What are funders doing to create conditions for communities to thrive? 

How can funders best support nonprofits and communities in rapidly changing conditions? Findings from Grantmakers for Effective Organizations’ 2025 National Study of Philanthropic Practice point to what’s needed: maintaining commitments to equitable and effective grantmaking, strengthening nonprofit and community infrastructure, and deploying the full suite of resources available to support communities. Here are some key takeaways from the study—based on survey responses from 765 staffed U.S. foundations gathered between January and March 2025—about supporting these conditions for long-term change.   

1. Equity-minded funders actively engage in effective grantmaking 

The study suggests that equity remains strongly linked to effective grantmaking practices that build trust, shift power, and strengthen nonprofit partners. For example, equity-minded funders who say diversity, equity, and inclusion (DEI) is “very much” central to their strategy are more likely to practice participatory philanthropy than those who say it’s “not at all” central (51% vs. 17%). Grantmakers who say DEI is very central are also more likely to have members of the communities they serve represented on their staff and boards.   

However, the study also finds boards tend to lag behind staff in DEI training, even in organizations with a DEI commitment. Continued equity-focused grantmaking would require deeper partnerships between CEOs and boards and educating members about aligning endowment practices with mission and connecting effectiveness, equity practices, and fiduciary responsibility.  

Additionally, funders can explore the impact of their institutions’ wealth creation on communities. The most common way grantmakers reported reckoning with their funding sources was with board (44%) and staff (49%) discussions. Eighteen percent have begun aligning funding strategies to disrupt or repair the effects of historical harm, prompting questions such as: “What do stories about our wealth creation offer that may shape decisions the institution and its leadership bodies make moving forward?” This may represent a next step for equity-minded funders to move beyond discussion. 

2. Flexible funding is up, capacity-building support is down

Another way funders have been able to strengthen the conditions for communities to thrive is through capacity-building efforts. And yet, the study found a decline in capacity-building support, a trend that stands in contrast to the sector’s growing commitment to multiyear and general operating support.  

Capacity building enables organizations to lead adaptively, retain staff, develop data and learning systems, and build infrastructure that uses flexible funding to strengthen outcomes. Even as 87% of respondents now provide multiyear funding, up from 79% in 2017, and 77% award general operating support, the share of funders providing capacity-building support fell from 86% in 2017 to 77% in 2025.  

When funders provide multiyear or general operating support without also supporting capacity building, nonprofits may gain flexibility but lack the infrastructure to fully leverage it. The result is a precarious dynamic: increased autonomy alongside declining organizational stability. Without robust, contextual, and continuous capacity-building support, the sector risks undercutting the very nonprofits it seeks to strengthen. 

Combining flexible dollars that increase nonprofit agility with long-term capacity building support remains one of the most reliable ways to help nonprofits respond quickly to community needs and sustain impact over time. It’s increasingly clear that nonprofits with both flexible resources and strong organizational capacities will be best positioned to thrive—and lead lasting change. 

3. Over half of funders have payout rates above 5%

Finally, funders can create conditions for communities to thrive by reimagining how their resources are deployed. According to our study, 55% of respondents spend above the 5% requirement. However, it will be important to track future trends as we begin to see how funders responded to the federal funding cuts in 2025 and calls to increase grantmaking, especially in historically underfunded communities.  

Beyond payout, funders can deploy their full assets, aligning endowments and investments for impact and leveraging influence, relationships, and knowledge of community needs. Yet, only 31% of respondents allocated resources for impact investing.  
 
Patient, flexible, impact-first investments alongside grants allow community-rooted organizations to grow on their own terms. Catalytic capital allows funders to take risks that commercial markets cannot, fueling experiments, seeding new models, and strengthening local economic ecosystems. Integrating these approaches with grantmaking helps close the gap between philanthropic values and communities’ lived conditions. 

Supporting change for thriving communities 

Taken together, these findings point to a powerful opportunity: When funders align equity, practice, and capital, they can strengthen the conditions communities need to thrive. Funders already hold many of the tools needed: deep expertise, applied learning, and long-standing relationships with nonprofits that serve, advocate for, and respond to community priorities as they arise.  

Funders might ask themselves: How consistently aligned is our organization’s purpose, practice, and capital? What would a deeper alignment look like, and what would it take? What conditions are we creating—both purposefully and inadvertently—for the communities we serve? 

By trusting our partners, sharing power, and investing in long-term resilience over short-term outputs, funders can advance change in ways that match the scale and complexity of today’s challenges. 

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