Two articles landed in our inbox last week, sparking conversations in our office about how foundation payout decisions intersect with the realities of government funding for nonprofits.
MacArthur Foundation’s “Six Hard Questions About Set It at Six” challenges philanthropy to think critically about payout rates. The Dorothy A. Johnson Center for Philanthropy’s “Nonprofits and Government Revenue: Understanding a Complex Relationship” explores the complexities nonprofits face with government funding—from delays and shifting priorities to unfunded administrative requirements. These conversations are deeply connected.
Direct service organizations ensure government funding reaches communities effectively. While public funding supports essential services, it doesn’t always cover what nonprofits need to sustain and evolve. Philanthropy shouldn’t replace government funding but can strengthen nonprofit capacity, support long-term planning, and provide flexibility where public funding is more rigid.
For funders weighing payout rates, the question isn’t just how much to give but how to ensure funding complements public resources for long-term stability. Instead of simply increasing payouts, philanthropy can provide flexible funding, multi-year grants, and bridge solutions to help nonprofits navigate uncertainty.
MacArthur Foundation asks how much philanthropy should give. The Johnson Center reminds us to ask how well government and philanthropy are working together. These discussions will shape the future of nonprofit sustainability.
