Editor’s Note: This article was originally published on March 23, 2026.
One of the inescapable stories to watch in the philanthrosphere over the past 12 months has been the extent to which large legacy foundations have — or haven’t — increased their grantmaking in response to Trump 2.0 and communicated those changes to the public.
The MacArthur Foundation, for one, has been particularly active in articulating its strategy and the threats at hand.
In early March, a little over a year after responding with an increase in MacArthur’s charitable payout ratio to at least 6% in 2025 and 2026, foundation President John Palfrey said that the 2025 figure clocked in at 7.1% — “about $190 million more than we had anticipated, given the crisis in the nonprofit sector.” About a week later, the foundation announced a $100 million commitment aiming to protect democracy in the United States by supporting nonpartisan organizations focused on ensuring fair and safe elections, voting rights and civic freedoms.
In an email to IP, Palfrey said the foundation’s $100 million in democracy support “is part of our ‘Set it at Six’ promise to help the social sector navigate and respond to ongoing threats on democratic institutions and norms in the United States.”
The foundation’s approach is striking for its simplicity. Confronted with the impacts of federal funding cuts, it boosted its payout. With an eye toward November’s elections, it committed $100 million — its press release lists representative gifts totaling $34.25 million to seven grantees — toward critical but underfunded blocking-and-tackling work in the democracy space. And looking further out, the foundation will share details about an open call later in the year for organizations administering projects that protect American democracy.
“To be clear, the $100 million in support is not a formal extension of a particular program,” Palfrey said. “While our new work may be in fields where we have funded, it does not revive past strategies. The current democracy work is helping respond to the moment, given the new challenges our country faces.”
Why MacArthur will maintain its minimum 6% payout in 2026
In his post earlier this month, Palfrey noted that for 2025, the foundation’s original budgeted amount of charitable spending — which includes grants, matching gifts, program-related investments and some administrative and capital spending — was $457 million, corresponding to a 5% rate. Its 2025 charitable spending ended up being an estimated $647 million, or 7.1%.
As for 2026, Palfrey told me it was “an easy decision” to maintain and ultimately exceed the 6% payout minimum, which translates to an approved charitable payout of $622 million.
“While some of our grantees have seen some of their funding restored after initial cuts, and while some of us have put in more money, the stress on our grantees and other nonprofits remains extreme,” Palfrey said, citing the Center for Effective Philanthropy’s recent report documenting how some nonprofits are at risk of shutting down due to diminished federal and philanthropic support.
November’s midterms also factored into his team’s decision to exceed the 6% payout minimum for 2026. “Philanthropy has an important role in supporting free and fair elections and supporting those who protect the rule of law,” Palfrey said. “The downsides of this increased level of funding are far outweighed by the potential benefits given the extreme need.”
As far as those downsides are concerned, foundation leaders typically stick to the IRS-mandated payout rate of 5% because a higher figure could erode a foundation’s endowment and imperil its ability to sufficiently fund future grantees. This challenge is particularly acute for legacy foundations, which, unlike those helmed by living donors who often blow past the 5% figure without threatening their perpetuity, don’t fortify their endowments with incoming contributions.
MacArthur stakeholders will keep these considerations in mind when addressing its 2027 funding level during the budget planning process later this year. “Our default spending policy at MacArthur Foundation is a target of 5.25%,” Palfrey said. “We will consider with care in the coming months, and prior to year end for sure, whether to continue to exceed this target level.”
How the $100 million commitment to democracy came together
While MacArthur does not have a specific democracy grantmaking program, its recent $100 million commitment builds on its longstanding efforts to “ensure the United States has a system of government built on citizen participation, equality and fundamental freedoms enshrined in our Constitution,” Palfrey said. Previous support flowed to organizations modernizing election administration, protecting voting rights and reducing partisanship in Congress.
“Since 2024, we have observed threats to election integrity rising along with the deep divides in our country,” Palfrey said. “And throughout the last year, we have seen more efforts and threats to democratic institutions and norms. Civil society, including philanthropy in the United States, is facing unprecedented challenges.”
This perfect storm forced leadership to ask themselves the same question countless other foundation stakeholders have been grappling with over the last year: How do we respond?
“We took hard reflections on the role we might play in ensuring a range of perspectives and people are supported to bridge and build across real and perceived divisions, including identities, cultures, geographies and ideologies,” Palfrey said. “We believe it was important to support organizations and leaders working across the country to protect fair and safe elections, voting rights, civic freedoms, civil and human rights and the rule of law.”
The seven representative grantees listed in MacArthur’s announcement included State Infrastructure Fund, which works to increase civic participation and advance voting rights; PolicyLink, an organization committed to redesigning American governance; and Defending Democracy Together Institute, which is focused on promoting pro-democracy education.
Related Inside Philanthropy Resources:
For Subscribers Only
Strengthening the democracy field for the long term
When Palfrey announced “Set it at Six” early last year, he said he hoped “others in a position to do so will consider voluntarily raising their baseline payout rate to 6%, from the 5% as mandated by law, for the coming two years, at a minimum.”
Over a year later, I asked Palfrey whether, in his estimation, the sector had risen to the challenge.
“We are proud to be a part of the Level Up Pledge hosted by CHANGE Philanthropy, where funders have committed to increase grantmaking by 20% or more, or to increase their endowment payout to 8% or higher for at least two fiscal years,” he said, noting that among the 50 funders who have signed, additional funding of $500 million has been documented. Palfrey also said many funders are disbursing grants more quickly and reducing reporting burdens, citing the Listen to Community initiative as “a hub for much of this work.”
So how do we square funders’ response with the CEP report, which found that an overwhelming majority of interviewed nonprofit leaders were “dissatisfied with foundations’ overall response to this moment?” For an answer, we turn to Fenno’s Paradox. (Bear with me here.)
The paradox stipulates that people disapprove of Congress as a whole but generally support their own representative. In a similar vein, it’s easy to envision a scenario in which nonprofit leaders are dissatisfied with the Trump 2.0 response of “foundations” writ large, but those who are working with funders that increased their payouts and simplified the grantmaking process harbor no such frustrations.
All of which brings us back to MacArthur’s $100 million commitment to protect American democracy.
The organizations listed in the foundation’s press release represent a cross-section of democracy funders’ key priorities, like voter protection, boosting pluralism and modernizing the machinery of governance. Many of them address these challenges through a national lens. It will be interesting to see if future grantees engage grassroots power-building work to back the fight against authoritarianism and — realizing this may be an unlikely proposition on the funder side — explicitly call out what IP Editor-in-Chief David Callahan called “the elephant in the room” — namely, the overt, antidemocratic machinations of the Trump administration and a Republican party that has backed up that agenda.
I’m also intrigued to see how MacArthur and other grantmakers that have increased their charitable payout approach the question of 2027 funding levels. Call me a pessimist, but with more federal funding cuts set to take effect and demand for direct services intensifying, it’s highly unlikely things will revert to a pre-2025 state of relative normalcy in 12 months, if ever. Assuming this is the case, foundation leaders who upped their payout percentages over the past year will have to make some tough decisions as they weigh grantees’ short- and long-term needs.
Another longstanding theme in the democracy sphere is the need for funders to move past their tendency to tie support to election cycles. Palfrey picked up this idea, noting that MacArthur’s nonprofit partners have stressed the importance of balancing “short-term needs with longer-term thinking.” Viewed through this lens, the foundation believes its $100 million democracy commitment will enable grantees to thrive far beyond November’s midterms.
“Protecting democracy means responding to the challenges of today,” Palfrey said, “and the future of democracy depends on sustained investments in mobilizing networks, civic participation, trust, and strong institutions.”
