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Business Standard
16 hours ago
- Business
- Business Standard
China's stealthy solar exports stay one step ahead of US trade tariffs
The hum of solar panel factories in this steamy island city doesn't sound like much. But to American trade officials, it's the muffled noise of rules being bent — or broken. In recent months, Batam, a duty-free Indonesian enclave a short ferry ride from Singapore, has become a key waypoint in a convoluted global shuffle. Chinese solar manufacturers, facing stiff US tariffs, are quietly assembling their equipment in Indonesia and slipping their products into the American market, tariff-free. It's an elegant workaround. But it may not last long. According to Bloomberg News analysis of trade and corporate records, Indonesia's 10 biggest exporters of solar cells and panels sold $608 million worth of products to the US during the first half of 2025. Of those, Bloomberg News identified six firms in Batam where company records indicate they are ultimately owned by executives at Chinese solar companies. Those firms accounted for almost 70 per cent of the exports to the US. Earlier in July, a coalition of US solar manufacturers, including First Solar Inc. and Mission Solar Energy, filed trade petitions against Indonesia, India and Laos. They claimed Chinese companies were gaming the system, flooding the US market with unfairly cheap goods made in the three Asian countries. This prompted the US International Trade Commission to begin an investigation into the anti-dumping and countervailing allegations. 'Under President Trump, America is no longer a dumping ground for cheap imports that undermine our industries and workers,' White House spokesman Kush Desai said. 'While the Department of Commerce conducts an anti-dumping investigation into solar panels, the administration is closely monitoring transshipment and other methods of undermining our tariffs policies.' The Trump administration hasn't released any detailed definition of what exactly constitutes a transshipment. It's also unclear whether any of these Chinese-owned Batam-based solar companies are rerouting products through Indonesia to avoid the steep US solar tariffs — which has effectively barred Chinese firms' direct access to the lucrative American market — or if the firms are genuinely producing the products in Batam to count as Indonesian origin. BP Batam, the Indonesian authority managing the island economy, said it hasn't as yet received any confirmation about the start of an anti-dumping investigation. It's working closely with the central and local government to support fair and transparent international trade, BP Batam said in response to a Bloomberg News query. 'So far, partner countries have acknowledged and appreciated the role of the Indonesian government, BP Batam, and the Batam City government in navigating global trade dynamics responsibly,' it said. Indonesia's trade ministry and China's commerce ministry didn't respond to a request for comment on the allegations from the US solar industry. This would not be China's first dance around trade barriers. When Western nations slapped tariffs on Chinese solar goods over a decade ago, the country's manufacturers simply moved production — first to Vietnam, Malaysia, and Thailand. The strategy worked. Southeast Asian exports, often Chinese in disguise, flowed into the US tariff-free for years. First, the US Department of Commerce, under former President Joe Biden, launched an anti-dumping and countervailing probe against Cambodia, Vietnam, Malaysia, and Thailand. The year-long investigation found manufacturers were dumping cheap exports into the American market at prices lower than the cost of production. Then in April, under President Donald Trump, the four Southeast Asian nations were hit with tariffs as high as 3,521 per cent. 'Chinese-headquartered solar companies have been cheating the system, undercutting US companies and costing American workers their livelihoods,' Tim Brightbill, co-chair of law firm Wiley's international trade practice, said in April. Brightbill is lead counsel for the Alliance for American Solar Manufacturing and Trade, the coalition of solar companies that successfully pressured the Commerce Department into launching the investigation. The April tariffs forced US buyers to reshuffle where they shop. Indonesia, not covered by the ruling, emerged as one of the biggest winners. Batam, a popular spot for cheap golf trips and long a weekend escape for Singaporeans, turned into the destination for something else: Chinese capital and solar ambitions. 