President Donald Trumps dramatic cuts to U.S. government grants are destabilizing every corner of the nonprofit sector, leaving organizations scrambling to adapt. Stacy Palmer, CEO of The Chronicle of Philanthropy, explores how organizations can adjust to the unpredictable philosophy of the new administration, the cuts relationship to Trumps war on diversity, equity, and inclusion, and why this moment could further fracture the ties that bind Americans together.This is an abridged transcript of an interview from Rapid Response, hosted by Robert Safian, former editor-in-chief of Fast Company. From the team behind the Masters of Scale podcast, Rapid Response features candid conversations with todays top business leaders navigating real-time challenges. Subscribe to Rapid Response wherever you get your podcasts to ensure you never miss an episode.Thousands of not-for-profits, aid groups, universities, and hospitals rely on government grants. The Trump administration has targeted that aid, first announcing a full-on freeze of grants and loans in late January, later rescinded, but many subsequent cuts. Then in his recent address to Congress, he name-checked a litany of what he framed as wasteful, absurd grants. Whats going on? What is the mood like in the philanthropy world? Is it anger, is it fear? Are there any cheers?Nonprofits and foundations are mostly terrified, for a lot of different reasons. One is about just the philosophy of cutting off this aid. One is about the direct impact on their organizations. The other is that theres fear for the safety of their staffsa lot of concern about whether all of this targeting of nonprofits might lead to physical or cybersecurity or other kinds of threats. So I would say most people in the nonprofit world are in a very bad state, worse than Ive seen before in my history of covering these organizations, and worse than it was in the Reagan administration when we saw a lot of cuts.Even the conservatives who feel strongly about cutting government and see that theres waste are very upset about the fact that this seems so haphazard, that theres not a philosophy of the idea that we should ask philanthropy to take up the charge and we should be organized about how we think about that. This all seems very random. It comes, it goes. It means that nonprofits cant make payroll. It means that foundations cant figure out what the smartest strategy is to do. So its a pretty rough time in the nonprofit and foundation world.Beyond the funding, you mentioned concerns for physical safety. Are there examples of that or stories of that? Are you hearing that from certain kinds of organizations?Ive talked to several grantmakers who said that the first request theyre getting for extra funding is to beef up security, and that organizations that deal with the most controversial issuesimmigrants, LGBTQ rights, those kinds of thingsfeel threatened. They say that theyre concerned about doxxing, and I dont have any examples, but I cant tell whether theyre withholding the examples because of fear.Things are moving so fast. I know youve launched special coverage to try to keep up with the Trump agenda. Is money still flowing but nobody knows for how long? Or has it been cut off, and is that what were talking aboutlike a faucet being turned all the way off?Some groups, even though a court said the money has to keep flowing, say that the money isnt flowing and that theyve suffered freezes. Environmental groups, for example, say that they cant figure out whats going on with their banks not releasing the money to them, and so there have been disputes over that.Its not that no aid is flowing. I think some is, but its in no organized way that you can figure out why is it coming from some agencies and not others. And when you think about it, all the federal workers who have been laid off, those are the people who would turn on the spigots and make sure that things are flowing and happening. Well, you cant call the person in the federal government who you used to call. Theyre not there anymore.Im curious how you would describe the sort of role of philanthropy and of nonprofit organizations overall in our economy and our society.One of the things that people dont really understand is they see billionaires who are incredibly wealthy, and they see them giving away moneypeople like Bill Gates and Melinda [French] Gates, Warren Buffettand the dollars are striking.They give more than any of us could think about giving, but they are tiny compared to what the federal government spends. The Gates Foundation could spend all of the money in its coffers, and it would just keep the government operating for a day.Its just the scale is quite different. So its very important to understand the role that government plays, and its twofold. One is direct funding of nonprofits. The second is when the federal government and the state and local governments pull back, there are more people in need. That means they turn to nonprofits for extra help. So often what happens in these cutbacks is not just that the nonprofits lose the support they need to provide services, but they have more people at their doors.So the scale of what philanthropy can do versus the federal government is really important to understand. Now, thats not to say that philanthropy cant pick up more. There has been an enormous run-up in wealth, as we all know. There are many billionaires who could give very generously and make a difference. So nonprofits are certainly calling on them to do more and calling on the nations foundationsFord, Rockefeller, all the names that you all knowasking them to step up. But it would be foolish to think that any private entities can make up for what the governments doing.I have to ask you about Elon Musk. What do folks think of him in the philanthropy world? I mean, there is a Gates Foundation. Bloomberg has a foundation. Musk is not necessarily known for that, and hes having kind of a different impact.Elon Musk, along with President Trump, said some of the most destructive things about nonprofits themselvesthat they are horrible organizations that are just sleazy and just trying to make money off of things like homelessness.So theres been a lot of nonprofit-bashing by both Musk and Trump, and thats incredibly damaging. If they dont believe in the value of these organizations, its going to cause damage in the short term in terms of resources. But if you were a young person trying to decide where you were going to have a career, if you were motivated to want to be a nonprofit or philanthropy worker, why would you do that after somebody has made it sound like its the dirtiest profession ever rather than a call to public service?And I guess in the corporate and the nonprofit reactions in their programs, on attacks on things like DEI or environmental, how much of that is a shift in semantics versus a shift in mission? Ive seen the term green-hushing rise, sort of the opposite of greenwashing. So hiding sustainability efforts, renaming things that had been DEI to be something else. What about this is semantics versus mission?I know pretty much every foundation weve talked to said that theyre looking at every word on their website and seeing whether there are trigger words. Just as you see in the federal government, lawyers are reviewing absolutely everything a foundation does to make sure things are okay. In the absence of really clear guidance from the administration, you can imagine why thats taking a really long time, but it is not leading anybody to move quickly.Is there any time in history that youre looking to as you cover this shifting dynamic in the White House and beyond, or is this so unprecedented that theres really no place to look?The Reagan administration is the one that comes closest because there were these very serious cutbacks, and there was this whole discussion about what is the role of philanthropy and what is the role of nonprofits and how should we do it. So we have asked experts about what kinds of things they have to say. I have two conservatives and two liberals who were involved at that moment who were working in the nonprofit arena, and they all agreed it was unprecedented.And the reason they said that it is this haphazardness, and what one said, who is a very strong conservative, said, Weve just never seen something this nasty. The anger, the kind of feeling that none of this aid matters, its deeply disturbing to people really of any ideology because they [Trump and Musk] dont see that there is an ideology.They want to talk about the view of government. There can be robust debates on that, but this seems unprecedented to the people who have watched this over a long period, which is making it hard to have a playbook. And I think thats why nonprofits and foundations are struggling. What do you do when you cant look to history and you have to figure out fresh whats happening and how to come together?Philanthropy and the work of nonprofits, in a lot of ways, is inherently optimistic. Is there anything thats making you optimistic right now?I think as long as we continue to have nonprofits that are willing to work collectively to make a difference, that does make me optimistic, because sometimes nonprofits just worry about their own communities, their own causes, their own coffers, and dont take collective action. But if they will come together and continue to do that and stay strong, that could make a big difference.