The Rainy Day Has Arrived: Private Philanthropy Must Step Up As Government Steps Back From Extended Foster

Forbes

01-05-2025

Written by Thomas Lee, CEO, First Place for Youth
As markets remain volatile and non-profits face drastic drops in government and private support, this is no time for philanthropy to think about cutting back. Instead, foundations and individuals must give more. There is a real risk that philanthropists will be tempted to continue to cut back on their investments and grant making. For the past year, we've seen how geopolitics and polarization in our body politic has made some take their foot off the gas. I'm not the first to notice this cycle. It's just my turn to urge you against any and all forms of retrenchment. You may feel a sense of déjà vu: You've lived through this before, but your response must be different this time around.
Photo courtesy of First Place for Youth
I serve as the CEO of First Place for Youth, a national nonprofit organization that delivers a comprehensive solution to the challenges facing transition-age foster youth in extended foster care (18-21 years old). For over 26 years, we've provide our youth participants who recently aged out of foster care with furnished apartments alongside intensive case management delivered by a dedicated team that wraps services around foster youth to ensure they focused on their education, get on a career path, and learn how to tap into their own resilience to manage the stressors of life.
Extended foster care has transformed hundreds of thousands of young lives, providing crucial support during the transition to adulthood for our most vulnerable youth. It's one of the last upstream levers we can pull to decrease homelessness and poverty. Research consistently demonstrates that each additional year in extended care significantly improves educational attainment, employment prospects, housing stability, and overall well-being for former foster youth. Yet today, these life-changing programs face unprecedented threats from federal funding cuts that could erase years of progress. This is not merely a temporary challenge but potentially an 8 to12-year cycle that requires a fundamental rethinking of philanthropic responsibility. As we witness a paradigm shift from government funding to private sector solutions, this is precisely the moment that calls for bold philanthropic leadership to protect these essential investments in our youth and communities.
The data supporting extended foster care is overwhelming and compelling. Studies have consistently demonstrated that providing support to foster youth beyond age 18 yields substantial returns both for individuals and society at large.
Research from the California Youth Transitions to Adulthood Study (CaIYOUTH) found that extended foster care significantly increases educational attainment. With each additional year in care, youth experience a remarkable 46% increase in the odds of progressing to the next level of education. In practical terms, this means the predicted probability of attending some college doubles from 26% to 52% when comparing youth who exit care at 18 to those who remain until 211. Meanwhile, the probability of not finishing high school decreases dramatically from 22% to just 8%.
The benefits extend far beyond education. Analysis showed that young people who remain in extended foster care are more likely to be employed, receive educational aid, and achieve housing stability. The most recent CalYOUTH study found that each additional year in extended care increases the probability of completing a high school credential by approximately 8%, increases bank account savings by $642, and decreases the odds of arrest by 28%.
Research by Dr. Mark Courtney and colleagues demonstrates that extended care positively influences "education, employment, savings, food insecurity, criminal justice system involvement, and social support." These benefits continue to accrue even after youth exit the system. As the largest study of its kind concluded: "There's no evidence of harm associated with time in extended foster care."
Despite these proven benefits, extended foster care programs now face existential threats from federal funding cuts. We are witnessing a fundamental paradigm shift in how social programs are financed in America. For the last 15-20 years, the government has largely been pumping cash into the economy to keep it afloat. The current push for the private sector to assume more responsibility signals a kind of austerity plan that could dramatically reduce support for our most vulnerable populations and slow our momentum.
Despite foundation endowments reaching all-time highs, most grant makers have actually lowered their rate of spending in recent years, falling to 5.2 percent in 2021 from 5.6 percent in 2016, despite their growing wealth. The question was recently posed by Alex Daniels, 'In a time of non-profit defunding, will foundations put more money on the line?'
The Trump administration has threatened to halt virtually all federal spending on social services, Among the programs explicitly threatened by halts in federal spending are those funded under Title IV-E of the Social Security Act, which provides essential support for foster care, adoption assistance, and programs designed to prepare young adults aging out of the system.
The Department of Government Efficiency (DOGE) has proposed eliminating more than $500 billion in programs, with cuts disproportionately affecting children's programs. First Focus on Children estimates that cutting these programs would cost children a staggering $101.12 billion in critical investments, with children bearing 19.6% of total funding cuts despite children's programs accounting for only 8.87% of federal spending.
