Nila Kartika Wati
The landscape of American progressive philanthropy is currently undergoing a period of profound structural and ideological reassessment as global geopolitical crises, domestic political shifts, and legal challenges to civil society converge. For decades, the philanthropic sector has operated under a model that prioritizes institutional longevity and risk mitigation. However, as movements for social justice face an environment characterized by what critics call "accelerated imperialism" and rising authoritarianism, the traditional methods of grantmaking are being scrutinized for their perceived inadequacy. The current moment, marked by the conflict in Gaza and the specter of increased federal scrutiny of non-profit organizations, has forced a confrontation between the stated values of progressive foundations and their actual operational practices.
The Structural Constraints of Modern Giving
At the heart of the tension in the philanthropic sector is a fundamental disagreement over the "floor" versus the "ceiling" of charitable obligations. Under the Internal Revenue Code Section 4942, private foundations are generally required to distribute at least 5 percent of the fair market value of their non-charitable-use assets annually. While this 5 percent payout is intended as a legal minimum to maintain tax-exempt status, it has historically functioned as a maximum for many institutions. This "payout floor" has become a point of contention for activists who argue that hoarding assets during times of global crisis undermines the very missions these foundations were established to support.
Furthermore, the professionalization of philanthropy has led to a culture of "strategic silos." In this model, foundations categorize their giving into narrow issue areas such as "environmental justice," "criminal justice reform," or "women’s rights." While intended to streamline impact, critics argue these silos ignore the intersectional reality of modern social movements. For example, a foundation dedicated to women’s rights may refuse to fund a campaign related to incarceration—even if that campaign is led by and for women—because it falls under the "criminal justice" silo. This rigid adherence to categorization often prevents foundations from responding to the evolving needs of grassroots organizations that must pivot their strategies in response to immediate community crises.
A Chronology of Philanthropic Retrenchment: 2020 to 2024
To understand the current state of the sector, one must look at the timeline of funding shifts over the last four years. Following the 2020 racial justice uprisings sparked by the murder of George Floyd, the philanthropic sector saw an unprecedented surge in commitments to racial equity. According to data from Candid and the Center for Disaster Philanthropy, billions of dollars were pledged to Black-led organizations and systemic reform efforts.
However, by 2022 and 2023, a "retrenchment" began to take hold. This period saw a decline in multi-year unrestricted funding as foundations grew cautious of "mission drift" and external political pressure. The 2023 Supreme Court ruling against affirmative action in higher education further chilled the sector, leading to fears that grantmaking programs specifically targeting marginalized groups could face litigation. This fear was realized in 2024 with the legal challenges against the Fearless Fund, a venture capital firm supporting Black women entrepreneurs, which sent shockwaves through the non-profit world.
The escalation of the conflict in Gaza in October 2023 served as a final tipping point. As grassroots organizations issued statements of solidarity with Palestinian liberation, several major foundations reportedly began cutting ties with long-term grantees. In late 2023, over 100 philanthropic organizations signed a "Funders for a Ceasefire" letter. Since then, reports have emerged of "tsunami-like" funding cuts targeting intermediaries and grassroots groups that endorsed the letter. This pattern suggests a shift away from "trust-based" models toward a more punitive or "risk-averse" stance when grantees engage in controversial geopolitical discourse.
Case Studies in Strategic Misalignment
The disconnect between funder strategy and movement reality is perhaps best illustrated by the experiences of organizations in Georgia and Missouri. In Georgia, a grassroots group focused on the rights of Black women workers sought to join the "Ban the Box" campaign—a national effort to remove criminal record inquiries from initial job applications. Despite the clear link between employment access and the economic stability of women, several "women’s rights" funders declined to support the initiative, citing a narrow focus that did not include criminal justice reform.
Similarly, in Missouri, an environmental justice organization redirected its resources to support the 2014 Ferguson uprisings following the death of Michael Brown. The organization’s leadership argued that the police violence facing their base was an immediate threat that took precedence over long-term environmental advocacy. However, detached from the urgency on the ground, many funders perceived this move as "mission drift" rather than a strategic necessity for base-building. These instances highlight a recurring theme: movements are often forced to choose between community accountability and funder compliance.
The Legal and Political Climate
The current caution in philanthropy is not happening in a vacuum. The legal landscape for civil society is becoming increasingly hostile. Conservative legal groups have begun utilizing the Civil Rights Act of 1866 (Section 1981) to challenge race-conscious grantmaking, arguing that such programs constitute unlawful discrimination. This has led many foundation boards to adopt "conservative legal advice," which often results in the dilution of language around racial justice and the withdrawal of support for "risky" advocacy work.
Additionally, the prospect of a new federal administration doubling down on the "campaign against civil society" has created a sense of urgency. Proposed legislative changes and executive actions could potentially target the tax-exempt status of organizations involved in protests or international solidarity work. For many foundations, the response to this threat has been to "wind down" support for groups that are most likely to be targeted by the state, effectively offloading the risk onto the most vulnerable organizations in the ecosystem.
Emergent Frameworks and the Path Toward Accountability
In response to these challenges, new frameworks and tools have emerged to guide funders toward more "liberatory" practices. One such tool is "Raise the Bar," launched by Funders4Palestine (F4P). This tool provides a rubric for foundations to evaluate whether their practices are helping or harming the movements they fund. It encourages a shift from "risk reduction" to "solidarity orientation," arguing that if a community is facing a disproportionate risk, the role of philanthropy should be to move toward that risk, not away from it.
Other frameworks, such as the Justice Funders’ "Resonance Framework," advocate for the redistribution of power and resources in a way that centers community leadership. These models call for:
- True Trust-Based Giving: Moving beyond the rhetoric of trust to implement governance structures where movement leaders have a say in how funds are allocated.
- Long-Term Commitments: Recognizing that structural oppression cannot be dismantled in three-year grant cycles and that "long-term" should mean decades, not years.
- Transparency in Decision-Making: Providing clear explanations for funding cuts and allowing grantees to appeal or provide feedback on strategic shifts.
Analysis of Implications for the Non-Profit Sector
The implications of this philanthropic shift are profound. If major foundations continue to retreat from "risky" social justice work, the burden of funding will fall increasingly on individual donors and smaller, more radical family foundations. This could lead to a "two-tier" non-profit sector: one tier of well-funded, highly professionalized organizations that remain within the bounds of "safe" advocacy, and a second tier of underfunded grassroots groups that take the most significant risks but lack the resources to sustain their work.
However, there are signs of resilience. New donor collaboratives, such as the Woven Futures Fund and the "In Our Name" fund, have emerged to fill the gaps left by traditional philanthropy. These funds are often led by the movements themselves, ensuring that the money flows to where it is most needed without the constraints of traditional institutional silos.
The future of progressive philanthropy likely depends on "funder organizing"—the process of staff and donors working within their institutions to challenge the status quo. This involves power mapping boards of directors, educating decision-makers on the interconnectedness of global struggles, and building coalitions across the sector to share risk. As the political climate grows more volatile, the choice for foundations will become clearer: they can either act as a stabilizing force for a status quo that many of their missions claim to oppose, or they can embrace a model of solidarity that treats the survival of movements as more important than the preservation of endowments.
In conclusion, the current crisis in philanthropy is a reflection of a broader global instability. The "imperial boomerang"—where tactics of repression used abroad eventually return to the domestic front—is now visible in the way US foundations are being pressured to police their grantees. To meet this moment, the sector must decide if its primary accountability is to the law and the market, or to the people and movements fighting for a more just and life-affirming future. The tools for transformation exist; the question remains whether the institutional will exists to use them.
