Nila Kartika Wati
The landscape of American philanthropy is undergoing a fundamental transformation as traditional grantmaking models face unprecedented pressure from both federal oversight and grassroots demands for systemic change. In September 2025, a directive from the Trump administration encouraged the Department of Justice to launch investigations into the Ford Foundation and the Open Society Foundations, two of the world’s most prominent philanthropic entities. This move signaled a significant shift in the political environment, demonstrating that even established, centrist-leaning institutions are no longer immune to politically motivated scrutiny. While more than 180 philanthropic organizations responded by signing a joint statement defending freedom of speech and condemning "acts of political violence," the internal reaction within the sector has been more complex. Many foundations have quietly begun "de-risking" their portfolios, often by withdrawing support from grassroots organizations perceived as politically controversial, even as a growing cadre of organizers works to repurpose wealth as a strategic tool for social justice.
The Escalation of Political Pressure on Philanthropic Independence
The federal interest in the Ford Foundation and Open Society Foundations marks a departure from historical norms of philanthropic autonomy. Historically, these organizations have operated with a degree of insulation from executive interference, provided they adhered to IRS regulations regarding non-partisan activity. However, the 2025 order suggests that the boundaries of "political activity" are being redefined by the state to include the support of broad civil rights and democratic participation initiatives.
In response to this shifting tide, the philanthropic community has seen a bifurcation. On one hand, institutional leaders are seeking legal and rhetorical cover, emphasizing their commitment to traditional democratic values. On the other hand, movement-aligned organizations report a "chilling effect" where funding for radical or frontline organizing is being curtailed to avoid attracting federal attention. This trend has highlighted a long-standing tension in the sector: the reliance of social movements on the very capital generated by the systems they seek to reform.
Case Study: 18 Million Rising and the Volatility of Grantmaking
A primary example of this volatility occurred recently with 18 Million Rising (18MR), a leading Asian American abolitionist organization. Following a single Instagram post expressing solidarity with Palestinian liberation, 18MR lost approximately $250,000—a quarter of its annual operating budget—after a major funder, the Wellspring Philanthropic Fund, raised objections. Wellspring, which had a history of supporting progressive causes, is currently in the process of a strategic wind-down, with plans to close its doors entirely by 2028.
The incident at 18MR serves as a microcosm of the broader instability within leftist funding ecosystems. When a single donor’s objection to a social media post can jeopardize 25 percent of an organization’s revenue, the structural vulnerability of the non-profit model becomes clear. However, the aftermath of the funding cut also demonstrated a new path forward. 18MR was able to recover its lost revenue by leaning into its community of individual donors and aligning with other major funders who shared its political stance. This resilience highlights a shift toward "donor organizing," where the goal is not merely to secure a gift but to build a political constituency of wealth-holders who are committed to the movement’s long-term objectives.
The 5/95 Contradiction: Analyzing the Financial Structure of Foundations
To understand the current crisis in philanthropy, one must examine the financial mechanics of how foundations operate. Under current United States tax law, private foundations are generally required to distribute at least 5 percent of the fair market value of their non-charitable use assets each year in the form of grants or eligible administrative expenses. This "5 percent rule" means that the remaining 95 percent of a foundation’s assets typically remain invested in global financial markets to ensure the endowment’s longevity.
Data suggests that this 95 percent is frequently invested in ways that directly contradict the mission of the grants being issued. For example, a foundation dedicated to environmental justice may have a significant portion of its endowment invested in fossil fuel companies, or a foundation focused on civil rights may hold shares in corporations that provide surveillance technology to law enforcement agencies. Critics argue that this model allows foundations to maximize profits through extractive industries while using a small fraction of those profits to mitigate the resulting social harm.
The movement to "organize money" seeks to bridge this gap. By advocating for "divest/invest" frameworks, organizers are pushing foundations to align their entire 100 percent of assets with their stated values. This involves not only changing grantmaking strategies but also engaging in shareholder advocacy, where foundations use their status as investors to influence corporate behavior from the inside.
Chronology of the Shift Toward Donor Organizing
The evolution of donor organizing can be traced through several key milestones over the last decade, culminating in the current strategic pivot:
- 2010s: The Rise of Social Justice Infrastructure: Organizations like the Solidaire Network and Resource Generation began formalizing the process of "class-traitor" organizing, encouraging high-net-worth individuals to redistribute their wealth and advocate for systemic economic changes.
