State of Good for May 18, 2026

Weekly insights on donor behavior, industry trends, and what’s shaping generosity
⏱️ 9 minutes | Once a week

The numbers are in, and they’re sobering. New research from the Center for Effective Philanthropy reveals that nonprofits are navigating their most challenging operational environment in years. With consumer sentiment down 5.8% and personal savings rates dropping to just 3.6%, the fundraising landscape requires more strategic thinking than ever.

Federal Funding Shifts Reshape Foundation Priorities

The nonprofit sector faces a fundamental realignment of funding priorities. According to the Center for Effective Philanthropy’s State of Nonprofits 2026 report, foundations are increasingly focused on backfilling federal funding cuts for basic needs programs. This shift creates both opportunities and challenges across the sector.

Organizations working in basic needs, food security, housing, healthcare access, may find increased foundation interest in their work. But this concentration means nonprofits in education, arts, environmental work, and other sectors could face tighter competition for remaining foundation dollars.

What This Means for You:

• Review your case for support to highlight any basic needs components of your work
• Consider partnerships with basic needs organizations if your mission aligns
• Diversify funding sources now, don’t wait for foundation priorities to shift away from your sector
• Document your outcomes more rigorously to stand out in a competitive grant environment

The Nonprofit Sustainability Challenge

Building on their February 2025 data collection, CEP’s analysis reveals concerning trends about nonprofit operational health. The research paints what they call a “sobering picture” of organizational challenges that extend beyond simple funding gaps.

These findings align with broader economic indicators. With inflation continuing (CPI up 0.6% this week) and donor discretionary income squeezed, nonprofits face a perfect storm of rising costs and constrained giving capacity. The strategic question isn’t whether these challenges will affect your organization, it’s how you’ll adapt.

What This Means for You:

• Conduct a sustainability audit: Can your organization maintain services if current trends continue?
• Build scenario plans for different funding environments
• Invest in donor retention – it’s more cost-effective than acquisition in tight markets
• Consider mergers or strategic partnerships to reduce overhead

New Transparency Requirements Change the Game

The IRS’s new Form 990 Transparency Initiative will fundamentally change how nonprofits report their activities and how the public accesses this information. While experts debate the implications amid concerns about IRS enforcement, one thing is clear: transparency is no longer optional.

This shift toward radical transparency creates both risks and opportunities. Organizations with strong outcomes and efficient operations can use enhanced disclosure as a competitive advantage. Those with operational challenges may find increased scrutiny uncomfortable.

What This Means for You:

• Audit your current 990 for areas that might raise questions under enhanced scrutiny
• Prepare board members for increased visibility of governance decisions
• Use transparency as a marketing tool – showcase your efficiency and impact proactively
• Train staff on proper documentation practices now, before new requirements take effect

The Hidden Opportunity in Donor Advised Funds

Here’s a finding that could reshape your major gifts strategy: Research shows that donor anonymity in DAFs is rare. This means the individuals behind DAF grants are identifiable and cultivatable.

With DAFs holding over $234 billion in assets (as of last reporting), this finding opens significant strategic opportunities. You’re not just receiving anonymous grants; you’re building relationships with sophisticated donors who chose DAFs for tax and timing advantages.

What This Means for You:

• Research the individuals behind your DAF grants – they’re likely identifiable
• Create specific cultivation strategies for DAF donors
• Partner with financial advisors who manage DAFs
• Develop DAF-specific marketing materials that speak to tax-smart giving

This week’s takeaway: The nonprofit sector faces a fundamental reshaping driven by federal funding changes, new transparency requirements, and evolving donor behaviors. Success requires adapting now, not waiting for conditions to improve.

Three actions for this week:

1. Audit your sustainability – Run scenarios for your organization under continued economic pressure and shifting foundation priorities. Where are you vulnerable?
2. Embrace radical transparency – Get ahead of new IRS requirements by proactively sharing your impact and efficiency metrics. Make transparency your competitive advantage.
3. Unlock your DAF donors – Research who’s behind your DAF grants and create cultivation strategies. These aren’t anonymous gifts, they’re relationship opportunities.

💡 Pure Charity can support your 2026 Fundraising Strategies.

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The power of collective giving remains strong, even in challenging times. The University of Nevada’s 2026 Giving Day proved this with their most successful campaign yet, raising over $1 million from more than 1,900 donors.

What makes this achievement remarkable isn’t just the total raised, but the broad participation. In an era of giving concentration, nearly 2,000 donors came together for a shared purpose. They proved that community-driven campaigns can still mobilize widespread support when executed well.

The Lesson: Even as giving becomes more concentrated among major donors, the desire to be part of something bigger remains powerful. Well-executed giving days create urgency, community, and momentum that transcends economic headwinds. The key is making every donor feel like their gift, regardless of size, is part of a larger victory.