'As other jurisdictions in Southeast Asia have come under increasing scrutiny, factories have continued to relocate in a cat-and-mouse fashion,' said Niclas D. Weimar, head of technology at Sinovoltaics, a Dutch-German compliance and quality assurance firm for the solar industry. Some of the biggest Chinese solar companies have landed there in the last two years, churning out solar panels straight for the US market. Indonesia exported a total $733 million in solar products to the US between January and May this year, a 350 per cent increase from last year, according to US customs data. One example: PT Rec Solar Energy Indonesia, now the country's largest solar exporter to the US. The company sent $219 million worth of panels across the Pacific in the first half of 2025 — virtually all of its output. It began exporting from Batam in 2023, based on information from its parent NE Solar, a Cambodian company founded in 2022, according to their website. Dig a little deeper, and Cambodian companies registry shows NE Solar's previous director was Huang Yunfei, who is also the owner of a Chinese manufacturer called Huzhou Zhongdian Solar. US and Canadian trademark data show Huzhou Zhongdian Solar owns the 'NE Solar' trademark, while the Cambodian NE Solar owns the trademark in that country. NE Solar's current director is Cheng Shen, whose office address in a Cambodian registry shows is just 4 kilometers away from Huzhou Zhongdian Solar. The ties don't end there. In the first half of 2025, PT Rec imported 91 per cent of its production materials, or $92 million worth, from Huzhou Paluo Yunpeng New Materials, a company owned by the same owners as Huzhou Zhongdian, according to Chinese business records. In other words: the factory might be in Indonesia, but the supply chain — and control — appears to be firmly Chinese. Calls to PT Rec's office in Batam went unanswered. Calls to a personal phone number listed for Cheng Shen on Cambodia's registration record went unanswered, while Bloomberg News couldn't find contact details for Huang Yunfei. Calls to Huzhou Zhongdian also went unanswered. Email inquiries sent to NE Solar and Huzhou Zhongdian were also unanswered. Companies registries in Indonesia and China also list Chinese solar firms' directors or subsidiaries as the beneficial owners of five other Batam-based companies – PT Nusa Solar Indonesia, PT Blue Sky Solar Indonesia, PT Allianz Solar Indonesia, PT Thornova Solar Indonesia and PT Msun Solar Indonesia. PT Nusa and PT Blue Sky didn't respond to requests for comment when contacted by phone, and a PT Nusa employee declined to immediately comment when reached on LinkedIn. Bloomberg News couldn't find phone numbers for the rest of the companies in public records or online. Emails sent to all five firms' listed addresses weren't responded to, while messages sent to company employees at four of the firms on LinkedIn went unanswered. Bloomberg News reporters haven't visited these factories. Together, the six Chinese-owned companies sold $419 million worth of solar cells and panels directly to America in the first half of this year, up 148 per cent from a year ago. The surge of solar exports to the US isn't limited to Indonesia. In Laos, which was also spared the April tariff ruling, solar exports have skyrocketed from virtually nothing in early 2024 to $717 million in the first five months of this year, US trade data showed. India went from $10 million in 2022 to $345 million this year. If the US International Trade Commission's investigation against Indonesia, Laos and India concludes there were unfair trade practices, another round of duties could soon hit. Which raises the question: where do the Chinese solar giants go next? The answer depends on how painful the new tariffs turn out to be. Indonesia has negotiated Trump down from a retaliatory tariff rate initially set at 32 per cent in April to 19 per cent earlier this month, making it more attractive than its neighbors, according to BNEF analyst Felix Kosasih. Still, many Chinese firms aren't waiting to find out. In April, JA Solar told Bloomberg News it was accelerating its overseas expansion while closely tracking US tariff developments. Among its bets: a new plant in Oman expected to open by the end of 2025, with a capacity of six gigawatts for cells and three gigawatts for modules. JinkoSolar Holding Co., another heavyweight, is going bigger. It's building a 10-gigawatt cell and module factory in Saudi Arabia, in partnership with the kingdom's sovereign wealth fund and Vision Industries. Neither company has indicated plans to sell to the US market. Still, there's no denying that Chinese solar companies will need to tread more cautiously with Trump at the helm, says Cosimo Ries, a Shanghai-based analyst at researcher Trivium China. 'If you're trying to make a long-term decision to invest, everywhere has become so unstable,' Ries said. 'Solar especially, because it's one of the most attacked industries of all.' But at least for now, the faint hums of Batam's solar factories are continuing.
