We hope you enjoyed perusing the Key Findings in our new 2022 Report On Private Philanthropy—our most comprehensive inside look at how foundations are giving and investing. In this issue of our series, we’re sharing a first look at the Giving Trends that emerged over the past two calendar years. Our subject matter experts spent months tracking and analyzing the activities of a sample of nearly 1,000 private, non-operating foundation clients during this timeframe—finding a gradual shift in giving patterns along the way. Read on to see what they discovered.
Focus Gradually Shifted Away from the Urgent Needs of 2020, While The Environment, Arts and Education Saw Modest Increases
Size and Number of Grants
Collectively, the 948 private foundations in our study made 500 fewer grants but gave nearly $40 million more in 2021 than 2020.
The total value of all grants awarded increased from $650 million representing 30,971 grants in 2020 to $689 million representing 30,470 grants in 2021. While the total amount granted by smaller foundations remained about the same year-over-year, the total amount granted by larger foundations increased significantly by about 21% or $60 million when compared to the previous year. Mid-size foundations decreased their giving by nearly 7%.
ALL FOUNDATIONS
2020 Mean = $21,000
Median = $4,000 2021
Mean = $23,000
Median = $5,000
Smaller foundations’ grants remained constant at approximately $9,000, while mid-size and larger foundations had slight increases (3% to 4%) for the same period. Median grant size remained constant year-over-year for all segments, ranging from roughly $2,000 at smaller foundations to $10,000 at larger foundations.
Based on a weighted average, the number of grants awarded by all foundations in the sample was relatively flat year-over-year, however, more pronounced changes were evident when viewed by asset segment. This information helps to demonstrate that in 2020, to meet urgent needs resulting from the COVID-19 pandemic and racial equity/social justice issues, foundations were focused on getting emergency aid to as many recipients as possible. As those needs decreased in 2021 when the pandemic slowed, mid-size and larger foundations made bigger grants to fewer recipients, likely returning their focus to core missions and lessening emergency funding.
Did You Know?
On average in 2021, the foundations in our study made 33 grants totaling $727,129. Collectively, they granted $689 million ($40 million more than in 2020) to 16,943 nonprofit organizations.
Distribution Requirement
Foundations are required to disburse an amount of charitable funding each year equal to roughly 5% of their net assets of the previous year, known as the “minimum distribution requirement” (MDR). It is often assumed that most private foundations will curtail their charitable activities to stay at or near the 5% minimum requirement.
In 2021, however, the foundations in our study collectively distributed an average of 7.2% of their assets for charitable purposes— generously exceeding the MDR. This finding is consistent with previous reports we’ve published using different samples of client foundations.
How Much Foundations Gave Relative to Their Assets
Over our 20+ years of working with foundations of all sizes, we have consistently seen their charitable distributions exceed the 5% MDR, and this year was no different. Historically, smaller foundations have been the most generous relative to their asset size, and they were the leaders again in 2021, distributing 8.9% of their total assets (down slightly from 9.1% in 2020), still nearly double the percentage required by law. Meanwhile, mid-size and larger foundations distributed 6.4% and 7.1% of assets, down from 6.7% and 7.4%, respectively.
Overall, in 2021, foundations distributed an average of 7.2% of their assets, down slightly from 7.5% in 2020.
Did You Know?
The foundations in our study have a total of $924.6 million in excess grant carry-overs for the 5-year period from 2017-2021, as a result of consistently giving above the MDR.
What’s On the Horizon for Giving?
Today’s challenges of record-high inflation, geopolitical and economic uncertainty, the Russia-Ukraine conflict and a sustained market downturn are likely to impact giving in 2022. It remains to be seen what will take place next but foundations will likely rise to the occasion—just as they did without hesitation when needs arose in 2020. More than any other charitable giving vehicle, foundations are equipped with a powerful and versatile philanthropic toolkit for creatively solving problems and effecting change.
Questions About This Report Or Want to Learn More?
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