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We hope you enjoyed exploring the Investment Trends in our last issue of the 2023 Report On Private Philanthropy. Next up in this series, we’re sharing a first look at the Giving Trends, including a deep dive into the grantmaking activities of the 980 private, non-operating foundation clients our subject matter experts analyzed during this timeframe.

At a high-level, we saw the number and size of grants and the total dollars granted increase on a year-over-year basis, which is consistent with the Giving USA report and helps to offset the decrease in individual giving that occurred during last year’s difficult economic environment. Keep reading to find out how these giving trends vary by foundation size and see which charitable categories captured the most funding from foundations in 2022.

Collectively, the 980 private foundations in our study made 1,553 more grants and gave nearly $111 million more in 2022 than 2021.

Asset SizeTotal Value of Grants
The total value of all grants awarded increased from $754 million representing 29,280 grants in 2021 to $865 million representing 31,373 grants in 2022. This increase occurred across all foundation sizes, particularly by mid-size and larger foundations: Total grant dollars awarded by smaller foundations increased 10.2%; mid-size by 20.4%; and larger by 13.6%.

This uptick is in line with the increase in foundation assets in 2021, as a foundation’s payout (distribution) requirement is calculated on the prior year’s assets. As such, increased payout requirements may be a factor in the increase in the total amount granted.

Grant SizeAverage Size of Grants
The average size of grants also increased across all segments, with mid-size foundations jumping the most from an average of $27,000 to $32,000. Median grant size remained constant year-over-year for smaller and mid-size foundations, while decreasing from around $13,000 to $10,000 among larger foundations. A foundation’s annual payout requirement is calculated on the prior year’s assets. Given the strong market performance in 2021, many foundations experienced an uptick in assets which translates to an increased payout requirement in 2022. The approach for managing this increase varies by foundation; some make more grants, some make larger grants, some will do both and others meet their higher payout requirement with carryovers from prior years.

Average Number of Grants
The average number of grants awarded by all foundations in the sample increased from 31 in 2021 to 33 in 2022, though the greatest increase occurred among larger foundations where the average number of grants increased from 74 to 80. Increased payout requirements may be a factor in the increase in the number of grants.

Average Number of GrantsOn average in 2022, the foundations in our study made 33 grants totaling $903,000. Collectively they granted $865 million ($111 million more than in 2021) to 17,544 nonprofit organizations.

Payout 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 order to sustain operations as long as possible. In 2022, however, the foundations in our study collectively distributed an average of 6.6% of their assets for charitable purposes—exceeding the MDR by more than 1.5%. 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 more than two decades of working with foundations of all sizes, we have consistently seen their charitable distributions exceed the 5% minimum distribution requirement, and this year was no different. Historically, the smallest foundations have been the most generous relative to their asset size, and they were the leaders again in 2022, distributing 7.7% of their total assets, down from 9% in 2021.

Meanwhile, mid-size and larger foundations distributed 6.1% and 6.5% of their assets, also down from 6.9% and 7%, respectively. Overall, in 2022, foundations distributed an average of 6.6% of their assets, down from 7.3% in 2021. These year-over-year decreases are likely due to foundations responding in real-time to the challenging economic conditions of 2022.

Average Distribution SizeThe foundations in our study have a total of nearly $1.1 billion in excess grant carry-overs for the 5-year period from 2018-2022, as a result of consistently giving above the MDR.

Giving by Charitable Category
The National Taxonomy of Exempt Entities (NTEE) category capturing the most funding from foundations in 2022 was Public/Societal Benefit at 19.5% of all grant dollars, up from 17.5% in 2021. Education was the second largest category at 18.1% (down from 19.9%) and Human Services rounded out the top three at 12.9% (down from 13.9%) for the same timeframe.

The other category that experienced a shift of at least 1% year-over-year was Arts, Culture & Humanities, which decreased from 7.0% to 5.8%. All other NTEE categories saw just minor changes in total funding from foundations in 2021 to 2022. Given the increase in grant dollars to Public/Societal Benefit organizations, it’s worth noting that the category encompasses the following subsectors: Civil Rights, Social Action & Advocacy; Community Improvement & Capacity Building; Philanthropy, Voluntarism & Grantmaking Foundations; Science & Technology; Social Science; and Public & Societal Benefit.

Of note, the largest percentage of 2022 grant dollars from foundations, or 20.3%, went to Unknown or Unclassified organizations. As of June 2023, 33% of the 1,854,097 verified public charities in the U.S. did not have NTEE codes which represents a growing blind spot in the philanthropic sector.

Giving by CategoryWhile we don’t have the full picture yet for 2023, we’re buoyed by the momentum we’ve witnessed amongst our clients so far and believe it bodes well for 2024 charitable giving.  We’ll be watching this space closely and will report back. In the meantime, check out our full report for more insights on last year’s philanthropic trends.

Questions About This Report Or Want to Learn More?
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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