Yahoo
18 hours ago
- Business
- Yahoo
China's Stealthy Solar Exports Stay One Step Ahead of US Tariffs
(Bloomberg) -- The hum of solar panel factories in this steamy island city doesn't sound like much. But to American trade officials, it's the muffled noise of rules being bent — or broken. Trump Awards $1.26 Billion Contract to Build Biggest Immigrant Detention Center in US The High Costs of Trump's 'Big Beautiful' New Car Loan Deduction Can This Bridge Ease the Troubled US-Canadian Relationship? Salt Lake City Turns Winter Olympic Bid Into Statewide Bond Boom In recent months, Batam, a duty-free Indonesian enclave a short ferry ride from Singapore, has become a key waypoint in a convoluted global shuffle. Chinese solar manufacturers, facing stiff US tariffs, are quietly assembling their equipment in Indonesia and slipping their products into the American market, tariff-free. It's an elegant workaround. But it may not last long. According to Bloomberg News analysis of trade and corporate records, Indonesia's 10 biggest exporters of solar cells and panels sold $608 million worth of products to the US during the first half of 2025. Of those, Bloomberg News identified six firms in Batam where company records indicate they are ultimately owned by executives at Chinese solar companies. Those firms accounted for almost 70% of the exports to the US. Earlier in July, a coalition of US solar manufacturers, including First Solar Inc. and Mission Solar Energy, filed trade petitions against Indonesia, India and Laos. They claimed Chinese companies were gaming the system, flooding the US market with unfairly cheap goods made in the three Asian countries. This prompted the US International Trade Commission to begin an investigation into the anti-dumping and countervailing allegations.'Under President Trump, America is no longer a dumping ground for cheap imports that undermine our industries and workers,' White House spokesman Kush Desai said. 'While the Department of Commerce conducts an anti-dumping investigation into solar panels, the administration is closely monitoring transshipment and other methods of undermining our tariffs policies.' The Trump administration hasn't released any detailed definition of what exactly constitutes a transshipment. It's also unclear whether any of these Chinese-owned Batam-based solar companies are rerouting products through Indonesia to avoid the steep US solar tariffs — which has effectively barred Chinese firms' direct access to the lucrative American market — or if the firms are genuinely producing the products in Batam to count as Indonesian Batam, the Indonesian authority managing the island economy, said it hasn't as yet received any confirmation about the start of an anti-dumping investigation. It's working closely with the central and local government to support fair and transparent international trade, BP Batam said in response to a Bloomberg News query. 'So far, partner countries have acknowledged and appreciated the role of the Indonesian government, BP Batam, and the Batam City government in navigating global trade dynamics responsibly,' it said. Indonesia's trade ministry and China's commerce ministry didn't respond to a request for comment on the allegations from the US solar industry. This would not be China's first dance around trade barriers. When Western nations slapped tariffs on Chinese solar goods over a decade ago, the country's manufacturers simply moved production — first to Vietnam, Malaysia, and Thailand. The strategy worked. Southeast Asian exports, often Chinese in disguise, flowed into the US tariff-free for years. By 2024, the region had become the largest solar exporter to the US. Then Washington moved to shut the loophole. First, the US Department of Commerce, under former President Joe Biden, launched an anti-dumping and countervailing probe against Cambodia, Vietnam, Malaysia, and Thailand. The year-long investigation found manufacturers were dumping cheap exports into the American market at prices lower than the cost of production. Then in April, under President Donald Trump, the four Southeast Asian nations were hit with tariffs as high as 3,521%. 'Chinese-headquartered solar companies have been cheating the system, undercutting US companies and costing American workers their livelihoods,' Tim Brightbill, co-chair of law firm Wiley's international trade practice, said in April. Brightbill is lead counsel for the Alliance for American Solar Manufacturing and Trade, the coalition of solar companies that successfully pressured the Commerce Department into launching the investigation. The April tariffs forced US buyers to reshuffle where they shop. Indonesia, not covered by the ruling, emerged as one of the biggest winners. Batam, a popular spot for cheap golf trips and long a weekend escape for Singaporeans, turned into the destination for something else: Chinese capital and solar ambitions. 