FAIRFIELD, CT—March 19, 2013—Foundation Source, the nation’s largest provider of comprehensive support and advisory services for private foundations, today released preliminary findings on 2012 giving activity by U.S. private foundations with endowments of less than $50 million. The aggregated data show that giving was up in 2012, both in dollar value and relative to the overall size of foundation assets. Foundations with assets of less than $50 million represent a super-majority (98%) of all private foundations in the United States.
Based on the actual grantmaking behavior of 732 Foundation Source clients, these findings provide one of the sector’s first looks at 2012 philanthropic activity and preview Foundation Source’s 2013 Annual Report on Private Foundations. The full report, scheduled for a May release, will provide information on asset allocation, grantmaking behavior, and endowment growth/decline for U.S. private foundations. The first Annual Report on Private Foundations was released last fall.
Initial findings on the 2012 giving behavior of these foundations are as follows:
- OVERALL GIVING: Private foundations with less than $50 million granted 9.1% more in 2012 than in 2011. Much of this is attributable to foundations in the $1–10 million range, which granted 21.5% more in 2012 than the year prior (see Figure 1 below).
- QUALIFYING DISTRIBUTIONS: These private foundations continue to pay out more than twice their 5% minimum distribution requirement, and actually increased their qualifying distributions (grants + charitable expenses) in 2012 to 11.7% of assets, up from 11.2% in 2011 (see Figure 2 below).
- GRANT RECIPIENTS: As giving priorities shifted in 2012, International Causes, Arts & Culture, and Human Services experienced an increased share of giving dollars. (See Figure 3 below.)
- SIZE OF GRANTS: The largest increase from 2011 to 2012 were grants of less than $1,000 (up 16.8% in value). The next largest category was grants between $100,000 and $1 million (up 16.2% in value). The smallest increase was in the $1,000 – $10,000 range (up 4.9% in value).
The foundations in this report provide a representative snapshot of the giving activity of the largest segment of private foundations in the U.S. today: private foundations with endowments less that $50 million that make up 98% of the approximately 80,000 private foundations in the U.S. Until recently, little has been reported on this segment of foundations, and even today, data remains scant. Most reporting about private foundations has traditionally focused on the largest 2% of foundations.
Because most studies rely on data from foundations’ previous year’s tax returns, there typically is a lag time of a year or more before information on foundation activity is publicly available. In contrast, Foundation Source’s Annual Report on Private Foundations provides an up-to-date snapshot of giving behavior because the data for this report is gleaned from aggregated transaction data of Foundation Source clients.
Analysis of the 2012 data shows that across the board, foundations with less than $50 million made qualified distributions well in excess of their 5% minimum distribution requirement. Consistent with last year’s findings, the level of qualified distributions for these foundations has remained relatively constant since 2008 (see last year’s report).
According to King McGlaughon, Chief Executive Officer of Foundation Source: “The narrative over the last few years has been that foundations under $50 million were ‘stepping up’ to do more during hard times. While no one would question their extraordinary generosity, the consistently high and sustained levels of giving that we see suggest that this group may actively exceed their minimum distribution requirement regardless of what is happening in the broader economy.”
“Private foundation grantmaking was up both in terms of the amounts given and as a percentage of assets,” said Andrew C. Bangser, Chief Financial Officer of Foundation Source. “When we release the 2013 Annual Report on Private Foundations later this year, it will be interesting to observe how these foundation giving trends correspond to their overall endowment growth and asset allocation.”
About Foundation Source (www.foundationsource.com)
Foundation Source is the nation’s largest provider of comprehensive support and advisory services for private foundations, bringing unparalleled knowledge and expertise to clients across the country. The company’s administrative services, online foundation management tools, and philanthropic advisory services provide a total outsourced solution for private foundations. The result: better-run, more effective foundations and more enjoyable philanthropy. Our clients supply the funds, the vision, and the philanthropic goals; we provide everything else.
Today, Foundation Source provides its services to more than 1,100 family, corporate, and professionally staffed foundations, ranging in size from $250,000 to over $500 million. The company provides its services directly to philanthropically focused families and institutions as well as in partnership with the nation’s leading private wealth management firms, law firms, and accounting firms. Foundation Source is headquartered in Fairfield, Connecticut, with offices in Atlanta, Chicago, Dallas, Denver, Los Angeles, New York City, Philadelphia, San Francisco, South Florida, and Washington, D.C.
FIGURE 1 (click to enlarge)
FIGURE 2 (click to enlarge)
FIGURE 3 (click to enlarge)