social service agencies.
With over $250 billion sitting in DAF accounts while nonprofits struggle to maintain services, the disconnect between available resources and urgent need is morally indefensible. Fidelity Charitable's research shows that DAF holders who increase distribution rates during crises report greater satisfaction with their philanthropy and stronger connections to the organizations they support.
Direct Emergency Grants
Provide immediate unrestricted funding to organizations facing increased demand. This is where individual donors can outperform foundations: you can write a check this week to an organization that needs it this week.
Follow the MacKenzie Scott model of large, unrestricted grants to organizations doing essential work. Her approach—identifying high-performing organizations and providing transformational unrestricted support—demonstrates how individual philanthropists can achieve maximum impact through trust and speed rather than oversight and restriction.
Corporate Giving Threshold Support
Help corporations meet the new 1% charitable giving requirement through matching funds or collaborative giving arrangements. Many companies currently giving below the 1% threshold face a choice between losing tax benefits or dramatically increasing their charitable contributions.
Partner with corporations in your network to design giving strategies that meet the new requirement while supporting organizations addressing One Big Beautiful Bill Act impacts. This maintains corporate philanthropic partnerships while ensuring nonprofits don't lose support during the transition.
Local Infrastructure Investment
Focus giving on community-level organizations that will absorb increased demand from federal cuts. Your local community foundation, food bank, federally qualified health center, and legal aid society are the organizations that will face immediate pressure from policy changes.
These organizations often provide exceptional social return on investment because they operate with deep community knowledge and established service networks. A $50,000 grant to your regional food bank may serve more families than a $50,000 grant to a national organization with higher overhead and less community connection.
Family Foundation Activation
Families with private foundations should consider increasing annual distribution rates above the required 5% minimum, potentially reaching 8-10% during the crisis period. The Giving Pledge research shows that families increasing their giving during community crises report higher satisfaction and family engagement with their philanthropy.
Use this crisis as an opportunity to engage next-generation family members in meaningful philanthropy. Young adults often respond more enthusiastically to emergency response giving than to traditional foundation grantmaking because they can see immediate impact from their involvement.
The Leverage Opportunity: Why Crisis Giving Achieves Maximum Impact
Smart philanthropic investments during this period can achieve unprecedented leverage. Every dollar provided to food banks, health centers, and legal aid organizations serves populations that would otherwise have no alternatives. This creates exceptional social return on investment compared to normal market conditions where government and charitable services overlap.
The Council on Foundations' emergency response research indicates that philanthropic investments during government service reductions achieve 3-5 times normal impact metrics because recipient organizations operate with full capacity utilization and serve populations with the greatest need.
Real-world examples demonstrate this leverage:
Feeding America reports that during SNAP reduction periods, every dollar donated generates $8 in food assistance value through their purchasing power and distribution networks
Partners in Health data shows that emergency health funding in areas with reduced government services produces 4x the patient impact per dollar compared to routine health philanthropy
Legal aid organizations report that emergency funding during immigration enforcement periods serves 6x more clients per dollar because demand far exceeds capacity
This isn't charity—it's strategic investment in community infrastructure during a period when that infrastructure faces existential threats.
The Accountability Framework: Ensuring Maximum Impact
Foundations and individual donors stepping up during this crisis should demand and provide accountability that ensures maximum impact. Support organizations that can demonstrate clear service delivery metrics, maintain transparent financial management, and engage in evidence-based program design.
Use evaluation platforms like GiveWell and Altruous to identify nonprofits with strong operational capacity and measurable impact. Use them to accelerate your discovery, research, fund deployment, and impact reporting. During crisis periods, these evaluative approaches become even more important as resources must achieve maximum efficiency.
But don't let perfect become the enemy of good. Organizations serving people who lost Medicaid coverage don't have time for six-month evaluation processes. Use existing research and reputation rather than requiring custom evaluation studies that delay critical funding.
Focus on output metrics that matter:
How many people are receiving services who otherwise wouldn't?
How quickly can organizations scale services to meet increased demand?
How much is each client helped, and for how long?
How sustainable are the organizations' operations if crisis funding continues?
These questions can be answered quickly with existing organizational data rather than requiring elaborate new measurement systems.
The Historic Test of Philanthropic Leadership
The One Big Beautiful Bill Act creates a test case for whether American philanthropy can fulfill its promise of filling gaps that government cannot or will not address. If foundations and major donors fail to meet this challenge, they risk not only immediate community harm but also long-term questions about philanthropy's role in democratic society.
Previous moments of government retreat from social spending—the Reagan-era budget cuts, the 1996 welfare reform, the 2008 financial crisis—demonstrated that philanthropic response often falls short of actual need. But those policy changes occurred gradually and with smaller scope than the current legislation.
This moment is different. The scale of need is larger, the timeline is compressed, and the philanthropic sector has more resources available than ever before. Total U.S. charitable giving exceeded $450 billion in 2022. Foundation assets exceed $1 trillion. Donor-advised funds hold $250 billion. The resources exist for meaningful response.
The question is whether philanthropic leaders have the vision and courage to deploy those resources strategically rather than incrementally.
Beyond Crisis Response: Building Long-Term Resilience
Smart philanthropic response to the One Big Beautiful Bill Act isn't just about surviving the immediate crisis—it's about building organizational and community resilience that can withstand future policy shocks.
This means funding nonprofit collaboratives that share resources and reduce duplication. It means supporting advocacy organizations that can influence future policy debates. It means building endowments and reserves that provide stability during uncertain periods.
Most importantly, it means demonstrating that strategic philanthropy can achieve outcomes that government programs cannot. The nonprofit organizations that emerge stronger from this crisis will be those that can prove their effectiveness, efficiency, and irreplaceable value to their communities.
The Choice Before Us
The One Big Beautiful Bill Act forces a moment of truth for American philanthropy. Foundations and major donors can either rise to this occasion with strategic, sustained investment in affected nonprofits, or they can maintain traditional approaches while communities suffer the consequences of policy choices they cannot influence.
This isn't about political partisanship—it's about practical problem-solving. When millions of people lose access to healthcare, food assistance, and legal protections, the organizations that serve them need resources to continue operating. The political debates that created these cuts are less important than the human needs those cuts create.
The choice is clear: foundations and individual philanthropists can either prove that private charity can effectively respond to large-scale social challenges, or they can let this moment pass while maintaining business-as-usual approaches that history will judge as inadequate.
The nonprofit organizations working to address climate change, racial justice, global health, and other critical challenges don't need another study about philanthropic innovation. They need partners who understand that effective response requires both urgency and scale.
The communities losing access to government services don't need another foundation strategy retreat. They need immediate support from philanthropic leaders who recognize that community stability enables everything else they care about.
The next generation of philanthropists watching how current leaders respond to this crisis doesn't need more lectures about strategic giving. They need examples of what bold, effective philanthropy looks like when the stakes are highest.
History will remember how philanthropic leaders responded when American communities faced their greatest need in decades. The resources exist for transformational response. The question is whether the will exists to deploy them. The clock is ticking, the need is urgent, and the choice is up to each of us.
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Altruous helps philanthropic organizations identify high-impact nonprofits and design strategic giving approaches that create measurable social outcomes during both stable and crisis periods. Our platform provides the research and analysis needed to move from traditional charity to strategic social investment. Because community resilience requires both immediate response and long-term partnership. Contact us at to learn more, and continue the conversation. We’d love to hear from you.