'As other jurisdictions in Southeast Asia have come under increasing scrutiny, factories have continued to relocate in a cat-and-mouse fashion,' said Niclas D. Weimar, head of technology at Sinovoltaics, a Dutch-German compliance and quality assurance firm for the solar industry. Some of the biggest Chinese solar companies have landed there in the last two years, churning out solar panels straight for the US market. Indonesia exported a total $733 million in solar products to the US between January and May this year, a 350% increase from last year, according to US customs data. One example: PT Rec Solar Energy Indonesia, now the country's largest solar exporter to the US. The company sent $219 million worth of panels across the Pacific in the first half of 2025 — virtually all of its output. It began exporting from Batam in 2023, based on information from its parent NE Solar, a Cambodian company founded in 2022, according to their website. Dig a little deeper, and Cambodian companies registry shows NE Solar's previous director was Huang Yunfei, who is also the owner of a Chinese manufacturer called Huzhou Zhongdian Solar. US and Canadian trademark data show Huzhou Zhongdian Solar owns the 'NE Solar' trademark, while the Cambodian NE Solar owns the trademark in that country. NE Solar's current director is Cheng Shen, whose office address in a Cambodian registry shows is just 4 kilometers away from Huzhou Zhongdian Solar. The ties don't end there. In the first half of 2025, PT Rec imported 91% of its production materials, or $92 million worth, from Huzhou Paluo Yunpeng New Materials, a company owned by the same owners as Huzhou Zhongdian, according to Chinese business records. In other words: the factory might be in Indonesia, but the supply chain — and control — appears to be firmly to PT Rec's office in Batam went unanswered. Calls to a personal phone number listed for Cheng Shen on Cambodia's registration record went unanswered, while Bloomberg News couldn't find contact details for Huang Yunfei. Calls to Huzhou Zhongdian also went unanswered. Email inquiries sent to NE Solar and Huzhou Zhongdian were also unanswered. Companies registries in Indonesia and China also list Chinese solar firms' directors or subsidiaries as the beneficial owners of five other Batam-based companies – PT Nusa Solar Indonesia, PT Blue Sky Solar Indonesia, PT Allianz Solar Indonesia, PT Thornova Solar Indonesia and PT Msun Solar Nusa and PT Blue Sky didn't respond to requests for comment when contacted by phone, and a PT Nusa employee declined to immediately comment when reached on LinkedIn. Bloomberg News couldn't find phone numbers for the rest of the companies in public records or online. Emails sent to all five firms' listed addresses weren't responded to, while messages sent to company employees at four of the firms on LinkedIn went unanswered. Bloomberg News reporters haven't visited these factories. Together, the six Chinese-owned companies sold $419 million worth of solar cells and panels directly to America in the first half of this year, up 148% from a year ago. The surge of solar exports to the US isn't limited to Indonesia. In Laos, which was also spared the April tariff ruling, solar exports have skyrocketed from virtually nothing in early 2024 to $717 million in the first five months of this year, US trade data showed. India went from $10 million in 2022 to $345 million this year. If the US International Trade Commission's investigation against Indonesia, Laos and India concludes there were unfair trade practices, another round of duties could soon hit. Which raises the question: where do the Chinese solar giants go next?The answer depends on how painful the new tariffs turn out to be. Indonesia has negotiated Trump down from a retaliatory tariff rate initially set at 32% in April to 19% earlier this month, making it more attractive than its neighbors, according to BNEF analyst Felix many Chinese firms aren't waiting to find April, JA Solar told Bloomberg News it was accelerating its overseas expansion while closely tracking US tariff developments. Among its bets: a new plant in Oman expected to open by the end of 2025, with a capacity of six gigawatts for cells and three gigawatts for Holding Co., another heavyweight, is going bigger. It's building a 10-gigawatt cell and module factory in Saudi Arabia, in partnership with the kingdom's sovereign wealth fund and Vision Industries. Neither company has indicated plans to sell to the US market. Still, there's no denying that Chinese solar companies will need to tread more cautiously with Trump at the helm, says Cosimo Ries, a Shanghai-based analyst at researcher Trivium China. 'If you're trying to make a long-term decision to invest, everywhere has become so unstable,' Ries said. 'Solar especially, because it's one of the most attacked industries of all.' But at least for now, the faint hums of Batam's solar factories are continuing. --Andy Lin and Ocean Hou. --With assistance from Skylar Woodhouse, Eko Listiyorini, Shadab Nazmi, Chandra Asmara, Tassia Sipahutar and Ben Otto. Burning Man Is Burning Through Cash Elon Musk's Empire Is Creaking Under the Strain of Elon Musk It's Not Just Tokyo and Kyoto: Tourists Descend on Rural Japan Confessions of a Laptop Farmer: How an American Helped North Korea's Wild Remote Worker Scheme A Rebel Army Is Building a Rare-Earth Empire on China's Border ©2025 Bloomberg L.P. Sign in to access your portfolio
