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NEW YORK (AP) — The John D. and Catherine T. MacArthur Foundation will increase its giving over the next two years in response to what it calls a “crisis" prompted by the Trump administration's freeze on federal foreign aid and the now- suspended freeze on federal grants.
"This is a major crisis for our sector and it’s a time when those of us who can do more should do more," said John Palfrey, president of MacArthur Foundation, in an interview Wednesday with The Associated Press.
Palfrey announced the increase in a blog post on the foundation's website, saying, “The cliff of funding from federal programs has sent budgets underwater in field after field, and people and communities in the United States and abroad will suffer.”
Palfrey said the foundation would increase giving from 5% of its endowment, which is the minimum required by the Internal Revenue Service, to at least 6% for the next two years. The foundation reported it had $8.7 billion in assets in 2023 and it pays out around $400 million annually. Palfrey said he expected to grant out around $150 million more over the next two years.
In his first days in office, President Donald Trump suspended foreign aid and directed the Office of Management and Budget to temporarily suspend all federal grants and contracts. Trump said he wanted to review whether all the grants aligned with his policies. The moves have had profound impacts across many sectors.
The U.S. is the largest funder of global humanitarian responses and spent $68 billion on foreign aid in 2023. In 2021, nonprofits reported receiving $267 billion in government grants, according to an analysis of the tax forms that nonprofits file by the Urban Institute.
In comparison, foundations granted out $103 billion in 2023, according to research from GivingUSA.
Palfrey called on other foundations to join them in the commitment to increase their giving.
“Philanthropy should act in a different way than we have in the past, which is historically, we’ve simply given out more money when the stock market has gone up and we’ve given out less money when the stock market has gone down,” he said.
Freedom Together Foundation, formerly called the JPB Foundation, also announced that it would double its grantmaking to 10% of its endowment in response to the Trump administration's policies.
Deepak Bhargava, the foundation's president, wrote in a letter that the current moment reminds him of the AIDS crisis, when activists pushed the government to find a cure and changed the place of LGBTQ+ people in society.
“The movement made a way out of no way. That can happen again, as it has so many times throughout American history,” Bhargava wrote. “There is a dispiriting tide of fear right now, and I’m disappointed by how few leaders and institutions are stepping up. But my own experience and our shared history teaches us a hopeful lesson: courage is contagious.”
The Chicago-based MacArthur Foundation is best known for its “genius” fellowship, which recognizes extraordinary people who work across disciplines and awards them a $800,000 grant. The foundation also focuses on climate, criminal justice and journalism initiatives and has ongoing commitments to Chicago and Nigeria.
Palfrey said foundations found ways to make more money available to their grantees during the COVID-19 pandemic and could do so again now. For example, the MacArthur Foundation was one of eight foundations that issued bonds, essentially borrowing against their endowments to be able to pay out more in the short term.
“I think we need to do something different in 2025,” Palfrey said. “But I think it’s the same rationale."
Elisha Smith Arrillaga, vice president of research at The Center for Effective Philanthropy, said nonprofits report feeling a great deal of uncertainty and anxiety because of the president's executive orders.
“Really what nonprofits do is that they stand in the gap for all Americans," she said. "So my hope is that organizations and individuals across this country doing this work in their communities will stand up for the nonprofits that they support, especially at a moment like this.”
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Associated Press coverage of philanthropy and nonprofits receives support through the AP’s collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content. For all of AP’s philanthropy coverage, visit https://apnews.com/hub/philanthropy.
