The nonprofit sector has provided critical and valuable services to the society over time. However, the challenges as a result of changes facing the sector cannot be overstated. This study therefore was to generate a theory regarding the effects of a funding shift on traditional small to medium-sized nonprofits in a large metropolitan area. The following research question guided this grounded theory study: In what ways has the funding shift to social-impact investing by foundations affected nonprofit organizations? A sample of 11 chief executive officers (CEOs) and program directors in the nonprofit sector described their experience in one-on-one interviews. Participants answered one major question and eight prompt questions about how the shift in funding has affected their organizations in areas such as budget, mission, financial stability, benefits, creativity, and changes in service. Data analysis employed grounded theory procedures and NVIVO 11.1.1(1551) software to develop the resultant theory of the impact of the funding shift. Effects identified in this study included effects on the mission, finances, programs, personnel, organizational structure, and the adoption of business principles into the altruistic sector. The study’s implications included leadership importance over success or failure of an organization in the midst of changes taking place in the sector. That an organization can edge out competition through creativity and innovation while maintaining their mission.