‘Devastating’: Chan Zuckerberg charity slashes funding for more Bay Area nonprofits

Earlier this year, Juan Hernandez was having exciting conversations with the Chan Zuckerberg Initiative about what to do with his next round of funding. Hernandez, the CEO of Creser Capital Fund, had received $500,000 two years earlier from Mark Zuckerberg and Priscilla Chan’s mammoth philanthropic organization for his nonprofit, which provides loans to Latino entrepreneurs. Hernandez says his understanding was that the grants would be ongoing, allowing Creser Capital to build out infrastructure and expand deeper into the community. 

But two days after another promising conversation, he learned that his program officer at CZI had been laid off. A month later, on April 15, the organization told him his grant would not be renewed. “That was it: ‘Over, thank you, bye,’” he said. “That was a third of our funding.”

It was a process repeated over and over this spring as CZI — one of the largest philanthropies in the Bay Area, with more than $6.3 billion in assets in 2023 — suspended funding to nonprofits across California, and the country. For nonprofit leaders, there was uncertainty, as CZI signaled a change in its priorities; then panic, as some of its grantmaking staff was laid off; and finally fury, as grants were canceled and plans went up in smoke.

CZI has publicly described this shift as part of a long-planned transition to a more science-focused philanthropy. But internally, employees say, leaders have made clear that the change is a reaction to the Trump administration and a desire to avoid undue attention from Washington.

Hernandez has a more cynical view.

“They just said they were cutting back, but everybody knows what happened,” he said. “Mark Zuckerberg needs something from the president of the United States. … These cuts are part of Mark Zuckerberg fighting for his No. 1, which is his bottom line.”

The Chan Zuckerberg Initiative, founded in 2015 with the mission of “advancing human potential and promoting equal opportunity,” quickly became one of the largest single donors in the Bay Area, giving almost $7 billion in the form of more than 5,500 grants. Under its three core focus areas — science, education, and community — it has seeded millions of dollars to nonprofits in San Mateo County, where Zuckerberg’s Meta is headquartered, and contributed substantially to movements for criminal justice reform, housing equity, and educational advancement.

In recent years, Chan and Zuckerberg signaled that they would shift the organization’s focus toward science, sending a letter to staff in January that deemed CZI a “science-first philanthropy.” But on Feb. 18, CZI quietly posted to its website a letter from COO Marc Malandro saying the organization had wound down its social advocacy work entirely, and had “discontinued that funding.”

CZI has since scrubbed all mention of housing affordability and economic inclusion from its website, along with a section on its diversity, equity, and inclusion programs. Members of its internal DEI team have been “transitioned to new roles and responsibilities,” according to Malandro’s letter. CZI also removed a line from its mission statement saying it wants to “build a more inclusive, just, and healthy future for everyone,” as well as mentions of “improving education” and “addressing the needs of our local communities.”

The Standard spoke to current and former CZI staffers about the changes underway at the organization. Two of these people said CZI leaders had hosted an internal meeting about the funding shifts, in which general counsel Mark Kim claimed the organization was a “political target” because of its billionaire CEOs and that it wanted to avoid litigation from the Trump administration. One person who left the organization recently said the recurring explanation from leaders was that they were “doing what we have to to avoid being sued.”

“They are making sure to cut anything that would sound or even be construed as DEI-esque,” the former employee said.

A CZI spokesperson denied this, saying the philanthropy’s “organizational strategy is driven by our science vision to cure, prevent, and manage all disease by the end of this century.”

A CZI spokesperson said that while the organization is shifting its focus to biomedical research, it remained “committed to our local community,” and would continue funding essential safety-net services in San Mateo County and running its free Community Space for local nonprofits. The spokesperson also noted that the organization recently launched applications for its annual Community Fund, which has provided $35 million in the last eight years to “help bolster local organizations doing essential work throughout San Mateo County.”

But at least one previous recipient of Community Fund money said CZI recently informed her she was no longer eligible to reapply for the grant. Adriana Ayala, executive director of the Chicana Latina Foundation, said she had a “very frank conversation” with a CZI program officer about how her foundation was no longer eligible for the hundreds of thousands in funding it had previously received, because of its focus on the Latina population. “Especially in this political climate, targeted populations are frowned upon, or they’re seen as DEI,” Ayala said.

Ayala said her organization has lost an additional $150,000 in funding this year because of the climate around race-based programming. With the inability to apply for CZI funding, she said, “we’re kind of having a come-to-Jesus conversation.”

“We’re a community-based organization, we’re small, and it’s disappointing — devastating,” she said of the loss of CZI funds. “We’re tightening the belt because of all the unknowns of what’s to come.”

Georgia Farooq, executive director of Thrive Alliance, a support network for San Mateo nonprofits, said she had heard that nonprofits focusing on racial justice and social advocacy would be disqualified from future CZI funding. Farooq was disappointed, given her organization’s closeness to CZI and its founders. She recalled speaking alongside Chan in 2020 at the opening of the CZI Community Space, a free meeting and event space for local organizations in downtown Redwood City. At the time, Farooq said, “we felt the commitment to the community was deeply considered and genuine.”

Now, that feeling has changed.

“We’re saddened that CZI is moving toward censoring nonprofits, penalizing organizations that recommit to racial justice and social advocacy during these critical times,” Farooq said. “We hope that CZI reconsiders its role in the local nonprofit ecosystem and returns to partnering with the sector in an authentic, courageous, and thoughtful way.”

The cuts also extend to CZI’s housing advocacy work, to which they have previously contributed hundreds of millions of dollars. A number of housing organizations, including the East Bay Housing Organizations, YIMBY Action, and All Home, were recently told their funding would not be renewed, and half of the housing equity team at CZI has been laid off in recent months, according to The Mercury News. (CZI says it will continue funding some housing efforts in the Bay Area.)

CZI has also cut all funding to The Primary School, a tuition-free private school it started in 2016 in East Palo Alto with the vision of providing quality education and healthcare services to children in the underserved area. The school will shutter after the 2025-26 school year. 

Catherine Bracy, the CEO of TechEquity, a statewide nonprofit focused on economic inequality, told The Standard that CZI had been reducing its contributions to her organization’s housing work for years. She recently combined her organization’s housing work with another department and laid off one staffer as a result of the cuts, she said.

So she was concerned, but not surprised, when she learned this month that her nonprofit would be getting no further funding from CZI.

“I just got a call from our program officer, who didn’t have any control over it at all. She just had a directive from the powers that be that said, ‘This does not align with the mandate to not do racially preferential programming,’” she said. “Which of course is bullshit. … They’re just trying to kiss up to Trump.”

Hernandez said CZI told him they were not renewing his grant because of concerns about Creser Capital’s “long-term financial sustainability” — not because of its focus on Latino entrepreneurs. But Luz Urrutia, CEO of Accion Opportunity Fund, a small-business lender with a similar focus, said she, too, was recently informed that her funding would not be renewed.

“I’m disgusted,” said Urrutia. “Organizations that are providing incredible value to communities all of a sudden having the rug pulled out from under them is ludicrous.”

Hernandez said Creser Capital has had to pause all lending, since it had budgeted its year around receiving CZI funds. He is now talking with other donors about giving more to make up for the deficit, but that money wouldn’t come until the fall or winter.

Still, he was more blown away by CZI’s decision to defund The Primary School. “We’re big boys, we’re gonna push through, we’re resilient,” he said. “But an elementary school, too?” 

“It shows the kind of character that they have,” he added of Chan and Zuckerberg. “It really reflects on who they are as people. ”