The Charitable Sector is Looking for New Ways to Work

11 Trends in Philanthropy for 2026 report cover

This article was first published in our 11 Trends in Philanthropy for 2026 report. Explore the full report here.

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For many organizations, the inability to exist effectively in the current environment has forced a retreat to survival strategies for both financial and operational reasons. Government funding cuts have led to a third of U.S. nonprofit service providers losing funding in early 2025 (Tomasko et al., 2025). In response, organizations are not just merging for efficiency; they are questioning their very existence. The Chronicle of Philanthropy (Beasley, 2025, para.1) notes that 46% of more than 400 surveyed nonprofit leaders worry their organizations may have to merge or close as a result of these cuts.

While some contract, others reinvent themselves through experimentation, bifurcating into two distinct streams: how funding is organized, and how operations are structured.

From a Foundation or Donor Perspective

Donors are bypassing the traditional private foundation model in favor of vehicles that offer speed, privacy, and political flexibility. The rise of “philanthropy via LLCs” — championed by the Chan Zuckerberg Initiative (CZI) and the Emerson Collective — allows funders to blend previously charitable giving with impact investing and political advocacy, untethered by the slow compliance and public disclosures required by a 501(c)(3).

Our previous Trends essays and reports have documented other shifts. There is a surge in collective giving and donor collaboratives (Loson-Ceballos & Layton, 2024) formalizing traditions of community generosity, while tech-enabled platforms like GoFundMe allow for hyper-local, direct-to-person giving that sidesteps traditional grantmaking institutions entirely. Within traditional grantmaking, the philosophy of “trust-based philanthropy” (Behrens & Martin, 2020) seeks to dismantle the rigid power dynamics between grantor and grantee. At the same time, new payment and processing vehicles, such as donor advised funds (Heist et al., 2025), continue to gain popularity. Other foundations are electing limited lifespans (Dale, 2025) instead of a traditional, perpetual horizon.

From an Operating Nonprofit Perspective

On the operational side, the 501(c)(3) is no longer the only option. Public Benefit Corporations (PBCs) (Hiller, 2013) and other low- or limited-profit structures allow entities to prioritize social mission alongside profit. We have also noted that fiscal sponsorship (Williams & Akaakar, 2024) is experiencing a renaissance, evolving from a temporary administrative stopgap into a permanent operational home. By housing projects within a larger entity that handles human resources, payroll, and compliance, social entrepreneurs can focus entirely on mission.

Other organizations are maintaining the same corporate structures but experimenting with new internal structures, such as our prior Trends essays on the co-CEO and other distributed leadership models (Sharp Eizinger & Martin, 2023; Sharp Eizinger, Peterson, & Martin, 2022), or dusting off the “linked” model of operating a charitable 501(c)(3) alongside a non-tax-deductible 501(c)(4). While operating multiple entities is not new, this structure is receiving fresh attention as a tool for defense. As noted by The Chronicle of Philanthropy (Gose, 2025), some leaders are exploring (c)(4)s not just for advocacy, but to shield assets and buy time if the federal government attempts to freeze assets or revoke tax-exempt status.

The Complex Case of OpenAI

Perhaps the most notable example of structural experimentation is OpenAI (n.d.). Initially founded in 2015 as a 501(c)(3) nonprofit, the organization added a for-profit subsidiary in 2019 to raise the capital necessary for large-scale AI research. In late 2025, the organization recapitalized, converting its for-profit arm into a Public Benefit Corporation (OpenAI Group PBC) that remains under the ultimate control of the nonprofit OpenAI Foundation. However, this unique structure has faced significant governance challenges. The sudden firing and subsequent reinstatement of CEO Sam Altman in 2023 highlighted the tensions between a mission-focused nonprofit board and the interests of major investors. The resulting oversight agreements underscore the difficulty of maintaining independent governance in hybrid entities.

“[T]hese experiments signal a departure from traditional, more hierarchical structures — and raise new questions.”

Blurring Lines and New Questions

Collectively, these experiments signal a departure from traditional, more hierarchical structures — and raise new questions. There are growing concerns about mission drift, conflicts of fiduciary duty, and how to value charitable assets to ensure they remain dedicated to community needs. As the lines blur, so too does the concept of independent governance and of the boundary between charitable and business activities and entities we noted back in 2019 (Moody).

