The MacArthur Foundation Steps Up in Response to a Funding Crisis
A Call to Action: MacArthur Foundation Increases Giving
The John D. and Catherine T. MacArthur Foundation has announced plans to increase its philanthropic efforts over the next two years in response to what it describes as a “crisis” triggered by the Trump administration’s freeze on federal foreign aid and grants. John Palfrey, president of the foundation, emphasized the urgency of the situation, stating that this is a critical moment for the nonprofit sector and that organizations with the capacity to do more should step up. In a blog post, Palfrey highlighted the severe impact of funding shortfalls from federal programs, which have left budgets strained across numerous sectors and put vulnerable communities at risk.
To address this, the MacArthur Foundation will increase its annual giving from 5% of its endowment—the minimum required by the Internal Revenue Service—to at least 6% for the next two years. With the foundation’s assets valued at $8.7 billion in 2023 and its current annual payout of approximately $400 million, this adjustment is expected to release an additional $150 million over the next two years. Palfrey called on other foundations to join this effort, urging the philanthropic sector to rethink its approach and act with greater urgency.
The Impact of Trump’s Policies on Nonprofits and Global Aid
The funding crunch faced by nonprofits and global aid programs is a direct result of President Donald Trump’s executive orders. Shortly after taking office, Trump suspended foreign aid and directed the Office of Management and Budget to temporarily halt all federal grants and contracts. The administration aimed to review whether these grants aligned with its policy priorities. While some of these freezes have since been lifted, the initial measures have had far-reaching consequences.
The United States is the world’s largest funder of global humanitarian responses, having spent $68 billion on foreign aid in 2023 alone. Domestically, nonprofits rely heavily on federal grants, which totaled $267 billion in 2021, according to data from the Urban Institute. In contrast, foundations granted out $103 billion in 2023, as reported by GivingUSA. The sudden disruption to these funding streams has left many organizations scrambling to maintain their operations and services.
Foundations Rise to the Challenge
In addition to the MacArthur Foundation’s commitment, other organizations are also taking bold steps to address the funding gap. The Freedom Together Foundation, formerly known as the JPB Foundation, has announced plans to double its grantmaking to 10% of its endowment. Deepak Bhargava, the foundation’s president, drew parallels to the AIDS crisis, when activists successfully pushed for government action and societal change. Bhargava expressed hope that the current moment could inspire similar courage and innovation, emphasizing that “courage is contagious.”
The MacArthur Foundation, best known for its prestigious “genius” fellowships, which award $800,000 to individuals demonstrating exceptional creativity and promise, has a long history of supporting critical causes such as climate action, criminal justice reform, and journalism. The foundation has also maintained strong commitments to local initiatives in Chicago and international efforts in Nigeria. During the COVID-19 pandemic, MacArthur and other foundations demonstrated their ability to adapt and increase their giving, even taking unconventional steps like issuing bonds to free up additional funds.
The Role of Philanthropy in Times of Crisis
Palfrey and other leaders argue that philanthropy must evolve to meet the challenges of the moment. Historically, foundation giving has often fluctuated with the stock market, increasing during boom times and decreasing during downturns. However, the current crisis demands a more proactive approach. Palfrey suggested that foundations should draw on the lessons of the pandemic, when many organizations found creative ways to expand their support. He emphasized that while the specific strategies may differ, the need for bold action remains the same.
Elisha Smith Arrillaga, vice president of research at the Center for Effective Philanthropy, echoed these sentiments, noting that nonprofits are facing significant uncertainty and anxiety due to the president’s executive orders. Nonprofits play a vital role in filling gaps left by government funding, and their work is more crucial now than ever. Arrillaga called on individuals and organizations to advocate for the nonprofits they support, particularly during this challenging time.
The Road Ahead: A Call for Solidarity and Leadership
The MacArthur Foundation’s decision to increase its giving serves as a powerful reminder of the role that philanthropy can play in addressing systemic challenges. By stepping up their commitments, foundations like MacArthur and Freedom Together are setting an important example for others in the sector. However, the scale of the current crisis requires more than just increased funding—it demands a collective effort to advocate for policies that prioritize the needs of vulnerable communities.
As the nonprofit sector navigates this uncertain landscape, the actions of foundations like MacArthur offer a glimmer of hope. By embracing courage and collaboration, the philanthropic community can rise to the challenge and help build a more equitable future. The question now is whether other foundations and leaders will join this effort, recognizing that the stakes have never been higher.
In conclusion, the MacArthur Foundation’s decision to increase its giving is not just a response to a funding crisis—it is a call to action for the entire philanthropic sector. At a time when government support is uncertain, the role of foundations and nonprofits in driving change is more critical than ever. By standing together and embracing their responsibility to act, these organizations can help ensure that communities in need are not left behind.
