The Center for Effective Philanthropy (CEP) has recently shared some sobering survey data in “State of Nonprofits 2026: What Funders Need to Know.” The proportion of nonprofit CEOs who report that their own sense of feeling burned out is “very much a concern” has spiked from an already high 29% in 2025 to 46% in 2026.
And no wonder. 73% of CEOs report increased demand for their organization’s services in the face of disruptive shifts in the funding landscape that have pushed 30% of them to cut staff. “More than half of CEOs (56%) describe leading in an atmosphere of increased fear and stress, while simultaneously managing lower staff morale.” In the face of this upheaval, 57% of nonprofit CEOs say foundation grants are harder to secure.
Many practitioners and critics of philanthropy have strong opinions on what foundations should do in response to the looming crisis depicted in CEP’s survey data. Perhaps the most common demand is for foundations to take dramatic steps to spend more money, and sooner, e.g., by boosting payout rates, or by spending down endowments rather than meting out smaller amounts in perpetuity.
Other commentators, myself included, have argued that regardless of foundations’ approach to payout rates and perpetuity, they have little choice but to go back to the drawing board and develop new strategies for work in domains that have been upended by the Trump Administration, from public health and global development to education and immigration.
Finally, foundation leaders and boards are getting increasingly vocal calls from their staff, grantees, and field observers to denounce bad actors in government and the corporate world, and to stand in solidarity with communities and institutions experiencing fear and distress.
Depending on foundations’ values, bylaws, goals, and ways of working, one or some combination of these dramatic actions may indeed be an appropriate response to the current situation. But not all foundations will be able or inclined to take similar actions, in which case the demands to go big or go home in these various ways are often ignored or tuned out.
What Every Foundation Can Do
As I read the report, perhaps because it came from CEP, another more modest but universally applicable set of steps for foundation leaders came to mind: What if foundations simply dedicated themselves to getting better at making grants, and went so far as to make themselves publicly accountable for doing so? After all, making grants is their primary reason for being. Why not aim to do it much better?
Mario Cuomo once observed that when it comes to being a politician, “You campaign in poetry. You govern in prose.” It is one thing to envision and promise grand departures at political rallies. It is another to execute them on a day-to-day basis when you bear responsibility for governing in complex institutional settings. There is a similar dynamic in the realm of philanthropy. Foundations announce funding surges, share new strategies, and make statements of solidarity in poetry; they make grants in prose.
All foundations — no matter the causes they support, nor their values, strategies, and governance models — have the opportunity, and I would argue the responsibility, to become better grantmakers. If they were to do so, it would go a long way toward alleviating the nonprofit distress signals that CEP has registered in its recent report.
Foundations dedicated to becoming better grantmakers would be more apt to make the larger, longer-term, and less restricted — if not unrestricted — grants that nonprofits find most helpful. They would streamline proposal and reporting requirements that repeatedly put nonprofits through labor-intensive wringers that add little in the way of value. They would avoid pushing grantees to alter their priorities in order to gain access to funding. Foundations focused on self-improvement would communicate more clearly and consistently with their grantees — and they would listen better and learn more from grantees in turn.
Building a Culture of Continuous Improvement
Imagine a world in which a critical mass of foundations dedicated themselves to becoming easier for nonprofits to do business with — and to granting not just funding but also greater initiative, respect, and reciprocity to the organizations they support. That world is closer than you think.
By my count, using information from CEP’s website, around half of the twenty largest U.S. foundations, alongside 300+ others, periodically commission Grantee Perception Reports from CEP. These instruments confidentially survey grantees to register their quantitative and qualitative perceptions on the experience of working with the foundation and its contributions to their fields. CEP then benchmarks the survey results against a comparative set of peer institutions to help foundations identify their biggest areas for improvement.
I found CEP’s grantee perception reports extraordinarily helpful when I served as the director of the Hewlett Foundation’s U.S. Democracy Program. My team used the survey data to zero in on ways we could streamline and improve our grant practices, and they helped sharpen our work and strengthen our contributions to the field considerably.1
But CEP’s approach is not the only way to proceed. Foundations can commission different types of third party evaluations that solicit grantee feedback to illuminate where and how the grantmaker can do better.
The particular instrument a foundation uses to get better at grantmaking is less important than it having an overarching and sustained commitment to learning from and acting on grantee feedback — and holding itself publicly accountable for doing so. Here are five steps that all foundations could constructively take in this regard:
- Regularly commission third party assessments of the foundation’s grantmaking that proactively solicit confidential and candid grantee feedback.
- Publicly share the actual survey results (not an interpretive gloss on them) so that grantees and other external stakeholders can review how the foundation is doing and its strengths and weaknesses.
- Alongside the results, share a reflection that specifies where, why, and how the foundation will endeavor to improve its approach and practices to become a better grantmaker in the years ahead.
- Implement the proposed plan, track the results, and follow up with another evaluation and updated report in 2-4 years.
- Last but not least, build an institutional ethos and culture of continuous improvement in grantmaking from the board and leadership to all the program staff.
These five steps are not especially complex. But they are very difficult. They require abiding institutional commitments to continuous improvement, gathering and reflecting on data to inform that imperative, and sustained attention to the prosaic yet nonetheless critical details of grant practices and ways of working that best support grantees.
It can be done. Exemplary foundations of all sizes like the David and Lucile Packard Foundation, Echidna Giving, and the Archstone Foundation are already taking the steps outlined above. Others should follow their lead. If the field of philanthropy really wanted to address the challenges highlighted in the “State of Nonprofits 2026” report, this pattern would become the rule, not the exception.
Daniel Stid is a senior fellow at the American Enterprise Institute in Washington, DC, where his work focuses on civil society, philanthropy, and democratic governance. His substack newsletter, The Art of Association, explores these same themes.
- For more on this, see Daniel Stid, “Taking Democracy for Granted: Philanthropy, Polarization, and the Need for Responsible Pluralism,” SNF Agora Institute, Johns Hopkins University, July 2024 (pp. 45-46, 50-51). ↩︎
