At an atypical and uncertain moment in the budget cycle, libraries are looking beyond traditional revenue streams and funding partners

The past year has been an unsettling one for libraries looking to determine funding strategies going forward—which is to say, all of them. LJ’s 2026 Budgets and Funding survey revealed an overall cautious approach in the face of multiple uncertainties, both at the national level and for state, city, and private dollars.

The majority of library funding comes from local sources, including city and county property taxes and local government budgets. This is augmented by state funding, as well as in-kind support from regional library systems and statewide investment. Federal funding covers a smaller piece of the library pie, but one that’s no less important. Grants distributed by the Institute of Museum and Library Services (IMLS) provide support for initiatives in workforce development, digital access, STEM programming, and innovation in libraries across the country.

Concerns about IMLS garnered many of the headlines last year. As of December 2025, the agency stated that it would restore all previously terminated grants. But worries persist about how the agency is allocating its money, and as the 2026 grant application cycle begins, the language in its guidelines has shifted to center proposals that align with the current administration’s goal to “restore truth to American history,” according to the grant overview page. Changes to funding protocols would particularly affect small-town, rural, and Native community libraries.

Property tax bases, long considered to be stable sources of funding, are proving less predictable than previously thought. In Ohio, 2025 legislation shifted the state Public Library Fund from a percentage of the General Revenue Fund to a line-item budget appropriation, making fiscal planning challenging (see also “The Tax Relief Trap”).

And with pressure from politically conservative groups to restrict materials that center LGBTQIA+ and BIPOC content has come defunding measures against libraries that do not—or are unable to—comply. These happen at the state level, through legislation that would withhold money from libraries that do not meet proposed standards, and at the ballot box when anti–freedom to read campaigns discourage voters from approving funding measures.

Despite having varied capital resources to draw from, libraries have seen a range of potential threats to their revenue streams come into focus over the past year. This is not, by all accounts, a traditional budget cycle, and even seasoned directors are unsure what coming months will bring. “There’s a long tail coming,” says Jeremy Johannesen, executive director at the Chief Officers of State Library Agencies (COSLA). “The real challenge for any public library that is receiving their funding by going directly to the voters or through their municipality is that many of them are not structured to look elsewhere.”

Many libraries are wondering what funding sources they should be considering, and how they can be ready to access them. The key, say fundraisers, advocates, and planners, lies in creative partnerships, increased advocacy, and—despite uncertain outlooks—thinking ahead.

STATE-LEVEL STRATEGY

After the Trump administration issued its executive order to dismantle IMLS in March 2025, Library PAC EveryLibrary published a report advising state library associations to develop a contingency plan that would incorporate a “fiscal trigger” mechanism within the state budget appropriations language. This would allow state funds to be allocated or released if federal FY25 IMLS funding thresholds were not met, so that core services, such as shared collections and databases, would not be disrupted.

Johannesen has also seen this systematic planning in progress. “There are states that have taken steps to adjust how their state level budgets, within the state library agency, are structured, and how they’re making use of their federal funds so that they’re in a better position if they had to absorb either reductions or eliminations.”

“There are important conversations for the library sector to engage in on a state-by-state basis,” says EveryLibrary Executive Director John Chrastka, and they need to be held proactively. Libraries are already engaged in workforce innovation, economic development, and health equity work, but they often don’t take advantage of available state and federal grant programs for those initiatives.

Chrastka also suggests taking a page from education’s playbook and looking for carve-outs in state gambling and lottery, cannabis, natural resources, and wealth tax budgets. While these have traditionally been resources for the education sector, libraries should consider making a case for eligibility as a fellow anchor institution.

LARGE-SCALE SUPPORTERS

Only about 4 to 6 percent of public library funding comes from other sources such as fines and fees, grants, and philanthropy. While private giving will never replace the money needed to keep the lights on and pay staff, it helps fund programming and initiatives critical to communities. The challenge for many libraries—particularly smaller systems without staff dedicated to seeking out available dollars or writing grants—is discovering where those opportunities exist.