Al Arabiya
3 days ago
- Business
- Al Arabiya
Takeaways from AP's report about cuts to government grants for nonprofits
President Donald Trump's policies are poised to upend decades of partnerships the federal government has built with nonprofits to help people in their communities. Since the 1960s, presidential administrations from both parties have used taxpayer dollars to fund nonprofits to take on social problems and deliver services. A vast and interconnected set of federal grants fund public safety programs, early childhood education, food assistance, and refugee resettlement services in every state. In January, the Trump administration sought to freeze federal grants and loans. Nonprofit groups immediately challenged the move and won a court-ordered pause. But in the six months since, the administration has cut, frozen, or discontinued many federal grant programs across agencies. An analysis by the Urban Institute provides a sense of the scale and reach of government support for nonprofits. Published in February, the data comes from the tax forms nonprofits file where they report any government grants they receive. In response to questions about the cuts to grant funding, White House spokesperson Kush Desai said, 'Instead of government largesse that's often riddled with corruption, waste, fraud, and abuse, the Trump administration is focused on unleashing America's economic resurgence to fuel Americans' individual generosity.' How much support does the government give to nonprofits? The Urban Institute found $267 billion was granted to nonprofits from all levels of government – federal, state, and local – in 2021, the most recent year a comprehensive set of nonprofit tax forms are available. That figure underestimates the total funding nonprofits receive from the government. It includes grants but not contracts for services nor reimbursements from programs like Medicare. It also excludes the smallest nonprofits which file a different abbreviated tax form. The data includes all tax-exempt organizations that file a full tax return, from local food pantries to universities and nonprofit hospitals. But government funding does not just go to the largest organizations. A majority of nonprofits in the dataset, across every sector from the arts to the environment to human services, report receiving government grants. In most places, the typical nonprofit would run a deficit without government funding. The Urban Institute cautions that just because a nonprofit would run a budget deficit without government funding, it does not necessarily mean the nonprofit will close. Even in wealthy areas, nonprofits would struggle without government support. In only two Congressional districts – one that includes parts of Orange County, California, and one in the suburbs west of Atlanta – would typical nonprofits not be in the red if they lost all of their public grant funding, the analysis found. However, funders in Orange County warn that nonprofits are not as optimistic about their resiliency. Taryn Palumbo, executive director of Orange County Grantmakers, said local nonprofits are seeing their budgets getting slashed by 50 percent or 40 percent. Last year, a large local foundation, Samueli Foundation, commissioned a study of nonprofit needs because they were significantly increasing their grantmaking from $18.8 million in 2022 to an estimated $125 million in 2025. They found local nonprofits reported problems maintaining staff, a deep lack of investment in their operations, and a dearth of flexible reserve funds. The foundation responded by opening applications for unrestricted grants and to support investments in buildings or land. Against this $10 million in potential awards, they received 1,242 applications for more than $250 million, said Lindsey Spindle, the foundation's president. 'It tells a really stark picture of how unbelievably deep and broad the need is,' Spindle said. 'There is not a single part of the nonprofit sector that has not responded to these funds. Every topic you can think of: poverty, animal welfare, arts and culture, civil rights, domestic abuse.' Private donations can't replace government support. The nonprofit Friendship Shelter helps house and support 330 people in Laguna Beach, California, which falls within Orange County. Dawn Price, its executive director, said the organization has an annual budget of about $15 million, $11.5 million of which comes from government sources. Price said the government funding is braided in complex ways to support different programs and fill in gaps. Private donors already subsidize their government grants, which she said pay for 69 percent of the actual program costs. 'We are providing this service to our government at a loss, at a business loss, and then making up that loss with these Medicaid dollars and also the private fundraising,' she said. Even in a wealthy place like Orange County, Price said she does not believe private donors are prepared to give five, six, or eight times as much as they do currently if new cuts to government grants occur or programs are not renewed.
