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Massachusetts funders and nonprofits scramble after federal attacks on DEI programs
Summary
Nonprofit leaders and funders told legislators that cuts, grant uncertainty and legal confusion are forcing organizations to redirect resources to compliance and risk management while demand for services rises.
Leaders of Massachusetts philanthropic and nonprofit organizations told the joint committee on racial equity that recent federal actions targeting diversity, equity and inclusion have forced many nonprofits into defensive modes — diverting staff time to legal questions, pausing programs, or shrinking services — even as community demand increases.
Why it matters: Nonprofits supply critical services across the state — from housing and elder care to youth education — and many rely on a mix of state, local and federal grants. Witnesses said unclear federal directives and threats to rescind grants have caused organizations to assess compliance risk, sometimes at the cost of direct service delivery.
Evidence at the hearing: The Boston Foundation said its survey of grantees found 91% of organizations expected the Trump administration would make their work harder and 64% anticipated increased demand, while 89% of organizations receiving federal funds expected potential loss of that funding. The Foundation and partner funders have deployed legal clinics and technical assistance to help nonprofit leaders interpret federal guidance and adjust grant strategies.
Philanthropy and employer responses: Major corporate and philanthropic witnesses described short‑ and long‑term responses. Eastern Bank executives outlined how their firm embeds inclusion in hiring and community investment programs and said their Eastern Bank Foundation disburses more than $5,000,000 annually and pursues multi‑year investments in economic inclusion. YW Boston announced a Massachusetts Alliance for Equity to coordinate private and nonprofit resources to protect and promote DEI practices.
Concrete nonprofit effects: Testimony included a specific example of 826 Boston, which withdrew an AmeriCorps application after federal administrators asked grantees to certify they were not engaging in DEI activities; 826 said the request would have constrained student storytelling and curricular projects. The organization declined to reapply and lost roughly $250,000 of anticipated funding; the group launched a community fundraising campaign and raised about $260,000 to hire five full‑time program assistants to replace AmeriCorps members.
What lawmakers can do: Witnesses asked the committee and the legislature to consider state supports — short‑term bridge funding, technical assistance and clearer state guidance — and encouraged continued coordination among funders and the attorney general’s office to shore up nonprofit capacity.
Ending note: Nonprofit and philanthropic leaders said they aim to continue equity work even as they shore up legal and financial risk management. Several called for new partnerships among funders, institutions and government to ensure essential programs are not lost to uncertainty.