Large, established philanthropic organizations such as the Mellon and MacArthur foundations and the Carnegie Corporation of New York have been providing meaningful support to libraries around literacy, digital, and cultural initiatives for much of the last century. And several ramped up their efforts this year, such as Carnegie’s gift of $10,000 apiece to each of the original Carnegie libraries.

The John S. and James L. Knight Foundation, with roots in journalism, has a longstanding interest in civic institutions, and has been investing in libraries in its anchor communities since 1971, as well as encouraging innovation through the Knight News Challenge on Libraries in the mid-2010s. Knight is currently sharpening its funding focus on libraries to potentially include more support for research and advocacy. The goal is to allow the foundation to deploy capital more intentionally for maximum reach, says Knight’s John Sands, VP of Information & Society—a rising tide that will hopefully float many boats.

THINKING OUTSIDE YOUR VERTICAL

The best-known names in library giving have been instrumental in helping move important programs forward. But discovering what’s on offer from other, below-the-radar funders—especially for libraries that don’t have dedicated fundraising staff—poses a challenge. Fortunately, groups exist to help philanthropies and the institutions they support network with one another, often state by state.

One such connector is Texas Rural Funders, a membership organization established to help funders of all sizes collaborate. “That can be large statewide funders who want applications from rural communities and aren’t getting them, or it can be small funders who are the only funder [in their area] and don’t have a lot of peers or very large staffs,” says Executive Director Dr. Kelty Garbee. “While we are not making grants, we describe ourselves as air traffic controllers.”

The Austin-based Tocker Foundation, for example, is well-known supporter of rural public libraries in Texas. But there is more need in a state of that size than it can meet, and smaller funders are eager to work with Tocker; Texas Rural Funders helps connect them. For those seeking funding, the organization publishes a monthly list of available national, state, and private grants. If a library reaches out with a project it needs to finance, Texas Rural Funders will suggest not only funders in their area, but other potential sources that don’t focus exclusively on libraries.

“A lot of what we do is help creatively brainstorm in the fundraising and grant-making space,” says Garbee. “Some of it is thinking about if there’s a part of your budget that could be funded another way that can free up dollars that are flexible, or if you can get in-kind contributions or build partnerships.”

That work of what Garbee terms “thinking outside your vertical” includes advice to a library system looking to build a new branch whose main asset was the promise from a local quarry to donate rock for its construction. Texas Rural Funders suggested finding a community foundation to work with that would let the library set up a fund, and to then begin raising money based on the strong local relationship demonstrated by the quarry’s commitment.

“Sometimes when you’re on the outside looking in, you can help somebody think about their assets in a different way,” Garbee says. And if a grant application is turned down, members of the funding community agree, libraries should ask where else they might apply—funders are usually generous with their contacts, and often a “no” has more to do with an individual grantmaker’s available pool of capital than a program’s merit.

For libraries elsewhere, Garbee suggests Googling the name of their state and “funders network” or “funders collaborative” to help find similar hubs—and notes that Texas Rural Funders could easily serve as a replicable template. She also points to the organization’s “Power Your Proposal,” which offers a useful framework for writing strong grant applications anywhere.

NEW PARTNERS

During the height of the COVID-19 pandemic, the Belén Public Library, which serves about 7,500 residents in semi-rural central New Mexico, began providing hotspots through the Emergency Connectivity Fund managed by the Federal Communications Commission (FCC). Hotspot lending has remained critical in the community, where 21 percent of households don’t have internet, but in September 2025 the FCC voted 2–1 to cut federal E-rate funding for Wi-Fi hotspots outside of school buildings. “We were left in a difficult position, having demonstrated a tremendous need but no longer having funding to support the program for our community,” says Belén Public Library Director Kathleen Pickering.

But at a New Mexico State Library meeting about digital citizenship, an Albuquerque Public Schools representative told her about Mission Telecom, a 501(c)4 nonprofit wireless broadband provider and grantmaking foundation. Mission Telecom was able to provide an affordable solution on par with the subsidy formerly offered by E-Rate; as a result, the library was able to restore the program—and circulation doubled.

