Smart Reform Part II. Philanthropy's Role in Helping Nonprofits Move off the Funding Cliff.

Written by Blossom Johnston, CEO Idaho Partners for Good

Last month I wrote about Smart Reform; a how-to to reduce government waste with the least amount of impact on the Americans these agencies exist to serve. While it got good feedback on the approach, I do not have the power or influence to make these types of changes.

So, let's try a different angle that I do have some influence in–philanthropy. The funding challenge that has put the squeeze on so many nonprofits does not stem from a singular source. Some have not recovered in the aftermath of Covid; they are paying higher prices for everything, their need to pay living wages, and the cuts in government funding all contribute to what we are seeing at every level-national, state and local communities. While I may not be the source of these constraints, I do believe solutions might lie in embracing these constraints.

I created a poll to better understand how noprofits are being impacted at the moment, and the results were interesting!

Let's unite as philanthropists (lovers of humanity) and identify new ways to do things within these current constraints. According to data from the Urban Institute, Wall Street Journal, and the Associated Press as well as many other news sources, the pressure on the nonprofit sector is greater because of the combination of all these constraints intersecting at the same time. It is a perfect storm that could take out many who have devoted their lives in the service of others.

Let's throw the door open wide to this issue of funding constraints and see how it might spark solutions that get us truly focused on what is most important–our families, neighbors, friends and our quality of life.

Can we begin by agreeing that all of us tap into the nonprofit sector, in some form or fashion? If you go to church, yep it is a nonprofit. How about the ballet, theatre, opera or museum? Yes, they are nonprofits. Know of someone who needs a little extra help affording food, housing, or low-cost healthcare? You got it–nonprofits fill these gaps too. Everywhere we turn nonprofits are filling the gap!

What Can We Do?

Here are thoughts from a philanthropist’s point of view that I have aggregated from a variety of sources.

Stop and listen. Go talk to the nonprofits you have historically supported to find out what is happening in their world. Hopefully, you have built a relationship of trust so they will be honest. Then, do what you can including emergency funding, or lend them your experts to provide legal, financial, communications, expertise.

Help shift mindsets: encourage those you fund to shift their mindset to see constraints as a positive, forcing function to get to new solutions. BTW - we have human-centered design experts for hire to help them get to new solutions.

Incentivize strategic partnerships: this is a key theme for us in 2025. We are looking for these kinds of partnerships to accelerate the good we do.

Try something new: Instead of sticking to the 5% annual disbursement requirement, how about trying out Program Related Investments (PRI) used by Ford Foundation, Packard Foundation, JA & Kathryn Albertson Foundation. Or, Mission-related Investments (MRI) used by the Heron and McKnight Foundations. Both these options require education and expertise but are great ways to capitalize on your assets and get more capital into the community.

Help them dissolve in a healthy manner: It is really hard and very emotional to stop doing something that people devote their lives to yet there are times and seasons when some programs and services need to end.

Spend down your private foundation assets: Make a bigger impact in a shorter timeframe by spending down your foundation assets and getting them into the community. Many of America's largest foundations were created by entrepreneurs who solved a problem the world needed them to solve. Perhaps, it is time for America's serial entrepreneurs to pivot and use their know-how to help solve this current, pressing challenge!

Philanthropy has always been about more than money—it’s about imagination, courage, and care for one another. If we want to move nonprofits off the funding cliff, we need to be bold, responsive, and collaborative. The constraints we’re facing aren’t just barriers—they’re signals, pushing us to rethink and reimagine how we support the organizations that hold the fabric of our communities together.

Let’s lean in. Let’s be the partners our nonprofits need. And most of all, let’s not wait for permission to do what we know is right.

The time to act is now.

Here is just one example: One of our premiere grantees is facing big challenges: The Idaho Capital Sun detailed how Boise-based nonprofit Jesse Tree, dedicated to preventing evictions and homelessness, experienced a 51% budget cut after losing federal grants in 2022. Despite this, the organization managed to prevent eviction for 1,500 families in 2024 by securing over $1 million in private funding.

To learn more about how we are teaching philanthropists how to give better and how we are resourcing and coaching nonprofits so they get better, email us at info@idahopartners4good.org.