Trump Is Scaring Donors Away From Progressive Nonprofits

The Intercept

25-04-2025

As President Donald Trump guts the federal government, there's a greater need than ever for nonprofit organizations to step up and fill the void. But there's a Trump-shaped fundraising problem looming over the nonprofit sector.
Fearful of Trump's penchant for targeting his perceived political enemies, some nonprofit leaders say the large donors who help subsidize their operations are pulling back. Even though the Trump administration has said it will not move forward with a series of rumored executive actions targeting nonprofits, this retreat by large donors poses a critical problem — especially as the federal government has slashed grants and issued stop-work orders already restricting key services.
'It's kind of a perfect storm of the federal cuts happening and philanthropy not moving as quickly as one would hope,' said Lynn English, president and co-founder of English Hudson Consulting, a development and consulting firm that works with dozens of nonprofits across the United States, including groups that have been outspoken against Trump. 'Anyone who has federal money is cutting expenses, cutting staff, and trying to figure out where they can possibly make up the gap.'
Threats from senior administration officials to foundations and nonprofits' tax-exempt status have heightened donors' concerns about giving to causes that might be perceived as opposing Trump and singled out for retribution — like law firms, universities, and news organizations, leaders of nonprofits told The Intercept.
The consequences are being felt at nonprofits that focus on climate, transgender rights, racial justice, and gender equality.
Both Trump and Vice President JD Vance have made no secret of their animosity toward certain nonprofits and major funders. In his 2021 Senate campaign, Vance argued that major foundations and academic institutions should lose their tax-exempt status. 'The Ford Foundation, the Gates Foundation, the Harvard University endowment, these are fundamentally cancers on American society, but they pretend to be charities so they benefit from preferential tax treatment,' Vance told Tucker Carlson during a 2021 Fox News interview.
More recently, Trump has publicly threatened to revoke Harvard University's tax-exempt status, while implying broader risks to other nonprofit organizations and foundations. 'Tax-exempt status, it's a privilege. It's really a privilege. And it's been abused by a lot more than Harvard,' Trump told reporters last Thursday. Last week, the administration cut billions of dollars in federal funding to the university for research purposes, though its tax-exempt status for now remains unchanged.
At the Thursday news conference, Trump also threatened specific nonprofit organizations, namely Citizens for Responsibility and Ethics in Washington, a government watchdog organization that has repeatedly sued the Trump administration. 'It's supposed to be a charitable organization,' Trump told reporters. 'The only charity they had is going after Donald Trump. So, we're looking at that. We're looking at a lot of things.'
Were a nonprofit to lose its 501(c)(3) status, it would have to pay corporate income tax, and in some cases back taxes. It would also block an organization from receiving most types of federal and foundation grants. Donations to that group would no longer be tax-exempt, making it significantly more difficult to fundraise.
A rumored executive order targeting climate organizations on Earth Day did not materialize. The White House told Politico this week 'No such orders are being drafted or considered at this time.'
However, Trump on Thursday urged Attorney General Pam Bondi to investigate alleged unlawful foreign contributions on ActBlue, a fundraising platform widely used by Democratic campaigns. Many nonprofits, including The Intercept, use ActBlue Charities to process donations.
This climate is causing hesitation among large donors, said English. 'They're being much more cautious,' she explained, 'and I think it is the threat of either litigation or attacks on their 501(c)(3) status or attacks on their endowment that are causing some real delays in getting money on the ground.'
'If they're going to be attacking us, I want to show people why.'
Kaniela Ing, national director of the Green New Deal Network, said that organizers focused on climate change have been warned to stay quiet to avoid attacks on their 501(c)(3) status, like those in the rumored executive order. 'Some of the advice that I've been getting is to be silent on social media,' said Ing.
But he rejects that logic.
'If they're going to be attacking us, I want to show people why. I don't want to have to tell them after the fact,' Ing said. 'I want to make it clear that this a fight of good and evil. And we're the good guys.'
While it's still too early to get a full financial picture of how donors are responding across the nonprofit ecosystem, layoffs at large nonprofit organizations working on left-leaning issues like LGBTQ+ rights provide a clue. In February, Human Rights Campaign, the largest LGBTQ+ advocacy organization in the U.S., laid off 20 percent of its staff. Another major LGBTQ+ nonprofit, GLSEN, laid off 60 percent of its staff that same month.
English said donors were much more willing to support causes in opposition to Trump in his first term, illustrating how much landscape has shifted in a second term focused in large part on revenge. 'They are trying to figure out what position they can take under the administration,' she said. 'Under Trump 1.0, the foundations came out very quickly to fund the pushback, and they came out with a lot of money to fund litigation and movement-building organizing. This time around, they are taking more time.'
