From more risk to less control, philanthropy is rethinking how it works

With government funding drying up and political scrutiny of nonprofits increasing, all eyes are on philanthropy to step up. But that also means the sector is under pressure to adapt, innovate, and maximize its impact — whether it’s stomaching more risk or handing over more control to communities. At South by Southwest, or SXSW, in Austin, Texas, this week, philanthropy leaders convened for a series of discussions — both onstage and behind closed doors — acknowledging that change is needed to meet the moment. While philanthropy alone cannot fill the gaps left by shrinking government coffers, funders are increasingly being called on to align their endowment investments with their missions to ensure their dollars go further. "If you’re not thinking about aligning your investing dollars with your mission, then you’re leaving a huge social change lever on the sidelines," said Sarah Haacke Byrd, CEO of Women Moving Millions. But a growing concern for U.S.-based organizations is the potential threat to their 501(c)(3) tax status, particularly for nonprofits working on issues labeled as DEI — diversity, equity, and inclusion — by the Trump administration. Donor-advised funds, or DAFs, were discussed as a possible workaround, allowing donors to direct funds more flexibly while shielding organizations from direct political pressure. Rethinking risk, power, and speed The shifting political landscape has raised fears that philanthropy will pull back from progressive causes, but some funders argue that this moment calls for greater risk-taking, not retreat. "It’s about risk for me and how the organization can take on a little more of the risk in these turbulent times," said Joe Tolbert Jr., executive director of the Waymakers Collective​. "What we’re trying to do at Waymakers is take on a little more of that risk that this moment is placing on the communities in which we’re trying to build." Rather than focusing on institutional self-preservation, some funders are embracing community-led decision-making and participatory grantmaking. "I just will name another fear that I have in the moment, which is that philanthropy and the field will focus on protecting those institutions and those structures that were already not working," said Lane Sugata, senior program officer at the Ford Foundation​. "I think that this is an opportunity that we have to co-create and to imagine new futures." One way to stretch philanthropic dollars further is to spend down endowments faster, rather than treating them as permanent fixtures. "As of 2020, U.S. philanthropy had $1.2 trillion sitting on Wall Street in foundation endowments," said Lora Smith, director of investment partnerships for Justice Funders. "If that money isn’t being mission-aligned, it could be actively harming the communities we aim to serve." Women, wealth, and the next era of philanthropy SXSW discussions unfolded against the backdrop of International Women’s Day, highlighting how women are reshaping philanthropy, with a historic shift in wealth underway. By 2030, it’s estimated that women will manage over $32 trillion in global discretionary spending, said Haacke Byrd of Women Moving Millions. "And in the next decade, we’re actually going to see a shift. We’re going to see women control more wealth globally than men." Women philanthropists like MacKenzie Scott are already changing the game, pioneering trust-based giving, collective giving models, and unrestricted funding. Giving circles — where donors pool resources to fund local and global initiatives — are becoming a powerful force, allowing more women to engage in philanthropy without needing vast personal wealth. This shift is pushing philanthropy away from rigid, compliance-driven models toward more flexible, impact-focused approaches. Instead of asking grantees to jump through bureaucratic hoops, funders are beginning to trust communities to know what they need. New models take center stage Indeed, philanthropy is increasingly looking to trust-based and radical giving models to break away from traditional top-down grantmaking. The Waymakers Collective, for example, has built a community-controlled fund where grantees become decision-makers. "Once you're a grantee, you can opt into voting membership, which makes you a member of our board of directors," Tolbert said​. Erika Augustine, founding executive director of the David Prize — an annual $1 million no-strings-attached award for five individuals making a difference in New York City — said that "we invest in the person, not the idea"​ when awarding unrestricted funding to visionary New Yorkers where “there are no metrics, no impact reporting, no outputs” required. With a background in international development before shifting focus to domestic work with the David Prize, Augustine noted that the global development community "has a lot they could learn from" more community-based approaches. In this moment of upheaval, she sees an opportunity to experiment with new models and rethink traditional funding strategies. "We’ve seen that the impact grows exponentially when you trust community-led processes," said Tolbert​. "From people getting their first grants and feeling the confidence in themselves and their work to go after other grants, that is an impact that comes from listening to the community." These approaches aren’t just about who gets the money — but who controls it. “If we’re not prepared to govern, we’re not prepared to win,” Tolbert said​.