The impact on extended foster care could be devastating. Without these supports, we risk returning to the pre-2008 era when most foster youth were left to fend for themselves after turning 18, resulting in alarming rates of homelessness, unemployment, incarceration, and poverty. This is not a time for backwards steps.
This shift may not just be a small, four-year moment—this might be an 8 to 12-year cycle that we're entering. This extended timeframe makes philanthropic intervention even more critical. Private foundations and individual donors must recognize that we are at the beginning of a fundamental realignment in how we support vulnerable populations in America.
Donor Advised Funds (DAFs) and foundation endowments have grown substantially over the past decade, creating a significant reservoir of philanthropic capital. Now is the time to deploy these resources to prevent the collapse of programs that have demonstrated remarkable success in transforming young lives.
We have already seen examples of how strategic philanthropic intervention can protect vulnerable youth. The Amico family used their Fidelity Charitable donor-advised fund to launch TeenEmbrace, a program supporting foster families of older youth that achieved a 94% placement stability rate in its first year. This model demonstrates how targeted philanthropy can maintain and even expand critical services when public funding is threatened.
For philanthropists who have been waiting for a high-impact opportunity that addresses multiple social challenges simultaneously, extended foster care represents an ideal investment. These programs operate upstream, preventing costlier interventions later by supporting young people during a critical developmental period. When we keep a young person in extended care, we're not just providing housing and services—we're preventing homelessness, reducing criminal justice involvement, increasing educational attainment, and building pathways to economic self-sufficiency.
For years, philanthropists have accumulated resources in donor-advised funds and endowments, building reserves for times of urgent need. That time has arrived. If there was ever a moment to deploy these philanthropic resources boldly and strategically, it is now.
What is the purpose of a rainy-day fund if not for times like these? People have been storing up wealth, perhaps primarily for themselves rather than for giving to others. But today is the rainy day we've been anticipating. The purpose of storing up is to give MORE in times of need, not less.
Unfortunately, First Place for Youth has already seen foundations start to tighten up, uncertain about their future giving levels. One foundation claims that "private foundations are not going to be able to close this gap if the government decides not to give as much." This reluctance is precisely what we must fight against. Foundations are already looking for reasons not to step up at the very moment when their leadership is most needed.
We call on philanthropic leaders to:
Research from the University of Chicago has demonstrated that California has become "the most generous state in terms of the constellation of things that it provides for young people" in extended foster care, with continuous legislative improvements each session. This didn't happen by accident—it resulted from years of advocacy, research, and public-private partnership. We cannot allow this progress to be reversed.
The stakes could not be higher. As of May 2023, only 33 states and 7 tribes have tapped into federal funding to support foster youth after 18. As many as 75% of foster youth nationwide would benefit from extended foster care services. Many of their transitions to adulthood are premature which leads to poor outcomes and more critical funding. Without extended foster care, youth who have already experienced significant trauma face even greater challenges. The difference between a young person who exits care at 18 and one who receives support until 21 is profound—it can mean the difference between homelessness and stable housing, between unemployment and career pathways, between continuing cycles of poverty and building intergenerational wealth.
This is not a moment for the weak at heart. While everyone is jostling and figuring out how to preserve their pennies, young people require crucial support. We need people to come off the sidelines, so to speak, and into the game—to get involved more than they ever have before. We want those with the means to store up rainy day funds to consider giving to others. The purpose of accumulating wealth should be to have the capacity to give more when times are tough, not to retreat from responsibility.
We appreciate our philanthropic partners who've stepped up to stand with us right now, who've let us know we're not alone fighting to make a difference. They have continued to support organizations that bolster our communities, remaining steadfast in their missions to drive social equity and sustainable impact through leadership in both business and philanthropy.
This is the rainy day we've been waiting for. It's time to open the philanthropic umbrellas like several of our philanthropic partners have already done. If we truly believe in the power of extended foster care to transform lives—and the evidence clearly shows it does—then we must act now to preserve these critical supports for our most vulnerable youth.
The question for philanthropy is simple: If not now, when? If not for these young people, who have already overcome tremendous obstacles, then for whom have we been saving?