A $65 Billion Wake-Up Call for Nonprofits: Why Donors Are Pulling Back

An image of black coffee in a red mug, sitting on a napkin that has "Wake up! Make things happen." written on it, to illustrate a blog post about nonprofits facing a $65 Billion giving decline.
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Nonprofit giving has taken a $65 billion hit since 2021. That’s a staggering number, and while there’s no single reason for the giving decline, a few major factors are at play.

Yes, part of the decline is economic—when inflation is high, markets are volatile, and people feel uncertain, charitable giving tends to slow down. That’s a well-established pattern. But this isn’t just about economic cycles. What’s happening now is a deeper crisis of confidence, particularly among major donors.

While some donors continue to give generously and support institutional changes, many others—especially those who built their wealth through business—feel that nonprofits, particularly in higher education, are no longer aligned with their values. And that perception alone is enough to make them hesitate.

The Economy: A Real Factor, But Not the Whole Story

Historically, recessions and economic downturns have always impacted charitable giving. When people feel financial pressure, they tend to scale back discretionary spending—including philanthropy. The last few years have seen a mix of economic uncertainty, inflation, and stock market fluctuations, all of which make donors more cautious.

But if the nonprofit giving decline were purely an economic issue, we’d expect to see equal declines across all nonprofit sectors. Instead, we’re seeing a disproportionate drop in giving to certain institutions, particularly universities and legacy nonprofits, while other causes—such as local community-based charities—are holding steady. That suggests something bigger is at play.

DAFs: A Convenient Explanation?

Some argue that much of the missing $65 billion is simply sitting in donor-advised funds (DAFs), waiting to be distributed. While it’s true that DAFs have grown, they don’t fully explain the shortfall. What’s really happening is that donors are parking money in DAFs instead of giving directly to nonprofits, often because they’re uncertain about the institution’s long-term direction.

One donor put it bluntly:
“I’d rather keep my money in a DAF and distribute it later than give it to a university that could turn around and erase my name from a building 20 years from now.”

This isn’t just speculation. We’ve seen institutions rename buildings, remove endowed faculty positions, and even distance themselves from past benefactors—not because of anything those donors did, but because their names no longer fit the new ideological landscape.

Presentism and the Erosion of Donor Trust

A major force driving donor hesitancy is presentism—the tendency to judge historical actions and figures by today’s evolving social and political standards.

This is why universities and nonprofits have stripped donor names from buildings, erased endowed chairs, and, in some cases, rejected funding from donors whose views or business backgrounds are now deemed “problematic.” The unintended consequence? Today’s donors are watching—and they’re thinking twice.

One longtime donor summed it up:
“I gave a major gift to my university years ago, and they praised me for it. Now, 20 years later, they’re debating whether my donation aligns with their ‘modern values’? No thanks. I’d rather keep my money where I control it.”

That said, not all institutions have taken this approach—some have navigated these cultural shifts while maintaining strong donor trust. Universities that provide clear donor policies, long-term recognition guarantees, and transparency are less likely to see donor hesitancy.

However, there’s a deeper contradiction at play. If an institution was built by a donor or a historical figure whose name is now being erased, why are the very people demanding these changes even there to begin with? If the institution was founded on “problematic” money, wouldn’t true consistency require them to leave entirely? Yet, they don’t—they continue to study, work, and draw salaries from the very institutions they claim to be morally compromised.

One donor recently remarked:

“They want to attend the school, benefit from the education, and have a prestigious degree on their resume, but then they turn around and say the founder’s name should be erased. If that’s how they feel, why are they there? Why not build their own institution from scratch, free of any so-called historical baggage?”

This is a question that institutions must wrestle with if they want to restore donor confidence and reverse the giving decline.

The Future of Philanthropy Is in Conservative Hands

Another reality nonprofits need to face: Most of America’s major wealth—the kind that fuels large philanthropic gifts—is held by conservative and center-right donors.

This isn’t about politics. It’s about math.

The largest generational wealth transfers, private foundations, and high-net-worth individuals tend to lean conservative in their economic and philanthropic philosophies. That doesn’t mean they don’t support charitable causes—but it does mean they are more strategic and cautious with their giving. They don’t blindly fund institutions that work against their interests.

One nonprofit executive recently admitted:
“We don’t like to say it out loud, but the donors making seven- and eight-figure gifts usually aren’t activists—they’re entrepreneurs, business leaders, and legacy builders. If we alienate them, who’s going to fund our future?”

This is the harsh truth institutions must confront: You can’t build a future by cutting ties with the people who created the past.

If nonprofits want to stay funded, they must respect and engage with the very donor base that sustains them.

Political Perception: The Elephant in the Room

Again, whether you believe it or not, many donors perceive that higher education and certain large nonprofits lean too far into activism. And that perception is costing institutions millions.

    • Higher Education Backlash → Columbia University has seen donor frustration over free speech issues, and at the University of Nevada, Las Vegas, major donors have questioned where their money is really going.

    • Legacy Concerns → Some donors who once gave generously are now hesitant, fearing that future social shifts could lead to their names being stripped from institutions, just like statues and monuments have been removed in recent years.

    • Generational Mistrust → A growing number of donors—particularly those who built their wealth through business—feel that the institutions they once supported now view them as part of the problem.

That said, many institutions still maintain strong donor relationships and have adapted well to modern expectations. The question is, will more nonprofits take this approach, or will they continue to alienate major donors?

As Obama Said: Yes We Can

The $65 billion giving decline is real. Some of it is tied to the economy over the past 4 years. Some of it is sitting in DAFs. But a major chunk of it is lost due to donor hesitation, frustration, and a loss of trust.

Nonprofits that want to reverse this trend need to send a clear message: Yes, we can honor our past while building our future. Yes, we can recognize donors without fearing ideological shifts. Yes, we can ensure that philanthropy remains about impact, not controversy.

The choice is theirs. Yes, they can. But will they?

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