One Trust Raised Its Grantmaking 50% for the Second Year Running. Sector Payout Didn't Move at All. Both Facts Are True, and Only One of Them Is Useful to You.

The Kate B. Reynolds Charitable Trust entered fiscal year 2027 on September 1, 2026 having increased its grantmaking by 50 percent — from $20 million to $30 million — for the second consecutive fiscal year. The Trust makes grants in four cycles per fiscal year, and it named the reason in plain language: historic disinvestment by federal and local governments in the public resources communities depend on.

In the same period, the aggregate picture looks like this:

• U.S. foundation assets reached roughly $1.68 trillion in 2025, up from $1.62 trillion at the end of 2024 and $1.46 trillion at the end of 2023 — about 15 percent growth in two years.
• Aggregate foundation giving was $19.4 billion in FYE 2024 and $19.4 billion in FYE 2025. Flat.
• The median payout rate has been 5 percent for five consecutive years. The legal minimum is 5 percent.

Those two paragraphs describe the same sector in the same period, and reconciling them is the single most useful piece of prospect research a fundraiser can do right now.

The pledge-to-practice gap, measured

The high-profile commitments are real and they are worth naming precisely, because they are the most reliable list of who is actually moving:

• MacArthur Foundation launched Set it at Six in February 2025, committing to a 6 percent payout for at least two years. Its 2025 charitable spending came in at roughly $647 million, a 7.1 percent rate — above its own pledge. Its approved 2026 charitable payout budget is $622 million. We covered MacArthur's elevated payout and the $100 million democracy commitment when it landed.
• Freedom Together Foundation is roughly doubling its payout, to 10 percent of assets.
• Weissberg Foundation moved to 10 percent.
• Marguerite Casey Foundation is drawing more than $130 million from endowment reserves.
• The Level Up Pledge has drawn roughly 50 signatory funders, each committing to raise grantmaking 20 percent or push payout to 8 percent or higher.

Now the denominator. Among 288 independent foundations reporting for FYE 2025:

62 percent held their payout rate flat year over year. 27 percent increased it. Separately, 67.6 percent of surveyed foundations reported increasing their giving in 2025, at a median of 5.8 percent — about 3.1 percent after inflation. And for 2026, 44.3 percent expect increases, 46.9 percent expect to hold steady, and 8.8 percent expect decreases.

Those numbers are not contradictory. They describe a sector in which a visible minority moved substantially, a comfortable majority moved slightly or not at all, and asset growth outran both — which is precisely why aggregate giving can sit flat at $19.4 billion while the trade press is full of funders announcing increases.

Why the aggregate cannot close the gap, and why that is the wrong frame anyway

Federal support to nonprofits in 2023 ran to roughly $303 billion. Total foundation contributions ran to roughly $103 billion. Do the arithmetic on what a sector-wide payout increase would produce: moving all $1.68 trillion in assets from 5 percent to 6 percent yields about $16.8 billion in additional annual grantmaking — roughly 5.5 percent of the annual federal flow to the sector.

There is no payout rate at which philanthropy backfills federal withdrawal. Anyone building an organizational plan on "foundations will step in" is planning on a number that does not exist, and the disruption tracking is not encouraging — the Lost Funds database now counts up to $177 billion in disrupted federal funding across roughly 20,000 recipients, against a total foundation payout an order of magnitude smaller.

But "philanthropy can't replace federal funding" is a macro observation, and you do not raise money at the macro. You raise it from specific institutions. And the distribution above says something operationally sharp: the increase is concentrated and identifiable. Roughly a quarter of foundations raised their rate. Thirty-three of 288 are paying out above 10 percent. Fifty funders signed a public pledge with their names on it.

Your job is not to hope the sector responds. It is to find the 27 percent.

How to tell a real increaser from an announcement

Not every "we are increasing our giving" press release describes the same thing, and the differences determine whether the money is available to you.

1. Is it a rate change or a special fund? A foundation that moves its payout from 5 percent to 7 percent has changed its base budget. A foundation that announces a $25 million rapid-response fund alongside an unchanged 5 percent payout has created a separate, usually time-limited, usually narrowly scoped pool. Both are welcome. Only the first one changes what a general operating request can plausibly ask for next year.

2. Has it happened more than once? This is the Kate B. Reynolds signal. A single-year bump is a crisis response and the base reverts. Two consecutive fiscal years at the elevated level is a different institutional decision — it implies the board has accepted a higher endowment draw as the new normal, and it means the fiscal 2028 conversation starts from $30 million rather than from $20 million.