The Independent
3 days ago
- Business
- The Independent
Takeaways from AP's report about cuts to government grants for nonprofits
President Donald Trump 's policies are poised to upend decades of partnerships the federal government has built with nonprofits to help people in their communities. Since the 1960s, presidential administrations from both parties have used taxpayer dollars to fund nonprofits to take on social problems and deliver services. A vast and interconnected set of federal grants fund public safety programs, early childhood education, food assistance and refugee resettlement services in every state. In January, the Trump administration sought to freeze federal grants and loans. Nonprofit groups immediately challenged the move and won a court-ordered pause. But in the six months since, the administration has cut, frozen or discontinued many federal grant programs across agencies. An analysis by the Urban Institute provides a sense of the scale and reach of government support for nonprofits. Published in February, the data comes from the tax forms nonprofits file where they report any government grants they receive. In response to questions about the cuts to grant funding, White House spokesperson Kush Desai said, "Instead of government largesse that's often riddled with corruption, waste, fraud, and abuse, the Trump administration is focused on unleashing America's economic resurgence to fuel American s' individual generosity.' How much support does the government give to nonprofits? The Urban Institute found $267 billion was granted to nonprofits from all levels of government — federal, state and local — in 2021, the most recent year a comprehensive set of nonprofit tax forms are available. That figure underestimates the total funding nonprofits receive from the government. It includes grants, but not contracts for services nor reimbursements from programs like Medicare. It also excludes the smallest nonprofits, which file a different, abbreviated tax form. The data includes all tax-exempt organizations that file a full tax return from local food pantries to universities and nonprofit hospitals. But government funding does not just go to the largest organizations. A majority of nonprofits in the dataset across every sector, from the arts to the environment to human services, report receiving government grants. In most places, the typical nonprofit would run a deficit without government funding. The Urban Institute cautions that just because a nonprofit would run a budget deficit without government funding, it does not necessarily mean the nonprofit will close. Even in wealthy areas, nonprofits would struggle without government support In only two Congressional districts — one that includes parts of Orange County, California, and one in the suburbs west of Atlanta — would typical nonprofits not be in the red if they lost all of their public grant funding, the analysis found. However, funders in Orange County warn that nonprofits are not as optimistic about their resiliency. Taryn Palumbo, executive director of Orange County Grantmakers, said local nonprofits "are seeing their budgets getting slashed by 50% or 40%.' Last year, a large local foundation, Samueli Foundation, commissioned a study of nonprofit needs because they were significantly increasing their grantmaking from $18.8 million in 2022 to an estimated $125 million in 2025. They found local nonprofits reported problems maintaining staff, a deep lack of investment in their operations and a dearth of flexible reserve funds. The foundation responded by opening applications for unrestricted grants and to support investments in buildings or land. Against this $10 million in potential awards, they received 1,242 applications for more than $250 million, said Lindsey Spindle, the foundation's president. 'It tells a really stark picture of how unbelievably deep and broad the need is,' Spindle said. 