Part of the problem with hitting so many nonprofits at once with federal funding cuts and freezes is that all of these groups are fighting for the same pool of funding of nongovernmental funding. At least 30 percent of the estimated 1.8 million nonprofits in the U.S. receive federal grant funding. Larger organizations are more reliant on grants, with 55 percent of nonprofits with budgets over $5 million receiving at least one government grant. Environmental Protection Agency Administrator Lee Zeldin announced that the administration had canceled over 400 environmental justice grants, totaling $1.7 billion in losses across multiple organizations. In the foreign assistance sector, Trump slashed 90 percent of the U.S. Agency for International Development's foreign aid contracts in February, totaling $60 billion, meaning the thousands of contractors relying on this funding now have to fight for the same pot of donor money.
So even if an individual donor isn't fearful of attacks by the Trump administration and might have more leeway than a corporate donor or a large foundation, demand for their dollars is now at an all-time high.
alicia sanchez gill, executive director of Emergent Fund, which provides rapid-response funding to BIPOC and LGBTQ+ organizations and also co-runs the Action for Transformation Fund along with the Transgender Law Center, said the groups they fund are seeing donors pull back at a critical moment.
'What we're seeing from the philanthropic ecosystem is that there is not [the] bump that we saw in 2016,' she said. 'And in fact, we're seeing a lot of funder retraction in this moment.'
sanchez gill argues that funders are scared of associating with nonprofits that could be targets. 'We are seeing our grantees actually be either denied funding in order to minimize funder risk,' she said. 'Or just complete — for lack of a better term — ghosting by funders.'
sanchez gill noted that many of the organizations Emergent Fund and the Action for Transformation Fund work with already struggled to get funding. Less than 1 percent of philanthropic dollars goes toward support trans-led organizations, according to the Equitable Giving Lab.
'Many of the groups that we fund, actually, at Emergent Fund and at the Action for Transformation Fund already are deeply divested from the federal government and from state institutions and from philanthropy itself,' she said. If their organization no longer existed, many of these organizations could go without the 'rapid-response' funding they need to survive.
The bitter irony is that this is the exact moment that marginalized communities need these resources the most. 'We've really seen a surge in applications from groups that are facing state violence and surveillance,' said sanchez gill. Last year, sanchez gill said that her organization received roughly 70 to 100 proposals in a month. Last month, it received roughly 180 proposals, underscoring the increased need in the communities it serves.
'There is no greater risk in this moment than defunding the communities who are doing the most mission-oriented and necessary work right now,' she said.
Federal cuts to nonprofit grant recipients have already had devastating consequences. Trump has frozen billions in federal grants to universities, states, and other nonprofit entities across the country.
Last month, for instance, the Trump administration cut funding to programs that provide legal services to unaccompanied minors. Unlike in the criminal legal system, in the U.S., people do not have a right to counsel in immigration court, which means that every year, tens of thousands of children are forced to represent themselves against the government. In 2023, nearly half of all unaccompanied minors represented themselves in immigration court. But federal funding cuts from the Trump administration are threatening even the existing services in place for these children, and philanthropic dollars cannot fill the gap.
A judge has blocked the implementation of these cuts for now, but the impacted nonprofits expect the Trump administration to continue its assault on the program, as well as other immigrant legal services.
'We're talking about 26,000 children across the country who will lose an attorney.'
Abegail Baguio, development and communications director for the Amica Center for Immigrant Rights, said these cuts would directly impact minors in their legal services program. 'We're talking about 26,000 children across the country who will lose an attorney,' said Baguio.
The threat to the organization runs deeper than just its program for unaccompanied minors. Baguio said that the Amica Center for Immigrant Rights receives roughly 70 percent of funding through federal contracts. Even with an outpouring of new philanthropic support, it won't be able to make up the loss of federal funds if the Trump administration succeeds in fulling stripping them away. 'There's no way that private philanthropy can fill that gap,' she said.
If the federal coffers fully close, 'we're going to see families separated, families separated. We're going to see people being deported without having access to due process rights,' said Baguio.
Organizations with federal funding, doing work from cancer research to feeding people, are being forced to lay off up to 40 percent of staff, said English, the nonprofit consultant. Next, she said it will be cuts to services. An analysis from the Urban Institute, after Trump temporarily froze nearly all federal grants nationwide, found that in every state, 60 to 80 percent of nonprofits that receive federal funding could fail to cover their expenses if government funding remained frozen or disappeared.
Despite the risks to funders, donors, and nonprofits, sanchez gill said the worst mistake would be to concede defeat. 'Now is really the time to double down on trust-based funding that resists authoritarian control,' she said. 'Now is the time to push back. We can't cede power in advance. We can't cower in advance, or retreat in advance.'