When Funders Close the Door: Inside the shift to invitation-only philanthropy

Insights from Pamela Ayers, MSW | Executive VP, Strategic Initiatives | Empreinte Consulting | Originally shared on her LinkedIn page, September 12, 2025

In 2025, the nonprofit sector is witnessing a quiet but significant transformation.

According to philanthropy strategist Pamela Ayers, more private and family foundations are moving away from open grant applications, where any eligible nonprofit can apply, and embracing invitation-only grant making.

Pamela explains that this shift is not isolated but part of a broader pattern reshaping the philanthropic ecosystem.

The change, she says, carries deep implications for equity, visibility, and nonprofit capacity, especially among smaller and community-based organizations.

 The Numbers Behind the Shift

In her analysis, Pamela cites new data from the Giving USA Foundation and the Indiana University Lilly Family School of Philanthropy, which reported that charitable giving in the United States reached $592.5 billion in 2024—a 6.3% increase from 2023.

However, once adjusted for inflation, that growth amounts to just 3.3%, underscoring how rising costs are diluting the real impact of philanthropic dollars.

“Foundation giving in real terms is essentially flat,” Pamela notes. “Yes, the nominal numbers are higher, but the purchasing power of those dollars has not kept up with inflation.”

She adds that while many nonprofit leaders were optimistic about 2024 revenue, the outlook for 2025 is more restrained.

The Center for Effective Philanthropy, in its State of Nonprofits 2025 report, found that 61% of nonprofit leaders reported that foundation funding met or exceeded expectations in the previous year—but most anticipate little to no growth this year.

“The optimism is thinning,” Pamela observes.

 Why Funders Are Turning Inward

Pamela attributes the growing preference for invitation-only models to a mix of strategic caution, administrative strain, and evolving funding philosophies.

“Many foundations are operating with tighter budgets and fewer staff,” she explains.

“Managing hundreds of open applications takes enormous time and resources, especially when many proposals don’t align closely with a foundation’s mission.”

For these funders, invitation-only grantmaking offers a more controlled, targeted approach.

“It’s about managing volume and ensuring alignment,” Pamela says. “But it’s also about reducing risk funders want to back organizations they already know or have vetted.”

In an era of political and economic uncertainty, Pamela notes, many donors are shifting toward deeper, multi-year relationships rather than one-off grants.

“Invitation-only models make it easier to build trust and invest more significantly in fewer, well-chosen partners,” she says.

 The Equity Challenge

While the move toward curated partnerships has its efficiencies, Pamela warns it also raises serious equity concerns.

“Invitation-only funding can unintentionally exclude smaller or newer nonprofits,” she explains.

“These groups often lack the networks or visibility to get noticed, even when their work is deeply impactful.”

Many grassroots leaders, she adds, wear multiple hats running programs, managing volunteers, and handling reporting, with little time left to nurture funder relationships.

“When visibility becomes the ticket to funding, those with limited capacity are sidelined,” Pamela observes.

She cautions that these dynamic risks reinforce existing inequalities in philanthropy.

“If funders primarily choose from within familiar circles, well-connected organizations continue to thrive while others, often those working in marginalized or underserved communities are left behind.”

The result, Pamela warns, is a potential mission drift across the sector. “We start funding who we know, rather than who’s making the greatest difference.”

Strain on Smaller Nonprofits

Pamela also highlights the operational burden this new landscape places on smaller organizations.

“To stay visible and competitive, nonprofits now need to invest time in networking, attending events, and staying active in funder spaces,” she says.

“That’s a real challenge for small teams already stretched thin delivering essential services.”

Still, Pamela believes nonprofits can adapt with a deliberate strategy. “Map your current funder relationships and identify where the gaps are,” she advises.

“Find out who you haven’t met yet that could extend an invitation.”

She encourages nonprofits to be proactive about storytelling and visibility, sharing impact stories, leadership achievements, and measurable results.

“Sometimes, being seen is the first step to being invited,” she says.

Even smaller organizations, Pamela suggests, can make modest efforts to engage by attending local events, joining coalitions, or collaborating with others in their field. “Partnership amplifies credibility,” she adds.

“Working together helps small nonprofits get noticed by larger funders.”

What Funders Can Do Differently

Pamela argues that funders, too, have an essential role to play in keeping philanthropy inclusive.

“Keep some open application tracks, even if limited,” she recommends. “That’s how new voices and innovative ideas enter the ecosystem.”

She also calls for greater transparency around how invitation-only decisions are made. “Share your criteria. Explain how nonprofits get on your radar. Let organizations know what it takes to be seen,” Pamela advises.

To counteract inequity, she proposes mentorships, application workshops, or simpler pre-qualification pathways for smaller groups.

“Not every organization can afford a full-time grant writer,” she notes.

Above all, Pamela urges funders to embrace trust-based philanthropy with fewer bureaucratic hurdles and more flexible funding that supports core operations.

“If you trust an organization enough to fund them, give them the space to lead and innovate,” she says.

 A Philanthropic Crossroads

Pamela believes the sector is at a defining moment. “There’s more money in philanthropy than ever before,” she says.

“But as giving becomes more curated and exclusive, the real question is: who gets to benefit from that generosity?”

She warns that unless funders and nonprofits work intentionally to bridge visibility gaps, the move toward invitation-only philanthropy could deepen existing divides.

“Those who are under-resourced or less connected risk being left out of conversations that determine who gets funded,” she cautions.

For Pamela, the path forward requires a balance of strategic curation without closing doors entirely.

“If philanthropy is truly about impact, innovation, and justice, we need to keep some gates open,” she insists.

She concludes with a reminder that resonates across the sector:

“Transparency, intentional equity, and relationship-building must remain central. Giving should not only flow it should flow where it’s most needed.”

Editor’s Note:

This article draws from insights shared by Pamela Ayers, MSW, Executive Vice President for Strategic Initiatives at Empreinte Consulting, on her LinkedIn page on September 12, 2025. Her reflections illuminate a critical turning point for the philanthropic sector, one that challenges both funders and nonprofits to rethink how inclusivity and impact can coexist in a rapidly evolving giving landscape.