3. Did they name the gap? The Trust did not announce a generic increase. It named where the money is going: legal services in response to state cuts; Medicaid and SNAP support in response to federal cuts; grassroots organizations, particularly those serving immigrants; local news providers; and in Forsyth County specifically, food bank support, safety-net organizations, a $1 million commitment to the school system, and nonprofit capacity and staff wellness.

That specificity is the most actionable part of the whole announcement. A funder that names five gap categories has told you the shape of a fundable request. A funder that says it is "increasing support for communities" has told you nothing.

4. Where do they actually fund? Kate B. Reynolds is a North Carolina funder, and its Healthy Places NC work concentrates in ten rural counties — Beaufort, Bladen, Burke, Columbus, Edgecombe, Halifax, McDowell, Nash, Robeson, and Rockingham — with additional statewide and Forsyth County–specific commitments. A $10 million increase at a place-based funder is enormous inside that geography and irrelevant outside it. Nearly every increaser on the list above has a comparable boundary. The increase is only an opportunity if you are inside it.

5. Check the cycle count, not the cached profile. The Trust runs four grant cycles per fiscal year. Several widely-used third-party funder profiles still describe it as running two annual cycles with information released in May and October. Cycle structure is exactly the kind of detail that changes when a funder scales up grantmaking, and exactly the kind of detail that third-party databases refresh slowly. Verify cycle timing on the funder's own site before you build a submission calendar around it — a funder that doubled its cycle count has also doubled your entry points, and a stale profile will cost you two of them.

What the funders themselves say they are doing

A Council on Foundations pulse survey of 138 philanthropic organizations gives the texture behind the payout numbers:

• 27 percent have increased or are considering increasing overall grantmaking budgets
• 39 percent are considering more flexibility in grantmaking processes
• 44 percent are adjusting grantmaking priorities to address funding gaps
• 54 percent are seeking collaboration with other funders
• 64 percent are maintaining an equity focus despite political pressure

Read that list as a hierarchy of cost. The cheapest response is collaboration — 54 percent. The next cheapest is changing priorities — 44 percent. Then process flexibility — 39 percent. The most expensive, spending more money, sits at 27 percent, and it matches the 27 percent payout-increase figure almost exactly.

There is real value in the cheaper responses, and it is the value most nonprofits underweight. Flexibility means an existing project grant may be convertible to general operating support, or a reporting requirement may be waivable, or a no-cost extension may be available. That conversation costs one email and is far likelier to succeed than a request for new money. If you hold a foundation grant right now and have not asked whether restrictions can be loosened, you are leaving the most probable win on the table.

Collaboration, at 54 percent, is why pooled funds keep appearing — the $7 million Innovative Postsecondary Models Fund backed by eight education foundations is the pattern, not the exception. A single application reaching eight funders is the highest-leverage form a proposal can take, and pooled funds are where the increasing-but-cautious money is congregating.

The practical sequence

1. Build a list of confirmed increasers, not a list of sympathetic funders. Start with the Level Up Pledge signatories, the named commitments above, and any funder in your geography that has publicly changed its payout rate. Verify against the 990-PF — the qualifying distribution and asset figures let you compute an actual rate rather than trust a press release.
2. Filter hard by geography and program. Most increasers are place-based or issue-bound. An out-of-scope request to a funder that just increased its budget is still an out-of-scope request, and it lands during the period when that funder's staff are most overloaded.
3. Ask current funders for flexibility before you ask new funders for money. The 39 percent number says this is the likeliest yes in the sector right now.
4. Match your request to the named gap. If a funder said legal services, food access, immigrant-serving grassroots work, and local news, do not send it a capital campaign.
5. Plan against the base case, not the increase. The median foundation is paying 5 percent, aggregate giving is flat at $19.4 billion, and 8.8 percent of funders expect to give less in 2026. Build the budget that survives that, then treat every increaser you land as upside. Organizations that planned on philanthropic backfill and were wrong are now in the bridge-grant and merger conversations that funders are quietly financing.

Foundation assets grew 15 percent in two years while foundation giving grew zero. That gap is the sector's defining fact in 2026. A handful of institutions — Kate B. Reynolds among them, twice now — decided not to participate in it. Those are the names worth your research time.