Foundation Source Just Released the 2026 Giving Outlook: $1.6B Across 71,000 Grants, GOS at 40.3%, and Private Philanthropy Recalibrating as Federal Dollars Become Politically Conditional. What the Numbers Tell You About Where to Apply Next.

Foundation Source published its 2026 Giving Outlook on June 4. The report covers grantmaking by Foundation Source's private foundation clients and donor-advised fund clients through September 2025 and projects forward into 2026 under the assumption that federal funding will continue to contract, that political conditions on federal awards will tighten, and that private philanthropy will become a more important — and more strategically positioned — counterweight than at any point since the 2008 financial crisis. The numbers behind the report are worth dwelling on, because they describe the operational reality of where flexible, fast-moving, mission-aligned dollars are flowing right now while federal program officers are absorbing what the OMB rule rewrite means for their pipelines (Granted News brief on OMB's overhaul here).

Foundation Source clients distributed $1.6 billion in grants through the first three quarters of 2025. The split was $1.5 billion from private foundation clients and $89 million from donor-advised fund clients served through the Charityvest platform. The grants reached more than 27,000 organizations through more than 71,000 individual award actions, an average of roughly $22,500 per grant and about 2.6 grants per recipient. The three largest sector destinations were education ($262 million), public and societal benefit ($146 million), and human services ($139 million). Religion, environment and animals, arts and culture, and health rounded out the rest of the visible giving.

The headline figure is large but the structural data underneath is more important. Foundation Source's separate 2025 Report on Private Philanthropy, which the Outlook draws on, reports that private foundation grantmaking grew 4.2 percent in 2024 overall — modest in aggregate, but with sharp variance by foundation size. Midsize foundations, defined as those holding $10 million to $100 million in assets, grew their grantmaking by 13.6 percent year over year. This is the most operationally consequential statistic in the report for nonprofits trying to figure out where to allocate development staff time, because midsize foundations are large enough to write meaningful grants but small enough to make decisions quickly, often without the layered program-officer review and board-cycle gating that characterizes the largest private foundations.

The other structural shift worth tracking is payout. Foundation Source reports that the average payout rate across all its private foundation clients held steady at 7.1 percent of asset value in 2024, comfortably above the 5 percent legal floor. The aggregate hides divergence: smaller foundations (under $10 million in assets) increased their payout from 9.9 to 10.3 percent, while larger foundations (over $100 million) reduced theirs from 5.8 to 5.2 percent. The pattern reflects two different operating philosophies. Smaller foundations have less to lose from drawdown and tend to give based on the urgency of community need; larger foundations balance grantmaking against perpetual-existence preservation and tend to give more conservatively when capital markets are volatile or uncertain. Both patterns matter for grant seekers, but they matter in different ways. Smaller foundations are the place to find unrestricted operating support quickly. Larger foundations are where to find multi-year programmatic commitments that survive board transitions.

General Operating Support Is the Quiet Revolution

The single most important programmatic shift in the data is the rise of general operating support. GOS grants now constitute 40.3 percent of all Foundation Source grantmaking, up from 37.1 percent in 2023. The pattern is even more pronounced among smaller foundations, where GOS represents 49.4 percent of grants. More than half of all 2025 grants written by Foundation Source clients carry no programmatic restrictions — funding the organization, not a defined activity within it.

This is a sea change. For two decades, philanthropy operated under the program-grant orthodoxy: funders preferred to restrict their dollars to defined programmatic outcomes and tracked deliverables, with operating support viewed as a soft second-best. The reasoning rested on funder anxiety about overhead and on a measurement infrastructure that rewarded programmatic specificity. The pendulum has swung back hard since 2020. The first wave of the shift came during the pandemic, when funders relaxed restrictions to let organizations survive. The second wave came in 2023 and 2024, as funders absorbed the trust-based philanthropy literature and concluded that program restrictions were producing administratively expensive grants that constrained the very nonprofits the funders had selected as competent. The third wave — which the 2026 Outlook captures — is happening right now, driven by the recognition that federal funding has become an unstable substrate. If a nonprofit's federal awards may be terminated at administrative discretion under the new OMB framework, a programmatic foundation grant tethered to the same project becomes a stranded asset. General operating support is the only flexible buffer.

Nonprofit fundraisers should read this as permission to ask for unrestricted dollars. The five-year-old assumption that funders prefer restricted program grants is no longer accurate. Smaller and midsize foundations in particular are looking for organizations that can articulate why unrestricted support will produce more outcomes per dollar than a tightly scoped programmatic grant. The proposal architecture that wins this kind of money is different: it foregrounds organizational competence, financial controls, and theory of change, rather than a defined logic model with quantified deliverables. Development staff who learned to write programmatic narratives need to add a separate competency for general operating proposals — and the two writing styles should not be confused.

