The challenges facing philanthropy in 2026

Over the past year, the global funding ecosystem has entered a period of upheaval unlike anything seen in decades. The collapse of U.S. foreign assistance channels, rising geopolitical instability, and tightening risk tolerance across philanthropy have converged to reshape how money moves — and who has access to it. For Shelly Helgeson, chief strategy officer of Connective Impact, the shift is not just structural — it is cultural. In a recent Devex Pro Funding Briefing, Helgeson described a system increasingly defined by closed doors, referral-only pipelines, and a growing gap between the rhetoric of “flexible capital” and the reality faced by organizations on the ground. Founded in 2014, Connective Impact operates as a global membership network of more than 200 nonprofits and social enterprises working across low- and middle-income countries. Its members range from grassroots groups with two staff and sub-$250,000 budgets to large INGOs operating across continents. But Connective Impact is not a research shop or grantmaker. Instead, it positions itself as a relationship broker — an intermediary that gathers intelligence from hundreds of real-time conversations with both funders and implementers, then translates that insight into access. “We’re a membership network of about 200 nonprofits and social enterprises,” Helgeson said. “What we do as a team … is we are intentionally, really laser-focused on providing our members with insider intelligence, resources, and visibility into the funder landscape.” Why philanthropy is in paralysis That insider vantage point — sitting between organizations seeking funding and funders recalibrating their strategies — has given Connective Impact a rare panoramic view of what Helgeson calls a sector “in paralysis.” On the surface, many private funders say they are stepping up. In Helgeson’s conversations, philanthropy leaders insist they are giving “the same amount or more” than in previous years. But nonprofits are not necessarily experiencing that generosity. “There is sort of this disconnect,” she said. “Funders … are telling us, ‘We’re giving out money, we’re giving out the same amount or more than we have in previous years.’ But it’s going to the same actors.” The result is a widening gap between incumbents and newcomers — especially for organizations that lost government funding and are now seeking replacement capital. “I’m sure many people have heard this from funders — ‘We are just focusing on our current grantees right now. We’re giving more with less strings attached, but we’re not taking on new partners at this time,’” Helgeson said. For many organizations, especially those formerly reliant on USAID, the loss has been significant. Yet Helgeson said philanthropy has not responded with the same surge of emergency support seen during COVID. “[During COVID] we were seeing this overwhelming wave of generosity … and we just didn’t see this in 2025,” she said. “Many funders paused to restrategize, and yes, we need to restrategize in this moment. But we also have to start giving at the same time. We can’t pause our giving.” A move away from open calls One of the clearest shifts has been the move away from open calls. “We’ve seen a lot of funders go to invitation-only,” Helgeson said. “They do not accept unsolicited proposals … We’ve heard consistently across every funder … they’re getting three to four times the amount of applications they once received.” The ease of AI-generated proposals has compounded the problem. Applications are faster to submit — but not necessarily better. In response, Helgeson said, funders are retreating into trusted circles. Discovery now happens primarily through referrals. “It’s really working with referral networks — funder-to-funder connections, or referrals for new partners,” she said. This has created what Helgeson describes as a closed ecosystem: the same organizations are repeatedly funded because they are known to the same gatekeepers. Beyond access, Helgeson sees a deeper shift: a collapse in risk tolerance. Instead, philanthropy is consolidating around safe bets — particularly in politically unstable environments. “In Haiti … many funders say, ‘it’s too unstable … we’re just sticking with the partners we’ve funded for years,’” Helgeson said. “There’s this almost false fear … that we can’t get behind the wrong type of partner.” The irony, she noted, is that the places most in need of innovation are now the least likely to receive it. This is what she calls “funder paralysis” — a fear of reputational damage, failure, or public misalignment. The result is a system increasingly governed by proximity to power rather than proximity to impact. Fundraisers need to focus more on relationships In this climate, she said, relationships have become the primary currency. “Fundraising has always emphasized who you know,” Helgeson said. “But I think that’s become even more important as organizations seek to unlock private capital.” She urged nonprofits to rethink their engagement strategies — not as transactions, but as long-term relational investments. “You never go to a conference thinking you’re going to get a check written to you that day,” she said. “It’s really about meeting the right people and working toward partnership.” Despite the disruption, Helgeson sees glimmers of transformation. Funders are increasingly offering nonfinancial support: fundraising coaching, organizational development, and network access. “We’ve seen so many funders come to us … saying, ‘How can we support our grantees with fundraising support?’” There is also a geographic shift underway. Philanthropy is no longer dominated solely by the U.S. and Europe. Diaspora giving, regional foundations, and local giving circles are beginning to fill some of the gaps left by traditional aid. “We’re seeing a real rise of philanthropic organizations coming from Africa, from Asia,” she said. The death of corporate philanthropy One of the most sobering trends Helgeson described is the rapid contraction of corporate giving. Regulatory backlash against environmental, social and governance and diversity, equity, and inclusion policies has forced many corporate foundations to scale back — or shut down entirely. “Corporate philanthropy … was shrinking at a similar pace as U.S. government funding,” she said. “At a conference … an executive director of a corporate foundation said, ‘In the short term, corporate philanthropy is dead.’” Yet even here, Helgeson sees a path forward: partnerships that make business sense. “How will investing in you increase their bottom line?” she said. One area drawing growing interest is artificial intelligence. While not always funded as a standalone theme, AI is increasingly expected as part of an organization’s strategy. “You need to have an AI strategy,” Helgeson said. “That’s the question you’re going to be asked.” Looking ahead, Helgeson is cautious about predictions. But she remains convinced that networks — not capital alone — will define who survives. “Relationships are really the real currency in fundraising this year and moving forward,” she said. Her advice is simple, if difficult: “Map your networks. Identify the levers you have. Be bold. Ask for favors. Collaborate.” Don't miss out on future briefings. Browse our events calendar for our next live conversations.