'There is not a single part of the nonprofit sector that has not responded to these funds. Every topic you can think of: poverty, animal welfare, arts and culture, civil rights, domestic abuse.' Private donations can't replace government support The nonprofit Friendship Shelter helps house and support 330 people in Laguna Beach, California, which falls within Orange County. Dawn Price, its executive director, said the organization has an annual budget of about $15 million, $11.5 million of which comes from government sources. Price said the government funding is 'braided' in complex ways to support different programs and fill in gaps. Private donors already subsidize their government grants, which she said pay for 69% of the actual program costs. 'We are providing this service to our government at a loss, at a business loss, and then making up that loss with these Medicaid dollars and also the private fundraising,' she said. Even in a wealthy place like Orange County, Price said she does not believe private donors are prepared to give five, six or eight times as much as they do currently if new cuts to government grants occur or programs are not renewed. ___ Associated Press coverage of philanthropy and nonprofits receives support through the AP's collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content. For all of AP's philanthropy coverage, visit
Boston Globe
3 days ago
- Business
- Boston Globe
The government was once a steady partner for nonprofits. That's changing.
'Government moves slowly usually, and I think what was so disorienting early on was government was moving really fast,' she said. Advertisement In the early days of his second term, President Trump froze, cut or threatened to cut a huge range of social services programs from public safety to early childhood education to food assistance and services for refugee resettlement. Staffing cuts to federal agencies have also contributed to delays and uncertainty around future grant funds. Altogether, his policies are poised to upend decades of partnerships the federal government has built with nonprofits to help people in their communities. This vast and interconnected set of programs funded by taxpayers has been significantly dismantled in just months, nonprofit leaders, researchers and funders say. And even deeper, permanent cuts are still possible. That uncertainty is also taking a toll on their staff and communities, the leaders said. In response to questions about the cuts to grant funding, White House spokesperson Kush Desai said, 'Instead of government largesse that's often riddled with corruption, waste, fraud, and abuse, the Trump administration is focused on unleashing America's economic resurgence to fuel Americans' individual generosity.' Advertisement He pointed to a new deduction for charitable giving included in the recently passed tax and spending law that he said encourages Americans' 'innate altruism.' But experts say private donations will not be enough to meet the needs. In 2021, $267 billion was granted to nonprofits from all levels of government, according to an analysis by the Urban Institute published in February. While the data includes tax-exempt organizations like local food pantries as well as universities and nonprofit hospitals, it underestimates the total funding that nonprofits receive from the government. It includes grants, but not contracts for services nor reimbursements from programs like Medicare. It also excludes the smallest nonprofits, which file a different, abbreviated tax form. However, the figure does give a sense of the scale of the historic — and, until now, solid — relationship between the public sector and nonprofits over the last 50 years. Now, this system is at risk and leaders like Price say the cost of undoing it will be 'catastrophic.' Government funding to nonprofits reaches far and wide The Urban Institute's analysis shows more than half of nonprofits in every state received government grants in 2021. In the vast majority of the country, the typical nonprofit would run a deficit without government funding. Only in two Congressional districts — one including parts of Orange County, California, and another in the suburbs west of Atlanta — would a typical nonprofit not be in the red if they lost all of their public grant funding, the analysis found. Advertisement But in Orange County, famous for its stunning beaches, mansions and extraordinary wealth, funders, nonprofits and researchers said that finding surprised them. In part, that's because of major economic inequalities in the county and its high cost of living. Taryn Palumbo, executive director of Orange County Grantmakers, said nonprofits are not as optimistic about their resiliency. 'They are seeing their budgets getting slashed by 50% or 40%,' she said. 'Or they're having to look to restructure programs that they are running or how they're serving or the number of people that they're serving.' Last year, the local Samueli Foundation commissioned a study of nonprofit needs in part because they were significantly increasing their grantmaking from $18.8 million in 2022 to an estimated $125 million in 2025. They found local nonprofits reported problems maintaining staff, a deep lack of investment in their operations and a dearth of flexible reserve funds. The foundation responded by opening applications for both unrestricted grants and to support investments in buildings or land. Against this $10 million in potential awards, they received 1,242 applications for more than $250 million, said Lindsey Spindle, the foundation's president. 