Grants to Non-501(c)(3) Entities Are the Most Interesting Frontier

The third pattern that stands out in the Foundation Source data is the growth of grantmaking to non-501(c)(3) entities. Foundation grants to non-charitable structures grew from $39 million to $51 million between 2023 and 2024 — a 30.8 percent increase. This is a small fraction of total giving in absolute terms, but the rate of growth and the strategic significance are out of proportion to the dollar volume.

Foundations write grants to non-501(c)(3) entities for a few reasons. The most common is expenditure responsibility grants to fiscally sponsored projects that have not yet incorporated independently. The second is mission-related investments and program-related investments to for-profit social enterprises whose business model directly advances a charitable purpose. The third — and the fastest growing category — is grants to government agencies, public universities, and quasi-governmental entities that have lost or are at risk of losing federal funding. A foundation that wants to keep a local Department of Health environmental health program running while federal funds are litigated can write a grant directly to the agency, document the public benefit, and exercise expenditure responsibility. This was rare three years ago. It is now a recognized line of work for several large family foundations.

For grant seekers operating in fiscal sponsorship structures, the data is a signal to engage foundations earlier in the maturation curve. Funders who would have insisted on full 501(c)(3) status five years ago will now consider a fiscally sponsored project on the merits, provided the sponsorship agreement is clean and the public-benefit case is documented. For grant seekers working alongside government agencies or universities whose federal funding is unstable, foundation backfill is a legitimate ask that should be raised in conversation rather than waiting for a formal RFP.

The Tax Law Effect Is Real but Narrow

The 2026 Outlook devotes substantial attention to the One Big Beautiful Bill Act and its charitable-giving provisions. The act introduces an above-the-line deduction for charitable giving of up to $1,000 single / $2,000 joint regardless of itemization, raises the adjusted gross income threshold for itemizers, and adjusts the substantiation thresholds for non-cash gifts. The aggregate effect, according to Foundation Source's analysis, will be a modest increase in giving from non-itemizing households — broadening the donor base — without significantly affecting the giving behavior of the largest donors, who continue to be motivated by tax planning around appreciated assets, qualified charitable distributions from IRAs, and estate-level optimization.

For nonprofits, the practical implication is asymmetric. The new above-the-line deduction matters for organizations that depend on mid-tier annual giving from individuals, where a $50 or $100 marginal gift can be the difference between a one-time and a sustaining donor. It does not meaningfully change institutional giving programs. Foundations file Form 990-PFs and pay an excise tax on net investment income; their grantmaking decisions are not driven by donor-level tax changes. The Outlook is careful to note this distinction, but the report's media coverage has often blurred it. Development teams should not expect the OBBBA to substantially shift foundation giving patterns. The shifts captured in the rest of the data — payout discipline, GOS growth, non-501(c)(3) grantmaking — are the ones that matter.

How to Position for the 2026 Foundation Cycle

The operational implication of the Foundation Source data, read alongside the broader federal environment, is that the foundation funding channel will absorb more strategic weight in 2026 than it has at any point in the last decade. Federal discretionary awards are entering a period of administrative discretion that grant recipients cannot fully model. Private foundations are entering a period of payout discipline, operating-support flexibility, and willingness to fund non-traditional structures. The center of gravity in the social-sector funding stack is shifting toward private philanthropy as the most predictable and adaptive channel.

Three practical moves are worth prioritizing for grant seekers entering the second half of 2026.

The first is to map the midsize foundation universe in your geographic and programmatic area. Foundation Source's data identifies midsize foundations as the fastest-growing grantmakers, but most fundraising shops still spend disproportionate time pursuing the largest national funders. Reweighting the pipeline toward $10M–$100M asset foundations — most of whom file 990-PFs that are public and machine-readable — is one of the highest-leverage activities a development team can undertake right now.

The second is to reposition program proposals as general operating asks where the relationship permits. Funders who have moved toward GOS will not refuse a programmatic ask, but they will give the GOS version more institutional weight and less administrative scrutiny. The conversion is not always linear; some funders still require program-level reporting. But for organizations with clean financials and a credible theory of change, the GOS framing is now the higher-probability ask.

The third is to engage foundations directly on federal funding instability where it materially affects your work. The OMB rule and the broader contraction of federal discretionary awards have produced foundation officers who are explicitly looking for opportunities to backfill credible federally funded work, even at organizations they have not previously supported. The conversation does not need to wait for a published RFP. It can begin with a one-page memo describing the federal funding at risk, the public-benefit consequences of its loss, and a specific ask. Foundations are ready for this conversation in a way they were not eighteen months ago. The 2026 Giving Outlook is the data that backs the readiness.

The numbers are unusual not because they are large in aggregate — $1.6 billion across three quarters from a single platform's client base is large but not unprecedented — but because they describe a sector that is moving faster, giving more flexibly, and absorbing more strategic responsibility than at any recent point. Grant seekers who treat private philanthropy as the second-best lane to federal funding are reading the moment backwards. For 2026, private philanthropy is the lane.