When Pickering heard that the nearby Valencia County Literacy Council needed hotspots to serve tutors and ESL classes for residents who were afraid to meet in person because of local ICE activity, she put the Literacy Council in touch with Mission Telecom, which was able to extend it the same price. The hotspots themselves were funded through a Meta Data Center Community Action Grant, available thanks to a local Facebook data center.

These unexpected partnerships drive home the need to “get out of your comfort zone and interact with folks as potential colleagues and partners moving forward,” says Pickering. “I’m always trying to learn about where the resources are, making this constant shift: Okay, have I got federal options? Do I have state or county options? What are my local foundations looking at? What’s ALA willing to support? What can I try to get built into my own municipal budget?”

FOUNDATIONAL THINKING

Advocacy is as much a part of fundraising as it is for building voter support for favorable library referenda or legislation—and in a challenging budget cycle, it’s especially needed.

“Private philanthropy can help protect and advance our public libraries, but it’s never going to be situated to make up for that public funding. There’s just not enough of it,” says Jonna Ward, founder and CEO of the Library Support Network, a peer-led community of library fundraisers, leaders, and advocates. “So what do you do instead?”

Many libraries are seeing this as the moment to create or reinvent their foundations, Ward says. While fundraising is now an important skill in directors’ skill sets, they need a strong partner to work alongside them to channel contributions, steward donors, and advocate where the library itself is not allowed to.

When the Library Support Network held its first International Public Library Fundraising Conference 10 years ago, she notes, “It was all pretty traditional, entry-level, basic fundraising. Fast forward to today, there are a lot more sophisticated operations going on, and the conversation has shifted so much you can’t just fundraise. Advocacy really needs to be part of the equation.”

A good foundation can help the library articulate and amplify what it’s doing well and what it wants to accomplish—Ward calls it “power mapping.” Look to the foundation of your local children’s hospital, she suggests, as a model of large-scale fundraising and effective messaging. “The ‘why’ is ultimately the key,” she says. “If you have a big enough vision, it makes your funding piece so much easier.”

HAVING A P.L.A.N.

Ward points to her former workplace, the Seattle Public Library Foundation (SPLF), and its Public Library Action Network (PLAN), as an effective way to get potential funders involved in library messaging.

Seattle Public Library has been successful at mobilizing voter approval for a levy every seven years but did not have a focused way to support library advocates and, possibly, turn them into donors. PLAN—what SPLF Senior Communications and Advocacy Director Will Livesley-O’Neill calls a “permanent grassroots activation base”—uses political advocacy tools to accomplish multiple goals. The initial idea, he says, “is to get this group of people, grow the group, and then engage them several times throughout the year at the local, state, and federal levels to let our elected officials know that we’re paying attention.” Although Seattle politicians are largely pro-library, in a tightened economy libraries can become soft targets for reductions in favor of what Johannesen calls “siren services”—police, fire, and first responders.

At the same time, says Livesley-O’Neill, “We know there’s this whole universe of people in Seattle that care about the library but are not in the foundation’s donor database, probably don’t even know they can donate to the foundation, don’t know there is a foundation. But if you ask them, do you care about protecting your library from budget cuts, they’ll say yes, of course.”

SPLF hopes to grow its fundraising by 50 percent over the next five years to meet increasing needs, and PLAN is one step among several. PLAN uses Action Network software and is relatively easy to implement, says Livesley-O’Neill; he encourages other foundation peers to check it out (and invites them to contact him with questions).

HAVING A PLAN

In the conversations he’s held over the past year, even nonlibrary stakeholders “are always so eager to talk about libraries,” says the Knight Foundation’s Information & Society Officer Ricardo Mor. “It feels like the one place that people have so much civic pride.”

The key for library fundraisers, in the next year and beyond, will be to both leverage that civic pride and think creatively about untried or underutilized options.

“Stay nimble and stay aware, because even if you think you’ve got it all covered, something’s going to change,” says Pickering. “Think about how to collaborate. You don’t have to solve all your own problems if you know enough to just reach out and ask some questions.”