The John D. and Catherine T. MacArthur Foundation recently announced plans to raise its annual payout from 5% to at least 6% for 2025 and 2026. This decision reflects a broader push for funders to play a greater role in addressing economic challenges and supporting organizations that drive social progress.

MacArthur’s approach encourages other foundations, Donor-Advised Funds (DAFs), and philanthropic leaders to reconsider their strategies. As government funding declines, nonprofit organizations face greater pressure to sustain their programs. A higher payout rate is one way philanthropy can help maintain momentum.

John Palfrey, president of the MacArthur Foundation, raised this discussion in his 2021 Stanford Social Innovation Review article, “The Case for Foundations to Do More in Times of Crisis.” He posed a critical question: Should large legacy foundations focus on preserving and growing their assets, or should they prioritize using those assets to create meaningful change? His stance is clear: investments should drive measurable improvements in society.

The Role of Philanthropy in Times of Need

Palfrey highlighted an important shift in perspective. He urged funders to consider an approach where giving levels are based on need rather than market conditions. This strategy encourages action during times of economic downturn, when organizations are most in need of financial support.

MacArthur is applying this thinking by committing to a higher payout for at least two years. In addition, they are advocating for unrestricted funding that gives organizations flexibility to address the challenges they face. By streamlining application and reporting requirements, they hope to remove unnecessary administrative burdens so organizations can focus on their missions.

This initiative challenges other funders to do the same. Raising the payout rate and adopting trust-based giving practices can provide stability to organizations working on critical issues.

Private Philanthropy Cannot Fill Every Gap

An increase in giving strengthens the nonprofit sector, but private funding alone cannot fully replace lost public dollars. With public funding decreasing, organizations must show that their work leads to meaningful results in order to build sustainable partnerships with funders.

More than ever, philanthropic dollars are directed toward initiatives that can demonstrate a clear impact. Funders want to support programs that create lasting improvements, and organizations that provide strong evidence of their effectiveness are more likely to secure funding.

How Nonprofits Can Strengthen Their Case for Funding

Funders are prioritizing organizations that can track progress and communicate results. Nonprofits that use data to tell their story and quantify their impact are in a stronger position to attract financial support.

SureImpact helps organizations measure, track, and report on their outcomes. With tools that simplify data collection and reporting, SureImpact makes it easier for organizations to:

• Gather real-time insights on program effectiveness

• Communicate measurable progress to funders

• Reduce time spent on administrative tasks

• Make informed decisions that strengthen results

With a structured approach to impact measurement, organizations can position themselves as valuable partners to funders who are looking for investments that make a difference.

Increased Giving Helps, But Nonprofits Must Prove Their Value

The MacArthur Foundation’s push for increased giving is an important step in helping nonprofits weather financial uncertainty. More funders are recognizing the need to distribute a greater share of their resources to organizations doing vital work.

But increased philanthropy alone will not solve the funding challenges facing the sector. Nonprofits must be ready to demonstrate their impact in ways that build trust and confidence among funders. The organizations that will secure long-term financial support are those that can clearly show why they are the best investment for meaningful change.

This shift requires better data, stronger measurement practices, and a commitment to transparency. Technology plays a key role in making this possible by simplifying impact tracking and reporting, ensuring nonprofits can effectively communicate their results.

More funding is a positive step, but it must be paired with greater accountability. Nonprofits that can prove their effectiveness will be the ones that thrive—not just in this moment, but in the future of philanthropy.