Foundation giving is up—but what about the payout rate?

Nonprofits are facing a challenging funding environment—with government cuts, increased demand, and growing financial stress. How are foundations responding?

Each year, Candid surveys U.S. foundations to learn more about their recent grant payments, giving forecast, and grantmaking practices. This year, 542 independent, community, corporate, and operating foundations responded to the survey (8% response rate). Here are some high-level findings:

Nearly half of foundations expect to increase giving

The fiscal year end (FYE) 2026 foundation giving forecast is optimistic. Nearly half of respondents (44.3%) expected their foundation’s giving to increase year-over-year in 2026, while another 46.9% expect it to remain about the same. Only 8.8% expected a decrease.

This is a shift from 2023-2025, when the share expecting to increase giving ranged from 23% to 37.3%, and marks a return to 2022 levels.

What was driving anticipated increases in 2026 foundation giving? Based on write-in responses, the most common factor was growth in foundation assets—due to expected strong investment returns and/or new gifts to foundations. Some highlighted heightened community needs and strategic decisions to expand grantmaking programs. One respondent commented: “We are launching several new grant programs to release more money into the community due to the difficult nonprofit landscape currently.”

2025 saw modest increases in foundation giving

Among 466 foundations that reported grant payments for both FYE 2024 and 2025, total cumulative giving was flat: Foundations reported a combined $19.4 billion awarded in each year. Looking beyond aggregate dollars, which can be skewed by the largest foundations, around two-thirds of respondents (67.6%) increased their giving in 2025. The median percentage change in foundation giving was a 5.8% increase (or 3.1%, adjusted for inflation). When analyzed by foundation type, community foundations saw the biggest median increase—14.1% (or 11.2%, adjusted for inflation).

Most independent foundations’ payout rates remained around 5%

Awarding more grant dollars is not the same as increasing the payout rate. The payout rate refers to qualifying distributions, as defined by the IRS, as a proportion of the foundation’s assets. Generally, private foundations must make qualifying distributions that are approximately 5% of the average market value of their net investment assets.

In early 2025, in response to federal funding cuts, the MacArthur Foundation pledged to increase their payout rate to at least 6% for two years. They also launched a campaign urging other foundations to do the same. The survey data offers an early read on whether the sector has responded.

Foundation payout rates in FYE 2025 overall did not meaningfully change from previous years for independent foundations (private non-corporate, non-operating foundations) and remained at 5%. Of 288 respondents reporting their payout rate, 62% indicated it remained about the same as the prior year, while 27% reported an increase.

Reasons for increasing payout rates fell into three broad categories:

• Increased grantmaking in response to government funding cuts and increased community needs: “Volatility in federal funding led us to add an extra million to our payout.”
• Board-approved decisions to increase payout: “The Board approved a 3-year increase in our payout rate.”
• Accounting and timing factors: “In 2024 we were using carry forward from earlier years.”

The median payout rate has remained at 5% for five years

When comparing self-reported payout rates over the last five years of survey data, the median has been locked at 5%. The average has fluctuated from 6.7% to 7.5%, with higher-outliers driving up rates. This flatness has persisted despite external shocks like the COVID-19 pandemic, market swings, or high inflation.

One respondent to this year’s survey described their foundation’s approach: “The payout rate is not so much arrived at strategically or in an aspirational way as it is sort of backed into as a result of considering both what a strict 5% would be and what’s required per Part XII, Line 6f (d) of the 990-PF for the prior year.” This is likely what’s happening for the typical foundation, where the payout rate isn’t a strategic choice—it’s merely a calculation. The IRS’s 5% payout rate floor effectively functions as a 5% ceiling.

As their assets increase, foundations anticipate giving more in 2026. That optimism may be small comfort to nonprofits facing increased financial challenges and difficulty obtaining foundation funding. The contrast between foundations’ financial health and nonprofits’ financial distress has intensified calls for funders to not just award more grant dollars but raise their payout rate. CHANGE Philanthropy’s Level Up pledge represents the latest coordinated effort to push philanthropy off the minimum 5%. Given that overall payout rate behavior over the years has been largely unchanged, will philanthropy respond differently in 2026?