On Turmoil: The Funding Crisis, DEI Rollbacks, and What's at Stake for BIPOC-Serving Nonprofits

Christine Lauren
Jun 24
5 min read

Updated: Jun 25

Recently, a client that serves a diverse low-income community was invited by a funder to submit a grant application for a food justice program. We submitted the application, and all was well and good until the funder came back and asked us to remove any mention of their participants' race and ethnicity.

Let that sink in for a moment.

This is a food justice program prioritizing low-income people of color, because that's precisely who faces hunger and food insecurity in my client's community. This funder, who has institutionally articulated a commitment to racial equity for more than twenty years, is now asking my client to delete the identity of the people their program was designed to serve.

Yes, a mere six years after the philanthropic world raced to the rescue during the Black Lives Matter protests, we have arrived here: the silent erasure of identity as a condition of funding.

If you're a fundraiser working with BIPOC-serving organizations, you know what I'm talking about. This is for you.

DEI Rollback Is the Real Story

What I'm seeing now is widespread backpedaling among funders that once pledged their support to racial equity. The evidence is everywhere if you know where to look.

When I compare grant applications from this year to versions from even 2024 and 2025, questions about DEI are quietly disappearing. Some of my other clients have been asked to do what was requested of my client above: scrub any mention of race and ethnicity from their applications entirely. Don't even get me started on changes to federal grant applications.

This has led to some of the hardest conversations I've had with clients in my career. On one hand, there's real merit in holding their ground. These organizations exist to serve communities of color. They were built in response to specific, documented, historical harm done to people of color in this country, from Jim Crow to the ICE raids happening right now. They should have the right to name who they serve and why. To ask them to erase that identity is to ask them to erase the very reason for their existence.

On the other hand, they need to keep the lights on.

The Funding Landscape Has Shifted Dramatically

The broader funding environment has tightened in ways that are reshaping the entire nonprofit sector. Federal funding cuts and policy changes have created significant shortfalls across human services. For BIPOC-serving nonprofits, especially Black-led organizations, which have historically had less access to unrestricted funding, reserves, and institutional social capital, this is not an abstract policy shift but immediate structural pressure.

The result is a surge in competition for private dollars that feels sharper than anything I have seen in 25 years of fundraising. I see this firsthand every time a client asks me to join a funder's bidder conference after an RFP is released; in many cases, hundreds of applicants are on the call for a handful of grants.

Foundations have largely remained silent, with few notable exceptions. To some extent, I understand their caution: many foundations are themselves nonprofits, and there is increasing concern that charitable designation and tax-exempt status could become politically exposed if they are seen as too directly engaged in "contentious" policy areas. At the same time, I keep wondering what might look different now if the philanthropic sector had maintained a unified and consistent stance on racial equity from the start, rather than complying in advance.

Where Things Stand

This is what I'm seeing from my vantage point as a consultant working in institutional philanthropy with medium-sized BIPOC-serving nonprofits:

BIPOC-serving human services nonprofits are experiencing increased community need and demand for basic services. Organizations are operating under widespread stress and fear, while being pressured to do more with less, essentially running ragged to mitigate the fallout of federal policy on real human lives. For instance, San Francisco's Human Services Agency recently issued an RFI asking nonprofits to serve as unpaid host sites for CalFresh recipients now required to complete 15 hours of community service per month to keep their food benefits, a work requirement expansion driven by federal policy. In other words, nonprofits are being asked to implement the enforcement mechanism for federal changes to food assistance, on their own time and dime, with no compensation offered.
Funders are becoming increasingly less accessible to less well-connected organizations, as part of a growing trend toward invitation-only models and philanthropic wealth consolidation. Whiteness, social connections, and proximity to wealth are increasingly becoming the drivers of who receives funding.
Funders aren't reading the room, and that's adding stress to an already strained sector. Shorter turnaround times force nonprofits to scramble, a practice that is particularly unfair to under-resourced organizations already stretched thin. This, coupled with heightened scrutiny and increasingly burdensome reporting demands, detracts from the ability of nonprofits to serve their communities. If trust-based philanthropy really does exist, precious few of my BIPOC-serving nonprofit clients are seeing it in practice.

The Human Cost

When federal anti-poverty policy shifts, the concentration of wealth, and a tone-deaf foundation world stack together, the cost to the nonprofit sector and the people they serve is very real. Here's what I'm seeing:

There's a talent exodus, especially among frontline fundraisers. As they burn out, they quietly transition to other fields or retire, taking hard-won expertise with them.
Several executive directors in my orbit have experienced significant health challenges. This is anecdotal, but we cannot ignore that the immense stress nonprofit leaders are under has very real physical consequences.
Although most of my clients are stable for now, they are overworked and strained by a harsh operating environment alongside overwhelming community need. Some are making hard staffing decisions. Their survival is not at risk - yet.

Overall, BIPOC-serving human services nonprofits are still showing up and doing the work, even when it takes more effort and creativity than ever before. They are strong and care deeply. But federal policy is changing the playing field in ways that make it harder for them to operate, which is deeply ironic, given that a core function of government is to care for its people.

There's no clean or easy resolution to this moment. But here's what I believe: for BIPOC-serving nonprofits, the funding crisis and the identity erasure crisis are not two separate problems. They are the same problem. The money is being cut precisely where identity is most visible. That's not a coincidence, and it's not hard to trace the downstream path to see who will bear the cost. Organizations are being asked to make a tradeoff: say less about who you are and who you serve, or risk losing the resources to serve them at all.

This fundamental tension - about truth, systems of power, and the distribution of resources - is one of the defining conditions of fundraising right now.

Photo Credit: "Turmoil" by Rod Waddington, via Wikimedia Commons/Flickr. CC BY 2.0