US Government Attempts to Reduce Grants, Increase Taxes on Foundations

Will Christian foundations increase giving?

In 2023, foundation giving totaled over $103.5 billion, according to the National Philanthropic Trust, making them critical to the charitable work happening in the United States and around the world.

Foundation logos / Insert of President Donald Trump (AP Photo via RNS)

Several recent Trump administration and Congressional policies and proposals could have a chilling effect on private foundations and charitable organizations.

The House budget reconciliation bill—dubbed the “One, Big, Beautiful Bill”—that passed in the House this week and now moves to the Senate includes a proposed tax increase on the investment income earned by private foundations.

According to the bill, the tax rate would range from 1.39% for foundations with assets below $50 million to 10% for foundations with $5 billion or more in assets.

Section 110011 of the bill would also put new limits on the charitable contributions of high-income taxpayers and corporations, thus disincentivizing charitable giving.

The National Council of Nonprofits opposes the legislation, saying some of the bill’s provisions “divert scarce resources away from essential services, undermine the ability of charitable nonprofit organizations to meet needs in their communities, and put greater strain on government.”

The Philanthropy Roundtable also questioned the tax bills implications. “Allowing the IRS to snatch charitable dollars out of communities and the hands of Americans in need and instead funnel those dollars to the U.S. Treasury to pay for Uncle Sam’s out-of-control spending habit is not something that advocates of limited government and individual freedom should get behind,” Roundtable President Christie Herrera said in a written statement.

The Trump administration is also considering an executive order that would ban charitable organizations from issuing grants to groups in foreign countries, according to the New York Post.

This would likely have a significant impact on religious groups and foundations that send money overseas for disaster relief and development efforts.

For example, World Vision International sent more than $70 million in grants to Ukraine, $11 million to Mexico, and $25 million to Colombia in 2023, the Post reported.

The Trump administration has also reduced its federal grants to some nonprofit groups, prompting secular foundations like the Marguerite Casey Foundation to significantly increase donations this year. According to the Chronicle of Philanthropy, the foundation plans to give $130 million to help nonprofits respond to policy changes from the Trump administration, especially federal funding cuts and what it calls threats to the independence of civil society organizations.

“We’re doing this very specifically to ensure that organizations across our country have the full weight of our resources to serve communities that are actively under attack from the administration,” Ian Fuller, chair of the foundation’s board and an investment advisor, told the Chronicle of Philanthropy.

According to its most recent IRS filing, the Marguerite Casey Foundation has about $827 million in assets that it can distribute.

Private foundations are required by IRS regulations to contribute at least 5% of their assets to charitable purposes each year. The 5% payout rule was established in 1969 and is a way to balance “ensuring that private foundations provide substantial resources for charitable activities in the near-term while enabling them to offer long-term support to charities,” according to Philanthropy Roundtable.

James Whitford, CEO of True Charity, believes private foundations and charities should step in and meet the needs where the government is reducing its giving.

Research has shown that government funding of work that charities do crowds out private foundation funding, Whitford said. Additionally, government funding also comes with strings attached that impede the ability to conduct effective compassionate ministry and can lead to a cycle of dependency, he said.

While government involvement has grown every year, Whitford welcomes the opportunity for local citizens, foundations, and ministries to take the reins of charitable work and fill gaps that may be left when government leaves the arena.

He thinks that as the government reduces its reach, the country will see more foundations step in to be helpful to charities and churches in their ministries.

MinistryWatch reached out to several private foundations and donor-advised funds that support Christian causes to see if they plan to increase their giving to make up for lost federal funding.

The Tyndale House Foundation, a part of Tyndale House Ministries, is planning to increase its giving to some of its charitable partners.

“In general, our grantees are not recipients of federal grants, so they are not directly affected by the USAID funding pause. We do have exceptions, however, and we are upping our giving for some of these organizations,” Tyndale House Foundation President Jeremy Taylor told MinistryWatch.

About 90% of the foundation’s grants are directed to organizations and projects outside the United States, Taylor added.

Tyndale doesn’t have a set percentage increase in mind, but is evaluating each grant on its merits and the strength of the relationship Tyndale has with the charitable cause.

“In general, our philosophy of giving is to partner with local organizations outside of the [United States]. We are highly committed to Relational Grantmaking and do all our giving in the context of biblical partnerships and relationships with organizational leaders,” Taylor said.

“We look to engage, equip, and empower local leaders for gospel impact,” he added. “We are committed to thoroughly reviewing each proposal we receive, praying for each organization that submits a proposal, and maintaining a high level of communication with applicants throughout the process.”

While Tyndale is no longer a private foundation subject to the minimum distribution requirement, Taylor said that its distributions regularly exceeded 5% when it was a private foundation.

According to its most recent Form 990, Tyndale House Ministries gave about $4.5 million in grants in its Fiscal Year 2023 and about $5.8 million the prior year.

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The Lilly Endowment didn’t reveal whether it has plans to increase giving to charitable causes that may have lost federal funding.

“While the Endowment is monitoring the evolving and changing dynamics relating to government funding, its decisions regarding its grantmaking are subject to authorization, budgetary approval and oversight by the Endowment’s board of directors,” Communications Director Judy Cebula told MinistryWatch. “To avoid getting ahead of the board or providing inaccurate or inconsistent information, we have adopted a general practice of not discussing upcoming plans for grantmaking.”

The Lilly Endowment has over $45 billion in assets and gave about $1.55 billion in grants in 2023.

The Christian Community Foundation, also known as Waterstone, is not an endowed private foundation, but is a donor-advised fund whose managed assets have grown from about $1.3 billion in 2024 to about $2 billion this year.

Waterstone’s Senior Gift Strategist Stephanie Hoff told MinistryWatch that donors who have funds with them don’t hold on to their funds. She said that funds are being donated at a rate of about 70-80% with about $3 million being distributed weekly — an increase from about $2 million per week in 2024.

While Hoff wasn’t able to identify the driver of increased donations, she noted that most of their donations go to Christian ministries, missionaries, churches, and disaster relief.

Another donor-advised fund, National Christian Foundation, has seen increased giving this year.

“Giving through NCF is up 6% from the first quarter of last year, demonstrating how Christians are stepping into their calling to live and give generously,” Mary Beth Googasian, vice-president of communications and public relations, told MinistryWatch. “This increase is typical of what we see [year over year].”

MinistryWatch calculated the distributions of other Christian foundations in 2023 by dividing the qualifying distributions by the noncharitable-use assets listed on the foundations Form 990-PF.

• The Arthur DeMoss Foundation distributed the largest percentage — 21% — or nearly $8.5 million of its $40.5 million in assets.
• First Fruit, a foundation to support “leaders and organizations working among the poorest countries of the Majority World,” gave 17% — $3.6 million — of its assets in grants in 2023.
• The Maclellan Foundation in Chattanooga had the third highest distribution rate of the foundations we analyzed, giving about 10% — $27.4 million — of its assets in 2023.
• The Stewardship Foundation and Crowell Trust hovered right around the required 5% distribution requirement.

MAIN PHOTO: Foundation logos / Insert of President Donald Trump (AP Photo via RNS)

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