Grants in a Time of Uncertainty: Lessons from 2025
In early 2025, one thing became abundantly clear across the nonprofit sector: uncertainty is no longer the exception. It is the operating environment. Nonprofit leaders are feeling the ground shift beneath them. Federal funding freezes, delayed decisions, political volatility, and rapidly changing philanthropic practices have created a moment where many organizations are asking the same question: How do we fund our work responsibly when the rules keep changing?
Why the 2025 Grants Landscape Felt So Different
The anxiety nonprofits felt in 2025 did not come from a single policy change or funding announcement. It came from the layered uncertainty of federal funding faced pauses, freezes, policy changes, and legal challenges. Foundations also adjusted their application processes. Corporate giving models continued to shift as well. And all of this happened in a political climate where information changed daily, sometimes hourly.
It is important to say this clearly: chaos does not always equal permanent change. Many of the most alarming federal actions will take years to resolve through courts and legislative processes. But chaos does change behavior. It delays decisions. It increases risk aversion and it forces nonprofits to spend more time navigating uncertainty instead of delivering services. That reality shaped the grant trends we saw throughout 2024 and into 2025. One of the benefits of working in grants over time is perspective. Shifts do not appear out of nowhere; they build.
Fewer Applications, Better Returns.
One of our internal practices at Mockingbird is iterative learning, so we implement new strategies each year and then share what we learned. Between 2023 and 2024, we intentionally submitted fewer grant applications for our clients. Instead of sending out as many applications as possible, we intentionally worked with our clients to spend more time on relationship development with funders. The result was a higher return on investment. Fewer applications generated more funding overall. This reinforced something we have long known anecdotally, but now have clearer data to support: Grant writing is not about volume. It is about alignment and relationships. Time spent building relationships, stewarding current funders, and having real conversations consistently outperformed cold submissions.
Below are some of the main trends we saw for 2025 in our work with clients at Mockingbird Analytics:
A Decline in General Operating Support
In 2023, a significant portion of awards were general operating grants. In 2024, those dropped by more than half, and when general operating funding was awarded, it tended to be under $100,000. At the same time, program-specific funding increased, as did targeted capacity-building support in some areas. Capital funding appeared in our data but reflected specific client work rather than a sector-wide trend.
This shift matters because general operating funds provide flexibility. Their decline means nonprofits must be more strategic about how restricted funding impacts staffing, cash flow, and long-term planning.
Private Foundations Played a Larger Role
In 2025, over two-thirds of awarded funding came from private foundations rather than government sources. It is still unclear whether this reflects broader sector trends or client-specific portfolios, but it aligns with what many organizations experienced as federal funding slowed or froze.
There is reason to believe philanthropy may step in to address some gaps left by federal funding, as it did during the COVID-19 pandemic and racial justice uprisings. However, philanthropic responses are uneven, slower, and often come with new expectations. Those expectations can include increased reporting requirements, tighter outcome measurement, or more frequent check-ins.
The Rise of Invitation-Only and LOI Processes
One of the most significant operational shifts we saw was foundations moving to invitation-only models or adding Letters of Inquiry (LOIs) as introductory steps. From the funder perspective, this was a response to overwhelming application volume. From the nonprofit perspective, it made getting “a foot in the door” harder.
The implication for 2026 is clear: If you are not investing in relationship-building, your access to funding will continue to narrow. This means attending funder webinars, participating in meet-the-funder events, sharing updates proactively, and inviting funders into your work through reports and conversations. It also means understanding who funds organizations in your ecosystem and letting go of the myth that nonprofits are competitors.
Data, Measurement, and the Tension Funders Are Creating
Data-driven decision-making is not new. But 2025 revealed how complicated it has become.
Funders increasingly asked for simplified, monetized metrics. How much does it cost per person served? What is the financial return per dollar invested? These questions can be reductive and, in some cases, harmful. They flatten complex, intersectional work into numbers that do not tell the whole story. At the same time, there has been meaningful progress toward ethical storytelling and data practices, thanks to years of advocacy from nonprofits pushing back against exploitative models.
For 2026, nonprofits will need to walk a careful line:
Identify a small number of meaningful indicators
Provide context for why those metrics are incomplete
Protect the privacy and safety of the communities they serve
Corporate Giving Continues to Shift
Corporate giving in 2025 moved further away from large, centralized grants and toward:
Employee-initiated giving
Matching programs
Skill-sharing and volunteer engagement
For nonprofits, this means corporate funding is less about filling out application portals and more about relationships. Boards, staff networks, vendors, and existing partnerships matter more than ever.
It also means organizations need to be prepared. Having clear, appropriate volunteer opportunities and engagement plans is essential. Corporate partners want to be involved, but unstructured involvement can drain nonprofit capacity.
Capacity Building Is No Longer Peripheral
One hopeful trend in 2025 was increased foundation interest in capacity building, including research, evaluation, and operational support. While these offerings are not always perfectly aligned with nonprofit needs, they signal a shift in philanthropic thinking. Funders are recognizing that programs cannot succeed without infrastructure. For 2026, nonprofits should:
Track which funders offer capacity-building support
Align proposals with those opportunities
Advocate for the kinds of support they actually need
What We Are Watching Closely as We Move Into 2026
Looking ahead, several issues will shape the grants landscape.
Federal Funding Volatility: Thousands of federal programs experienced freezes or delays. While many actions will be challenged legally, the burden on nonprofits is already real.
Organizations with federal funding should:
Stay in close contact with contract administrators
Document impacts of delays
Avoid making reactive decisions based on early headlines
Burnout and Leadership Turnover: We are seeing significant turnover in both philanthropic and government leadership. New leadership brings new priorities, sometimes quickly.
This reinforces the importance of staying informed, subscribing to funder communications, and checking whether priorities have shifted since your last application.
Data Privacy and AI Risks: As AI enters funding decision-making and reporting systems, data privacy becomes a critical concern. Nonprofits serving marginalized communities must be especially cautious. Protecting sensitive data, establishing internal privacy practices, and consulting legal counsel when concerns arise will be increasingly important.
Policy Threats That Affect Giving: Changes to the SALT deduction, the potential dismantling of the Johnson Amendment, and the lack of payout requirements for donor-advised funds all have profound implications for charitable giving. Nonprofits do not need to become policy experts, but they do need to stay informed and engaged through trusted sector organizations.
What This Means for Your 2026 Grants Strategy
If there is one takeaway from 2025, it is this: Grants are not free money. They are a strategic investment of time, labor, and trust.
For 2026, effective grant strategies will prioritize:
Fewer, better-aligned applications
Stronger funder relationships
Clear understanding of return on investment
Collaboration rather than competition
Ethical data practices
Long-term sustainability over short-term wins