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Our most anticipated report of the year is here, and we’re excited to give you a glimpse into the giving and investment trends within private foundations starting with the key findings—the first issue in this new series. As philanthropists, we are all curious about the current philanthropic landscape following record giving in 2020 and 2021. We’re happy to report that in our study of nearly 1,000 private foundations, they continued to give generously in 2022 despite difficult macro-economic conditions. Keep reading to see the three key findings our experts reported.

3 Key Takeaways

1. Giving Increased.
Collectively, the 980 foundations in our study made a total of 31,373 grants in 2022 representing $865 million in charitable aid. This is a 7.1% increase in grants and 14.7% increase in dollars granted over the prior year.

2. Grants Got Bigger.
In 2022, foundations made more and larger grants than they did in 2021. The average number of grants made annually per foundation increased from 31 to 33, while the average grant size increased from $25,000 to $28,000.

3. Foundations Gave More Than The Minimum.
As in prior years, foundations granted more than the required 5% distribution— an average of 6.6% of assets in 2022.

Focused On Mission
Foundations leveraged a variety of tools and techniques to manage and deploy their charitable assets to effect desired outcomes:

/ In 2022, foundations increased their funding for non-501(c)(3) organizations by 88.9%, nearly doubling from $18 million in 2021 to $34 million in 2022. They also increased their use of gifts to individuals by 39.6% over 2021.

/ Foundations directed 19.5% of total grant dollars to Public/Societal Benefit charities in 2022, a 2% year-over-year increase. Funding for Education-related charities dropped 1.8% to second place, receiving 18.1% of grant dollars.

/ Larger foundations favored specific-purpose grants at a rate of 2:1 in 2022 to ensure their charitable missions are being pursued in a way that aligns with their vision and incorporating documents.

/ Smaller foundations maintained the highest allocations to public equities (57.9%), fixed income (15.5%) and cash (12.2%), one of the ways they ensure liquidity for their overall higher levels of giving. Larger foundations had the highest allocation to alternatives (28.0%) to help provide diversification and return potential to their long-term portfolios.

/ Due to market performance, foundations shifted their asset allocation; their equities dropped to an average allocation of 47.0% and alternatives hit a peak of 20.2%.

Emerging Headwinds
2022 presented a number of challenges that, if left unchecked, might adversely affect the nonprofits that rely on foundations for funding.

/ Due to sobering market conditions in 2022, including lower-realized gains and contribution rates as well as generally weaker investment performance, foundations experienced a decrease of 14.5% in their net assets and a year-over-year change in asset value of -31.5%. This outcome may have a greater impact on 2023 foundation giving since each year’s payout requirement is a factor of the prior year’s assets.

/ The largest percentage of 2022 grant dollars, 20.3% or $175 million, went to charities without NTEE codes, a system used by the IRS and the National Center for Charitable Statistics to classify grants and grant recipients. This helps illuminate a growing blind spot in the philanthropic sector as funders, nonprofits, industry leaders, regulators, and other key influencers seek to understand giving trends and obstacles.

Want to learn more?
If you haven’t already, be sure to subscribe to our Blog so you don’t miss this new series where we’ll break down the report over the coming weeks. Enjoy!

Questions In The Meantime?
Whether you’re looking for support for your existing foundation or want to create a private foundation, our philanthropic specialists are here to help. To learn more, schedule a call with us or reach us at 800-839-0054. Together, let’s #begiving.

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