This version of the article first appeared on CNBC’s Inside Wealth Newsletter. This is Robert Frank, our weekly guide to Net-Worth Investor and Consumer. Sign up to receive future editions directly in your inbox. Wealthy philanthropists are working on new landscapes to give as government cuts create more funding needs, but political fights make donations more difficult. Whether it’s a legal battle at Harvard, a cut in foreign aid, or a sudden loss of research funding, key donors face changing dynamics, staying under or staying under the radar in an attempt to keep them from getting caught up in the political crosshairs. Harvard University received approximately 4,000 gifts online, totaling over $1.1 million in the wake of its battle with the Trump administration last week, according to a report from Harvard Crimson. The gift comes after the White House frozen more than $2 billion in federal funds when Harvard rejected a request that included an audit of the school’s student body on “diversity of perspective.” In addition to cutting backs to other federal sources for US International Development Organizations and nonprofit organizations, the Trump administration also suggests it is considering a broader scrutiny of the nonprofit sector, which could target causes or positions that are contradictory to the administration or are considered excessively partisans. In response, the nonprofit has launched its most aggressive fundraiser since Covid Pandemic, claiming that the very future of the nonprofit sector and freedom of speech is under attack. But so far, major donors have not responded with large public gifts like in 2020 and 2021. Harvard President Alan Gerber and other leaders have reached out to the school’s mega donor roster, including Michael Bloomberg, Ken Griffin and others, but no one has announced what has happened so far. Advisors to some large donors say their clients disagree with Harvard’s position or the school’s progress on anti-Semitism and other issues. Other clients don’t want to see publicly oppose the administration. Charitable experts and advisors say that some of today’s wealthy donors and foundations do not want to be seen as ally for fear of public criticism. Some of them give, but you can do so quietly and personally. Other donors agree with the Trump administration’s criticism that many nonprofits or institutions are becoming too ideologically unilateral and political, and should be seeking reform or compromise. Recent trends in nonprofits relying on bigger gifts from small pools of ultra-rich donors have exacerbated the problem as they can no longer rely on numerous small donations from grassroots fundraisers. A report from Altrata found that the ultra-high wealthy (over $30 million worth of people) now account for 38% of charitable contributions around the world. The world’s 320 billion or accounts for 8% of individual philanthropy. For most of today’s large donors, the non-profit turmoil erupts very quickly, and they still handle and evaluate the best response. Nicholas Tedesco, CEO of the National Centre for Family Charity, said he is asking how members will navigate the political situation and how to best protect the grantees. “The questions they ask more than anything are the risks of charities and families moving resources, and how can we protect our charities individuals and families, how can we navigate the environment of risk that allows us to stay true to our mission and be sensitive to our ingredient needs?” Tedesco said. BJ Gorgen Maloney, Head of Private Advisory for JP Morgan Private Bank, said that the client received a message that felt that the nonprofit was in crisis. “Donorers feel the urgency of fundraising, just like nonprofits’ early Covid-19 crisis, especially those who rely on federal funds,” she said. She added that many nonprofits are merged or closed in economies of scale, particularly overseas. Ed Chaney, an attorney who advises tax-free organizations, said some of his private foundation clients have even stopped giving to causes chosen by the Trump organization. “I’m watching some people sanitizing things a bit. I’m watching people ready to fight,” he said. “In the end, it comes down to the individual situations of the charity.” Chaney noted that wealthy donors tend to move slower than small dollar donors, as they rarely make large donations for general operational support. “They have to negotiate a gift agreement and everything about that,” he said. “It’s possible that a larger donor responded, but they started a conversation that didn’t end for a while.” Some philanthropists are trying to show their resolve even if they haven’t committed to a particular dollar gift this year. In late March, the trust-based charity project began its “Meet the Moment” pledge. So far, 118 signatories representing $23.7 billion in assets have pledged to support them at the time of need, through nonprofit organizations, unlimited, multi-year fundraising. Another official statement stating that charitable contributions are First Amendment rights has been signed by more than 500 foundations as of Thursday morning. The Kenneth Rainin Foundation has signed both pledges and said it will distribute another $4 million this year. Shelleitrott, executive director of the Family Foundation, said many funders are strengthening their support, but they are doing it quietly to avoid government scrutiny. “Unfortunately, the job is politicized,” she said. “This is unprecedented, so we’re all trying to find our foothold,” she added that the threat to Harvard’s tax exemption and a wider attack on academia has “galvanized” some philanthropists and encouraged them to speak up. “We must stand together to protect our freedom to direct our private resources on issues that people care about,” Trott said. Jordana Barrack, executive director of the Mighty Arrow Family Foundation, said many funders were moving slowly. “We don’t have enough resources to save everyone and keep all these organizations open,” she said. “How do you decide how to get a band-aid and what you don’t get? That’s the tough part of how many funders are overwhelmed and slowing down the decision-making process.” Created by Kim Jordan, co-founder of New Belgian Brewing, Mighty Arrow has the authority to spend assets by 2040. However, family foundations designed to exist in a permanent state should consider how increased spending in a depressed market will drain their contributions. Priscilla Kersten, president of the Square One Foundation, said her top priority was not the foundation’s longevity, but that her parents started out in 1957 with manufacturing destiny. Square One recently launched the Rapid Response Fund, holding a six-hour meeting for grantees to allow resources to be coordinated. “The market is just a market and we’ll be back,” she said. “If you can’t see this moment in your lifetime, I honestly don’t know what I’ve built up and grown up.”
Students will walk along the Harvard University campus in Cambridge, Massachusetts on December 17, 2024.
Bloomberg | Bloomberg | Getty Images
This version of the article first appeared on CNBC’s Inside Wealth Newsletter. This is Robert Frank, our weekly guide to Net-Worth Investor and Consumer. Sign up to receive future editions directly in your inbox.
Wealthy philanthropists are working on new landscapes to give as government cuts create more funding needs, but political fights make donations more difficult.
