By David Callahan, Founder & Editor-in-Chief Inside Philanthropy

Signs are mounting that the Trump administration and its allies in Congress will target the philanthropic sector as part of a push to “cripple the left,” as the New York Times recently put it. Such moves would come on top of funding cuts already doing enormous damage to nonprofits working across many areas. 

I can see the appeal of such a strategy to a movement hungry for domination and contemptuous of democratic norms. But if I were a MAGA mastermind, I’d counsel caution in targeting philanthropy. 

Here’s why. While the executive branch and Congress have a lot of ways to harass foundations and major donors, as well as philanthropy-serving groups, what they don’t have on their side is the law. 

Take the fixation with Arabella Advisors, the consulting firm again under scrutiny in Congress for its role in moving so-called “dark money.” What are the chances that a sophisticated Beltway organization like this, which has been operating in the nonprofit funding space for two decades, facing recurrent attacks, hasn’t been legally dotting its i’s and crossing its t’s? Next to zero, I’d say.

The same goes for other large philanthropic entities, which can afford top-flight legal help with a granular command of IRS rules. Those rules, it should be noted, allow for all sorts of activities related to advocacy and civic participation, including moving large sums of money anonymously. Investigators may generate a lot of smoke, but they won’t find many fires. 

To be sure, Trump’s anti-DEI executive order could be used to harass large foundations and other endowed institutions. But the constitutionality of that order is far from clear, ensuring extended legal fights — which foundations can easily afford. 

Could attacks on the sector, however unfounded, intimidate foundations and major donors? Absolutely, and we’re seeing that already. But how long is a campaign of fear likely to be effective? Will it still have traction two years from now if investigations have petered out for a lack of legal grounds? And the country is in recession, Trump’s polling is in the low 30s, and Democrats have retaken the U.S. House? I doubt it. 

Meanwhile, one effect of targeting top foundations and donors could be to mobilize these wealth-holders against the MAGA movement like never before. We saw this with Trump 1.0 when many rich people and family foundations began funding advocacy and making large political donations for the first time. Those coming to the table with large checks included former Republicans and moderates. 

During the Biden years, quite a few of those donors pulled back, thinking the MAGA threat to democracy had receded. Authoritarian moves by the Trump administration are now reawakening these fears — and direct attacks on institutional and individual wealth-holders would fan anxiety to unseen levels. The backlash from a broad coalition of anti-MAGA funders that are far wealthier than they were eight years ago could make the 2017-2020 “resistance” look like a low-budget operation. 

Remember, the main advantage that blue America has in the contest for power ismoney. Much has been made of several top tech billionaires’ Trump appeasementfollowing the election, but the wider landscape of wealth in America still favors the center-left. In 2020, the counties that Joe Biden won accounted for 71% of GDP. All the richest congressional districts are now represented by Democrats, who have increasingly become the party of the professional class. This education polarization is not a good thing for either Americans or Democratic candidates. Still, one result is a growing asymmetry between the financial resources that left and right can bring to ideological combat. Even with Elon Musk’s heavy thumb on this scale — for now, at least — wealthy liberal America is far better positioned to win a fundraising war of attrition. 

Might Congress try to gut charitable deductions for the very wealthy, pass new laws to selectively strip foundations of tax-exempt status, or heavily tax them? Yes, on all counts — and such moves are already underway. But I suspect the first effort will meet pushback from mega-donors on the right who want to preserve those tax breaks, not to mention conservative groups committed to “philanthropic freedom.”Curtailing charitable tax breaks for the super-rich, recall, has typically been a priority of the left, not the right. 

As for precision strikes on big foundations, say through new tax levies or revoking their nonprofit status, it’s not clear such moves would rebound to MAGA’s advantage. Grantmakers like Ford might respond by rapidly spending down rather than seeing their assets taxed into oblivion, flooding progressive groups with cash. Or, if they lose their tax-exempt status, these institutions might become top donors to the Democratic Party. 

This may all be wishful thinking about an increasingly lawless administration. A full-on authoritarian push could still lie ahead. Otherwise, as long as political spending is equated with free speech, which the right doesn’t want to change (yet), wealth will always find a way into the struggle for power — even if that takes time in a climate of intimidation. Now is a good moment for an overreaching MAGA movement to remember the law of unintended consequences, along with the axiom that every action has an equal and opposite reaction. 

What We’re Covering

Philanthropy’s reaction to Trump’s attacks on immigrants. IP’s Martha Ramirez reached out to 13 top immigrant rights funders about what they’re doing while Trump deports and threatens immigrants. While some funders are quiet about their plans, Ramirez highlights a handful that have been proactive in their grantmaking to support immigrants’ rights and protect immigrant workers. It’s understandable that some funders are being cautious — they’re wary of being targeted themselves — but Ramirez reminds us that “the threats to grantmakers, while considerable, pale next to what immigrants themselves are facing.”   

What does Trump’s defunding of Columbia University mean for the alumni-donor boycott? Will the billionaire alumni who withheld donations to their alma maters over the schools’ response to the October 7, 2023, Hamas attack on Israel and student protests maintain their boycott now that Trump has punished Columbia by canceling $400 million in federal grants and contracts, with cuts to other schools expected soon — or do they value these institutions enough to resume funding and help the schools push through? IP’s Mike Scutari wonders.

Philanthropy can’t fund Medicaid. So what’s next? “Shock, disbelief and a recognition that life is no longer as safe as it once was”— that’s what IP’s Wendy Paris heard in conversations with funders focused on aging as they face the Trump administration’s threats to Medicaid and more. 

Why is Bill Gates overhauling his climate giving? Bill Gates’s Breakthrough Energy Foundation has abruptly slashed grantmaking for clean energy policy and technology. IP’s climate funding reporter, Michael Kavate, digs into what might be going on. 

Intermediaries stepping up with emergency funding for farmers. The Regenerative Agriculture Foundation and Rural Climate Partnership have started distributing $1.7 million in emergency grants after the federal government halted reimbursements to farmers and ranchers. The regrantors are among few funders who have taken action so far to support climate groups facing huge funding gaps due to federal cuts. 

What We’re Reading and Hearing

Nonprofit leaders are now in full freakout mode. At the Chronicle of Philanthropy, Sara Herschander reports on the chilling effects of government data requests and online harassment on nonprofits, and what they can do to increase safety and security. The Center for Effective Philanthropy’s latest research snapshotfound that the majority of U.S. nonprofit leaders say they are negatively affected by the current political climate, concerned about the future of funding, and want to hear more from funders about their plans. 

Courage might be a new flex for philanthropy. While the point is well taken that large foundations are much better protected from government threats than their grantees or the vulnerable communities they serve, that doesn’t mean funders are used to or comfortable with taking risks. At the Chronicle of Philanthropy, Lisa Pilar Cowan, VP of the Robert Sterling Clark Foundation, reflects on what it means for philanthropists to be brave and how to build that muscle.   

Global grants for clean energy. While many U.S.-based funders are quietly and warily figuring out what to do at this moment, the international partnership Sustainable Energy for All (SEforALL) announced this month that it has mobilized $900 million to support the transition to clean energy in developing countries. Participating U.S. philanthropies include Bloomberg and ClimateWorks Foundation. (Philanthropy News Digest)  

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