Now that 2026 is underway, the contours of the grants landscape are becoming clearer. Here are five grant funding trends we’re watching closely this year.
1. Public funding uncertainty continues to influence foundation strategy.
Ongoing volatility in federal and state funding remains a defining backdrop for philanthropic decision-making in 2026. Budget negotiations, shifting political priorities, and changes to public programs all ripple outward, especially for nonprofits that rely on government funding directly or indirectly.
Foundations are responding in different ways. Some are continuing their commitments to stabilize essential services when public funding pulls back. Others are narrowing their focus, choosing to invest more deeply in organizations they already know and trust.
What this means for grantseekers
- Funders will be paying closer attention to sustainability and long-term viability.
- Proposals that feel purely reactive or framed only as short-term gap-filling will be less competitive.
- Clear articulation of how your work complements (rather than replaces) public systems will matter more than ever.
What to do now
Sharpen your language around resilience, partnerships, and continuity. Being explicit about what your organization does and does not do can strengthen funder confidence, especially in uncertain environments.
2. Accountability and impact expectations are shaping how foundations define success.
Even without major changes to foundation payout rules, philanthropic institutions are operating in an environment of heightened scrutiny. There is a growing emphasis on transparency, public benefit, and demonstrable outcomes.
In response, many foundations are becoming more explicit about what “impact” means within their portfolios—and more selective about the organizations they fund.
What this means for grantseekers
- Strong proposals should go beyond describing activities to explain why the work matters and what will be learned.
- Reporting should be increasingly framed as a learning process, not just a compliance exercise.
What to do now
Tighten your evaluation language. Be clear about:
- what you will measure,
- how data will be used, and
- how learning will inform future decisions.
Funders are not expecting perfection—but they are looking for clarity, honesty, and follow-through.
3. Foundations are funding fewer organizations and investing more deeply in readiness and capacity.
Across the sector, foundations continue to shift their strategies. Many are focusing on specific geographies, defined populations, or systems-level approaches. At the same time, there is sustained interest in funding organizations that demonstrate a readiness to deliver results.
This is where capacity, infrastructure, and organizational effectiveness come into play.
What this means for grantseekers
- “Close fit” may not be enough anymore.
- Funders will be making fewer grants overall, but committing more deeply to organizations they see as prepared, stable, and well-run.
- Capacity funding will remain viable, but only when it is clearly tied to impact.
What to do now
When requesting support for evaluation, systems, staffing, or operations:
- Explicitly link capacity to program quality, scale, or sustainability,
- Explain why the investment matters now, and
- Avoid framing capacity as overhead for its own sake.
4. Relationships remain critical, but they are increasingly intentional.
Many foundations continue to move away from open, high-volume RFPs toward invitation-based or relationship-informed grantmaking. Program officers are managing large portfolios with limited time, which means they rely heavily on signals of readiness and trust.
What this means for grantseekers
- Funders will notice organizations that communicate clearly and respect their time.
- Relationship-building will be less about frequent contact and more about quality, consistency, and relevance.
What to do now
Treat relationship-building as a year-round grants activity. Thoughtful updates, transparency about challenges, and consistency in follow-through all matter.
We’ve written about relationship-building in Want to Win Over Funders? Start Before You Walk in the Room and 5 Ways to Foster Warm Contacts with Funders.
5. AI is becoming a practical tool in the grants process—with guardrails.
In 2026, artificial intelligence is no longer a novelty in the nonprofit sector. Many organizations are using AI to support funder research, summarize guidelines, draft early narratives, or synthesize evaluation data.
At the same time, adoption remains uneven, and many nonprofits lack clear internal guidance around AI use.
What this means for grantseekers
- Funders may increasingly expect tighter, clearer proposals.
- Inconsistent voice, inaccuracies, or misuse of sensitive information will undermine credibility quickly.
What to do now
Establish basic internal guidance around:
- appropriate uses,
- human review requirements, and
- data privacy.
Used thoughtfully, AI can support grants work without replacing the human judgment, storytelling, and strategic thinking funders still value most.
Looking ahead
As 2026 begins, a few things are clear:
- Foundations are prioritizing depth over breadth.
- Strong proposals combine clear alignment, credible data, and a compelling narrative.
- Organizations that communicate clearly and consistently during uncertainty stand out.
This is not the year to apply for every possible grant. It’s the year to be intentional—about fit, readiness, relationships, and the story you’re telling funders about your work.
If you’d like support refining your grant strategy or strengthening your funder communications, Three Notch’d Nonprofit Solutions is here to help.
Cover photo by Drew Beamer on Unsplash
Three Notch’d Nonprofit Solutions, LLC 