'It tells a really stark picture of how unbelievably deep and broad the need is,' Spindle said. 'There is not a single part of the nonprofit sector that has not responded to these funds. Every topic you can think of: poverty, animal welfare, arts and culture, civil rights, domestic abuse... They're telling us loud and clear that they are struggling to stay alive.' Charitable organizations have held a special role in the US One of the founding stories of the United States is the importance of the voluntary sector, of neighbors helping neighbors and of individuals solving social problems. While other liberal democracies built strong welfare states, the U.S. has preferred to look to the charitable sector to provide a substantial part of social services. Advertisement Since the 1960s, the federal government has largely funded those social services by giving money to nonprofits, universities, hospitals and companies. Several new policies converged at that time to create this system, including the expansion of the federal income tax during World War II and the codification of tax-exempt charitable organizations in 1954. Then, the Kennedy and Johnson administrations started to fund nonprofits directly with federal money as part of urban renewal and Great Society programs. 'It was a key approach of midcentury liberalism of addressing issues of poverty, sort of making a reference to civil rights and racial inequality, but not growing the size of government,' said Claire Dunning, an assistant professor of public policy at the University of Maryland, College Park. Conservatives also tended to support working through local, private, nonprofit organizations, though for different reasons than liberals, she said. With various expansions and cuts during different presidencies, the federal government has continued to fund nonprofits at significant levels, essentially hiding the government in plain sight, Dunning said. The size and importance of the nonprofit apparatus became suddenly visible in January when the Trump administration sought to freeze federal grants and loans. Dunning said the speed, hostility and scale of the proposed cuts broke with the long legacy of bipartisan support for nonprofits. 'People had no idea that the public health information or services they are receiving, their Meals on Wheels program, their afterschool tutoring program, the local park cleanup were actually enabled by public government dollars,' she said. Advertisement A coalition of nonprofits challenged the freeze in court in a case that is ongoing, but in the six months since, the administration has cut, paused or discontinued a vast array of programs and grants. The impacts of some of those policy changes have been felt immediately, but many will not hit the ground until current grant funding runs out, which could be in months or years depending on the programs. Private donations can't replace scale of government support Friendship Shelter in Laguna Beach has an annual budget of about $15 million, $11.5 million of which comes from government sources. Price said the government funding is 'braided' in complex ways to house and support 330 people. They've already lost a rental reimbursement grant from the US Department of Housing and Urban Development. But the Samueli Foundation stepped in to backfill those lost funds for three years. That kind of support is extremely unusual, she said. 'We don't know of any large-scale private philanthropy response to keeping people housed because it's a forever commitment,' Price said. 'That person is in housing and is going to need the subsidy for the rest of their lives. These are seriously disabled people with multiple issues that they're facing that they need help with.' She also believes that even in a wealthy place like Orange County, private donors are not prepared to give five, six or eight times as much as they do currently. Donors already subsidize their government grants, which she said pay for 69% of the actual program costs. 'We are providing this service to our government at a loss, at a business loss, and then making up that loss with these Medicaid dollars and also the private fundraising,' she said. Advertisement She said her organization has discussed having to put people out of housing back on to the streets if the government funding is cut further. 'That would be, I think, a signal to me that something is deeply, deeply wrong with how we're looking at these issues,' said Price, adding, 'If I was placing a bet, I would bet that we have enough good still in government to prevent that.'