- 2020: The Racial Justice Uprising: Following the murder of George Floyd, a massive influx of capital entered the racial justice space. This period exposed the limitations of "rapid-response" funding without long-term structural commitments.
- 2024: The Palestine Litmus Test: As domestic protests regarding US foreign policy intensified, support for Palestinian rights became a "red line" for many traditional funders, leading to the defunding of several grassroots organizations.
- 2025: The Movement Finance Forum: The inaugural gathering of the Movement Finance Forum brought together movement leaders, investors, and capital strategy practitioners to coordinate a "just transition" of wealth toward community control.
- Late 2025: Federal Intervention: The Trump administration’s DOJ order against major foundations forced a reckoning within the sector regarding the safety and sustainability of traditional philanthropic models.
New Models of Wealth Redistribution: The Kataly Foundation
In contrast to the traditional "perpetual endowment" model, the Kataly Foundation has emerged as a leader in the "spend-out" movement. Kataly is intentionally distributing its entire corpus of wealth over a set period, prioritizing the redistribution of resources to Black, Indigenous, and other communities of color.
Kataly’s approach extends beyond the volume of its grants. The foundation has reimagined its internal operations, focusing on "trust-based philanthropy" that reduces the administrative burden on grantees. Furthermore, Kataly transparently shares its investment strategies, demonstrating how a foundation can divest from harmful industries while simultaneously resourcing the movements that oppose them. This model challenges the industry standard of capital preservation, suggesting that in a time of political and ecological crisis, the immediate deployment of resources is more valuable than the long-term maintenance of an endowment.
The Role of "Class Traitors" and Cross-Class Solidarity
A central component of organizing money involves navigating the complex cultural and emotional landscape of wealth. Movement organizers Chanelle Gallant and Rebecca Vilkomerson have documented the challenges of building power across social classes. Gallant, a longtime anti-capitalist organizer, notes that many working-class activists are conditioned to avoid or fear wealth, viewing money solely as a tool of oppression. Conversely, wealthy progressives often struggle with guilt or a lack of political education regarding their role in a "just transition."
The concept of the "class traitor" is used to describe individuals who utilize their class privilege to undermine the systems that granted them that privilege. This involves more than just writing checks; it includes mapping relationships to power, leveraging proximity to corporate boards or political officials, and advocating for wealth redistribution measures like increased corporate taxes or housing justice campaigns that limit the power of landlords.
Official Responses and Sector Analysis
The philanthropic sector’s response to the DOJ investigations has been a mix of defiance and caution. Sector analysts suggest that the targeting of the Ford and Open Society Foundations is a "shot across the bow" intended to discourage other foundations from supporting voting rights or criminal justice reform.
"The right-wing has long understood that money is a tool to accomplish strategic goals," notes Vu Le, a prominent critic of the non-profit sector. "While the left often debates the morality of using ‘the master’s tools,’ the opposition has used those tools to build a formidable infrastructure. To mount a serious counterforce, the left must be equally strategic and fearless about organizing capital."
This sentiment is echoed by leaders in the Palestinian liberation movement, who have faced some of the most aggressive funding withdrawals. They argue that the "Palestine exception" in philanthropy is a testing ground for broader repression. If donors can be pressured into defunding Palestinian rights, the same tactics will eventually be applied to climate justice, reproductive rights, and labor organizing.
Broader Impact and the Future of Movement Finance
As the United States enters a period of heightened political polarization and potential authoritarianism, the role of wealth in social movements will remain a critical site of struggle. The move toward community-controlled wealth and regenerative economies represents a departure from the "charity" model of the 20th century. Instead of relying on the whims of wealthy patrons, movements are seeking to build their own financial institutions, such as community land trusts and cooperative investment funds.
The implications of this shift are profound. If social movements can successfully organize wealth at scale, they reduce their vulnerability to political shifts in Washington or the changing priorities of foundation boards. The goal is to move from a state of "funding" to a state of "resourcing," where the flow of capital is determined by the needs of the community rather than the requirements of the market.
Ultimately, the strategic realignment of philanthropy is not just about money; it is about power. By challenging the processes and relationships surrounding how wealth is managed and distributed, organizers are attempting to return accumulated capital to the communities from which it was originally extracted. In a period of "perilous danger" for democratic institutions, the ability to mobilize and protect these resources may determine the viability of the movements working to build a more equitable future.