Resolving these tensions will require more than new legal structures. It will require robust public engagement, openness from the philanthropic sector, and a legal framework that accommodates creativity without sacrificing accountability. As trust in traditional institutions continues to erode, a fundamental question emerges: can philanthropy reinvent its structures without losing its soul?

REFERENCES

Beasley, V. (2025). When does it make sense to merge? The Chronicle of Philanthropy. https://www.philanthropy.com/solutions/when-does-it-make-sense-to-merge

Behrens, T., & Martin, T. (2020, January 15). Alternatives to strategic philanthropy are emerging. 11 trends in philanthropy for 2020. Dorothy A. Johnson Center for Philanthropy at Grand Valley State University. https://johnsoncenter.org/blog/alternatives-to-strategic-philanthropy-are-emerging/

Dale, E. (2025, January 15). More foundations opt for planned lifespans and spend‑down strategies. 11 trends in philanthropy for 2025. Dorothy A. Johnson Center for Philanthropy at Grand Valley State University. https://johnsoncenter.org/blog/more-foundations-opt-for-planned-lifespans-and-spend-down-strategies/

Gose, B. (2025). A new playbook: How nonprofits are reinventing themselves. The Chronicle of Philanthropy. https://www.philanthropy.com/article/a-new-playbook-how-nonprofits-are-reinventing-themselves

Heist, H. D., Vance‑McMullen, D., Williams, J., Shaker, G. G., & Sumsion, R. M. (2025). The annual DAF report 2025. Donor Advised Fund Research Collaborative. https://doi.org/10.4087/XUGU3656

Hiller, J. S. (2013). The benefit corporation and corporate social responsibility. Journal of Business Ethics, 118, 287–301. https://doi.org/10.1007/s10551-012-1580-3

Loson-Ceballos, A., & Layton, M. (2024). In abundance: An analysis of the thriving landscape of collective giving in the U.S. Dorothy A. Johnson Center for Philanthropy at Grand Valley State University and Philanthropy Together. https://johnsoncenter.org/2023-us-collective-giving-research-initiative/

Moody, M. (2019, February 13). The boundaries are blurring between philanthropy and business. 11 trends in philanthropy for 2019. Dorothy A. Johnson Center for Philanthropy at Grand Valley State University. https://johnsoncenter.org/blog/the-boundaries-are-blurring-between-philanthropy-and-business/

OpenAI. (n.d.). Our structure. https://openai.com/our-structure/

Sharp Eizinger, A., & Martin, T. (2023, January 18). New organizational structure models are toppling the staff pyramid. 11 trends in philanthropy for 2023. Dorothy A. Johnson Center for Philanthropy at Grand Valley State University. https://johnsoncenter.org/blog/new-organizational-structure-models-are-toppling-the-staff-pyramid/

Sharp Eizinger, A., Peterson, S., & Martin, T. (2022, January 18). Innovations in talent investment for individuals, organizations, and communities. 11 trends in philanthropy for 2022. Dorothy A. Johnson Center for Philanthropy at Grand Valley State University. https://johnsoncenter.org/blog/innovations-in-talent-investment-for-individuals-organizations-and-communities/

Tomasko, L., Martin, H., Fallon, K., Kim, M., Faulk, L., & Boris, E. (2025, October 7). How government funding disruptions affected nonprofits in early 2025. Urban Institute. https://www.urban.org/research/publication/how-government-funding-disruptions-affected-nonprofits-early-2025https://www.urban.org/research/publication/how-government-funding-disruptions-affected-nonprofits-early-2025

Williams, J., & Akaakar, A. (2024, January 17). The fiscal sponsorship model: A growing trend in the nonprofit sector. 11 trends in philanthropy for 2024. Dorothy A. Johnson Center for Philanthropy at Grand Valley State University. https://johnsoncenter.org/blog/the-fiscal-sponsorship-model-a-growing-trend-in-the-nonprofit-sector/

Innovation and Survival: The Charitable Sector is Looking for New Ways to Work

From a Foundation or Donor Perspective

From an Operating Nonprofit Perspective

The Complex Case of OpenAI

Blurring Lines and New Questions

New Organizational Structure Models are Toppling the Staff Pyramid

The Fiscal Sponsorship Model: A Growing Trend in the Nonprofit Sector

More Foundations Opt for Planned Lifespans and Spend-Down Strategies

REFERENCES